tv Bloomberg Markets Asia Bloomberg July 17, 2017 9:00pm-10:00pm EDT
♪ 9 a.m. here in hong kong. 9:00 monday evening in new york city. trouble for this man. feeling the heat. he may be punished for breaking investment rules. looking at global stocks flirting with records, but the world worst in shenzhen. can they break their slump today? haidi: and i'm haidi lun in sydney. also coming up, netflix surging ,ndex traded -- extended trading smashing forecasts in a record second quarter. this is "bloomberg markets: asia." ♪
rishaad: one of the stocks in theing the session post-market period, we had netflix coming out with something, just reiterating what it has been doing. big increase in the subscriber numbers, particularly overseas, helping to propel the stock. about 10% plus and afterwards section -- session. oftory at the beginning april, you can see how disney, cbs, viacom, 21st century fox, have all lagged. cbs was the best performer, still down 6%. netflix was up 10%.that doesn't include the
post-market period, which will also increase after the nasdaq reacts properly. that is something to watch out for. haidi: that's right. i can't wait for that session to see how the stock reacts. it these questions, is sustainable, can they repeat this for another quarter? line is the company actually going to turn a profit? meantime, 30 minutes away from the opening in china and hong kong. in yesterday's session decoupling from the equity rally elsewhere. singapore, taiwan, and malaysia just coming online. sophie: taking a look at what's going on today on this trading session, we are seeing stock rally -- -- asia hitting a wall of asia stocks snapping a six-day third. we have aussie shares leading the data about 8/10 of a percent, falling for a second day. we have the nikkei 225 losing about half a percent after a three-day weekend.
at 112.44.lar yen new zealand assets are looking under pressure, given the soft inflation we got out of wellington this morning. the kiwi dollar is down 6/10 of a percent. of the offshore yuan is halting a five-day advance today, despite the up the best of the chinese data we got today. industrial metals are higher. iron ore show -- soaring in singapore. trading at the highest level since april. copper is high -- hovering around a four-month peak. looks like the start of a rally. mainland property prices are also on deck. watch. plenty to we do have that slump when it comes to the china yesterday on the trading session.there was a
slump in chinese stocks monday, but that might not be a good enough reason to switch the bullish stance. while the shanghai, did drop after the second quarter gdp , we do have the msci china and at, the line in blue, maintaining its resilience. this was backed by sturdy earnings. earnings prospects are weighing in when comes to performance of chinese stocks. i want to end with a check on noble shares in singapore. this after the commodity traders think the most in two months after monday. that happened in the last half hour of singapore training -- trading. rishaad: thank you. let's find out going on with first word news.
republicans plan to --eal and obamacare repealing replace obamacare, but it looks fatally wounded. criticized by another senator for time republicans that long-term cuts to medicaid demanded that conservatives would likely be unlikely ever to take effect. mcconnell was accused of a breach of trust. plans are said to be under threat. sources say funding for projects could be denied with the conglomerate accused of breaching the subject in .overseas investments six purchases i said to have violated the world's best rules. -- have violated the rules. six months into the trump presidency, most americans fear fought -- feel fairly optimistic about their jobs, the economy, and the future. however, the latest bloomberg
poll says just for a -- four out of 10 approve of the job performance. 61% say the u.s. is headed down the wrong path. iran's foreign says his country remains committed to monitoring the nuclear program under the 2015 deal with world powers. the white house says secretary of state rex tillerson will make an announcement in the next few hours on whether the u.s. will -- there was a conference in new york saying that iran was abiding. >> iran is committed not to produce nuclear weapons. that never expires. rosalind: global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm rosalind chin. this is bloomberg. rishaad: these global stocks
rallied to near records. one part of china's equity markets is heading in the opposite direction. they are plunging by more than 5% on monday. if we look at 96 global benchmarks tracked by the bloomberg, it is the worst among greater china markets. the fundamental problem, why are they so unloved and why do they hurt so badly? >> it has been a very bad year for chinese companies. many small caps in china are highly be leveraged. hurting the really small caps in china. also, it you look at the earnings reports announced by the small caps, many are missing estimates by analysts.
together, they are really underperforming the markets. one of the triggers yesterday for the slump is key meetings held during the weekend, or the -- where theators chinese regulators highlighted the important risks and the financial system. believevestors really the key focus of the chinese view risk rather than boost growth.that is worrying investors . of other reasons we are seeing such a bad year for chinese companies. haidi: what is the outlook when it comes to shenzhen stocks? >> there has been a diverging view for sinus small caps and -- china's small caps and large caps. some say small caps will continue underperforming.
the reason is that there has been constant concern about the pace of chinese economic recovery, so people tend to buy larger companies in china, because they have stable earnings and more transparent government. theyis the reason why think small caps in china are going to continue underperforming. haidi: thank you so much. ahead, we will delve deeper into china small caps cella, and looking at why the pain is here to say -- staker that conversation with morgan stanley. rishaad: later, find out when june prices are released, breaking down the numbers. this is bloomberg. ♪
rishaad: "bloomberg markets: asia." you are back to -- you are back to "bloomberg markets: asia." i'm rishaad salamat in hong kong. reopening the blame on poor weather and rail pricesance that helped rebound into a bull market. shipments from australia are expected at around 330 million metric tons compared to the forecast in april of 330 million to 340 million. the online financial division start servicing international clients out of singapore next month. city state regulators have given "in principle approval." haidi: said to be seeking a
buyer from -- for a bundle of crop care assets as it looks to incorporate the acquisition of syngenta and meets antitrust demands. buyers are said to include chemical companies and australia's new farm. chinese small caps fell to two year lows monday, but msci china, seeing that index of about 30% this year.let's discuss what else is going on with morgan stanley's jonathan garner. 30% of. -- up. some say it is too far too fast, let's go somewhere else. if we look at the emerging markets, they are also up massively, too.
do you go back into the developed markets like japan in this part of the world? >> i guess if you look at msci china, we are still overweight, along with india it is about key top picks. the key point to make is it is a tech heavy index.what you are seeing in the indices worldwide is strong outperformance of tech. technology at em stocks, they are up almost 40% year to date in the leading global index. often we talk on the shows about things through the country lands, and that is important, but it is the sector lands -- lens driving things. energy stocks have enormously underperformed. rishaad: also, people have been making the argument to switch to financials in the u.s. is that something you would also see happening in this part of the world? that's a great question. for china in particular. what we saw over the weekend,
the focus on financial regulation, which may be part of why small caps sold off, that actually helps large-cap financials because it ensures the debt to gdp ratio begins to stabilize in china. sector,e cheapest likely to deliver earnings roughly in line with the overall -- x, but clay -- trading tech is delivering double the earnings growth, but for that double earnings growth, we are bar billing it over with -- overweight for tech. financials have performed in line, but we think better as it progresses. rishaad: you have to be selective here. could you make the argument that you only become selective in places where the yield curve looks like it's going to steepen? these banks can make more money in such a scenario. we basically got in asia this
sort of organic, long-term growth story, which is present in india and indonesia, about issues like household formation and accredited gdp ratio rising. and koreave china where financials are trading on a discount to where they ought to be, given the underlying credit characteristics to the economy. controversial.is many people are trapped in yesterday's thinking about chinese financials, overly worried about mpl's. we think the people in the mpl cycle is at least a year ago and earnings, growth is likely to resume this year. to a lesser extent, you could say the same about korean financials.i think there are different ways to looks -- look at the financial stories in asia. haidi: that's interesting you say that about npl's and the bearishness of china's thinking.
they are still quite high. that is if you are ok with the way the banks categorize their loans. >> this debate has been raging for some time, and it has morphed and changed. then we had a big wave of concerns over manufacturing. npl's and coal related. each time when the issue has raised its head, the mpl cycle has been going on in china, but the organic growth has shifted to near sectors. what's interesting now about chinese banks is they are lending to the consumer. that is consistent with china becoming a high income society. if you look at that transition in terms of the consumer loan that if they were driving credit growth, that's what you see with a high income transition. that dilutes the existing mpl
program. assets are still growing. beingl problem itself is dealt with and we have an improved macroeconomy, which is what we saw on yesterday's numbers. sales and gdp, and exports are strong. the overall macro environment is very strong in china. going back to the discussion on small caps, one of the things we know that the chinese equity markets is if you want to predict the future macro in china, hang seng in hong kong and msci china, they do a far futurejob of predicting china macro than the shanghai composite or the onshore indices. we actually see very consistent here msci china is doing well. china macro data is surprising on the upside. haidi: so what you are saying is that largely a great part of these onshore stocks are really a bit of a roller coaster, a bit of a casino.
i want to bring this up, it talks about how we improve the macro situation. you can see the diversions, the decoupling. .hey yellow is the shanghai cop the turquoise is the bloomberg commodity index. it never tracks macro growth. bad news is good news with chinese equities. at what point do you start looking at onshore a-shares and start talking about fundamentals? >> the market is maturing, but it is gradual. we got the connect programs bringing global money into the onshore market, but it's tiny relative to current trading activity. we are getting more institutional investor participation onshore, including the national pension fund, but it is what it is. it is an early phase emerging-market separated from global markets for its history. that's going to change going forward. it's interesting the chinese
authorities want that change to happen, which is why they've allowed the connect program to go forward. that's why the msci inclusion was so important for chinese authorities. they understand capital allocation and equity market onshore is not optimal. haidi: does this kind of remain a bit of a casino until we have the opening of the capital accounts? i don't like to use terms like that. we talk about the underlying aspects of asia. factors, ifvalue you by higher valuation price to book stock, and a-shares you do well compared to buying a low share. that's because the book value is more reliable than the income statement.
it's just a young emerging-market in that sense, but the msci china and hang seng, hang seng in particular, has been going since the 1960's, these are markets global investors can be involved in. highly sophisticated investors, high net worth individuals and institutions, they can all be involved in hong kong blue chips, which have massive chinese drivers to their earnings. that's why we find that you can constitutively that hang seng and msci do a good job of rejecting future china macros. it was not particularly surprising to see strong china macro yesterday. haidi: always a pleasure, jonathan garner, chief asia strategist at morgan stanley.coming up , a blockbuster quarter for netflix, seeing subscribers top 100 million. but has it finally managed to profit? we will break down the earnings and see whether they can do it again, next. ♪ this is bloomberg.
haidi: netflix releasing second-quarter earnings after the bell, and investors are loving it. the stock took off in extended trading as streaming video giant crushed forecasts for subscriber growth. cory johnson breaks down the results. cory: netflix announcing second-quarter results. now it has a higher valuation because wall street likes the results. why they added a lot of subscribers. forget the free cash flow burden. -- burn. forget meager profitability. they had over 100 million subscribers. international subscribers are really seen as the hope for the company. because content costs are going way up from netflix, and
competition from hulu, hbo, andon prime, showtime, fx, many others. that competition is raising the cost of content. you don't see it in the income statement, but you see the profitability. the number that jumps out is how many users the service has. as long as they are adding suit -- users, wall street likes it. a concern on the horizon is the cost of content. the cost of content is going up with all the competition. the company had negative free cash flow of over half $1 billion. a run rate of $2 billion a year going out of netflix. that's expensive. wall street doesn't seem to care. the stock is up 11% after hours. , andontent they license
the content that they don't own it a success with viewers. it helps the mad subscribers and helping shares of.cory johnson, bloomberg, san francisco. rishaad: bloomberg's at large, cory johnson. large,mberg's editor at cory johnson. hang seng futures are down. we have those auction prices up. a few minutes to go before we get more important data showing what's going on with the chinese housing market. this chart shows you that third tier cities are actually on a bit of a tear up.
rishaad: looking at victoria peak. 9:29 in hong kong as we count you to the open of the hong kong trading day. we will have the reserve bank of australia minutes. also, house prices at of china. looking ahead, u.k. inflation numbers. we also have the second round of brexit talks between the eu and u.k. we are looking ahead to the bank of japan out with a rate decision. mario draghi's ecb as well on the same day, a little later on. i'm rishaad salamat from
bloomberg's asia headquarters. haidi: i'm haidi lun here in sydney. we are awaiting these numbers out of china. we have to see in particular whether the third tier cities are going to see sustained and as a result we may see more curves from authorities to dampen the markets. let's go to the details. paul: just crossing the terminal now, the rba noting that data has been generally positive for the june quarter, even though we have gdp pulled back a little. quarterly growth was expected to increase, but there were disruptions to: exports because of cyclone debbie in queens land. in the labor market, we saw that last month, the big jump on jobs figures.
the rba is still concerned about saying on the minutes that the strength of the labor market data has removed some of the downside risk of growth. that is the theme we have seen emerging, concern about jobs and household debt. haidi: that's right. market pricing shows some rate hikes by 2018. it's about a 20% chance when it comes to the third quarter. interesting to note that core inflation has been low globally , blaming part of that on oil. but that's the issue, inflation has just ticked over to that, sort of, what they are looking at. they need to go higher. paul: the canary in the coal mine. at a, flat, worse than expected. inflation in no great shape.
philip lowe is infamous for the not -- the line, so we may not see the rba move swiftly. no indication they are ready to join the tightening party. certainly a lot of concern about household incomes related to how over levered are highly leveraged households are. paul: we may be seeing some more measures if we are likely to come out with something new in the coming weeks or months. interesting to note the behavior of the australian dollar here, gaining on the back of the minutes. often it doesn't move when we have rba minutes out, but it is above $.78 now. i wonder if we are going to see dollar commentary to feature the rba statement going forward. haidi: absolutely. lowecularly as philip
refrains from joining the chorus of global banks. sticking with breaking data out of china, we've got property prices in beijing. new home prices falling by 4/10 of 1% month over month. prices fall 2/10 of 1% on month, rising 10% on year with shanghai new prices in june. some ofzhen has seen the most extraordinary gains year on year on terms of home price. we have seen unchanged month-to-month rising 2.7% year on year for shenzhen. that's the top three. existing home prices for beijing falling 1.1% month on month. when it comes to year on year, that number existing home prices in beijing, still gaining. pricesi, existing home barely falling 1/10 of 1% month on month.
a little bit of a cooling. we've been waiting to get more of these numbers in terms of how has just come through. new home prices rising in 60 cities month on month versus 56 in may. looks like we are seeing something of a property rebound. and also from looking at it, it seems as though we also have some of those third tier and fourth tier cities perhaps showing improvement month on month. any see if there's been additions to the global markets.hong kong just take -- kicked off. let's find out more. sophie: given that we've seen gains in 60 cities compared to 56 in the previous month, that could lead to the view that there might be more deleveraging curves in china. chinese stocks losing about a third of a percent here, deepening losses we saw at the opening for the index. this after falling 1% on monday. the hang seng lower, snapping a
six-day rally. yuan, a bright spot here, strengthening after a week or fixed on the pboc at 676.11. we had the pop in on me, but the asx 200 not getting support from the data this morning.rba thing is not going to join the global policy unwind. that benchmark falling almost 1% in sydney. wanted check on the shenzhen stock market, given that it has been in focus, given the slump we saw in china on monday. we have it following about half a percent extending losses for a seventh day. there has been anxiety around investors given the regulatory concerns for china, but we do have base metals rallying nicely, following the upbeat economic data. copper is trading at a four-month high. that could be just getting started.
this is chinese industrial output for the red metal, jumping 7.6% in june. this chart shows you the red metal broke above the upper bollinger band. that is the line in red. exceeded $6,000 a ton for the first time since march. that could spring more buying from traders. i want to pull up stocks to watch at the open in hong kong. checking on wanda hotels. reports that the chinese government is screenwriting six -- scrutinizing six deals. it is falling over 3%. lined films are -- shares are suspended in china. rishaad: thank you. one man who is not exactly what you may call pollyanna about what's going on, particularly
for the prospects of the world's biggest economy, the boss at one of the world's biggest asset managers. he's making headlines on our first word news headlines. that's right. blackrock ceo larry fink says the us economy is growing more slowly than expected, and the trump administration's inability to act is a threat. he told bloomberg that there are dark clouds building. black rock issued second-quarter earnings. revenue missed expectations for the fourth consecutive quarter. the united arab emirates says there is little likelihood of a speedy resolution to the qatar crisis because the saudi led alliance wants a deal that would endure. uae foreign minister says they need a clear signal that qatar will meet him on the position on extremism.
a brazilian judge has denied a request for companies and individuals related to the disaster to pay financial guarantees. marco, bhp,y some and vale do not have the funds while the case is being tried. 19 people were killed when the dam collapsed in november 2015. indian lawmakers have been voting for a new president. an election is widely expected to be won by a little-known member of a political group. kovind is a longtime associate of a hindi group accused of spurning religious hatred. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. is rosalind chin, this bloomberg.
bloomberg sources are saying china may cut funding for regulatory approval wanda's deals, accusing it of reaching overseas investment restrictions. china's second richest man -- we've got wanda hotels down another 7.8% so far. may be they are too clever by half. >> yes. those overseas deals were a while ago. it's not like new deals are announced. why is the government cracking down and investigating wanda bank loans for overseas acquisitions right now? last weekend, we just found out the chinese government wants to focus on deleveraging.
it's not in the government's favor right now. rishaad: what about the mainland listing? how is that likely to be affected?? reporter: it looks like wanda will probably run into more trouble. first of all, when wanda listed, it was going to take private its hong kong shares last year, it promised it would be re-listing in mainland china in one year. that was the deal. would have 12% returns. it doesn't look like it's happening, because the government doesn't want another have really leveraged company to list in china. it's not a quality priority. the government already said wanda would not be able to invest in overseas assets. so wants to buy this essentially troubled real estate developer
right now? picketing get the good valuation it was hoping to achieve. haidi: reading the tea leaves on policy and what it means for the other conglomerates, i want to play sound from our interview trading snp global investor. they suggest this could just be the beginning. >> it does seem like the regulator is putting more scrutiny on them. perhaps the funding, domestic funding of these acquisitions may be temporarily put on hold or could be primarily put on hold. we have to see what the regulators do on a more permanent basis, these actresses since will be -- but it seems like for now they will be put under more scrutiny. todi: is this a warning shot
be exuberantly acquisitive chinese conglomerates? also, what would you be thinking if your -- you are the acquisition target? this highlights the risk in china. reporter: absolutely. if i was the target, i would seems like we are closing the deal, but what about bank financing? in half a year, the money may not be there. we would all look stupid and let go of other possible deals. thought onhen we bonds chairman being read -- , the government still wanted the banks to hold some business transactions with them. i would be very nervous. haidi: very nervous, indeed. just theossibly
rishaad: china releasing residential property prices for june. new home prices rising in 60 cities, versus 56 in may. chin, theg in henry head of asia-pacific research at cbre, a real estate company.. tell us something. louisiana headline that 60 cities are higher month on month. beijing, shenzhen, shanghai, all declines.
these third tier cities have catch up, because they have so much overcapacity. >> surprise. the pace is moderate. there is a bifurcated trend in the china housing market. rishaad: but there always has been. >> but you can see the home purchase restrictions played a big part cooling down the tier one markets. if a tear to market comes into and thenues to grow, tier three, the key trend we notice is the spillover demand for the tier one market, particularly for cities around major economic clusters. rishaad: give me an example. shanghai, beijing, they have cities nearby. which are they? cities.ind of smaller it's amazing that you can see price growth of 80%.
up to 80%. you can see the demand. it's amazing. rishaad: is it sustainable?? >> i think the fear of the property double burst is overstated in my opinion. i cank the three reasons get you up your number one, the demand is very strong. the momentum is slowing down. number two, based on our research, you would be surprised. billion rmb expected by 2020. 112re expecting additional -- one trillion rmb of capital from real estate markets. capital is not to do with high will individuals. it is about institutional capital. insurance companies, corporations, foreign investors, all aggregate together adding up to one trillion rmb.
given the restrictions for outbound investment, i think a lot of chinese are looking at domestic opportunities. i will give you examples. and the big economy. there are so many investment .trategies if you want to stick to the upper tier market like shanghai or beijing, thinking about urban , but if you are thinking about going with arernment policies, there interesting medium to long-term opportunities for inland cities. other -- those are attractive
for investors looking to invest in china. haidi: if you are looking at opportunities in terms of geography, a lot of those locations are where we saw ghost towns and severe overcapacity. >> yes, i think overcapacity is the issue. i think that's why the tier three and here four cities -- tier forecast cities is where the stocking process will happen. china will continue to grow going forward. rishaad: what about affordable housing? is there a concept such as that which is gaining a foothold in china? >> and the chinese culture, buying a property means accumulation of wealth. one element is -- rishaad: it's a tautology. >> the other thing we are talking about, increasing
income. that's why the chinese government is trying to control the price growth of the property sector, but also trying to bring out income. the affordability ratio -- rishaad: looking at your research, there are so many niche markets like parking, and also senior housing. these are gaining traction. >> it is very attractive. commercial real estate, residential real estate probably couldn't deliver returns. more wealthy people getting more rich, everyone has a car. senior housing is a topic for institutional investors. we see a lot of funds into the car park. rishaad: urban renewal you talked about, but in a transport
-- you mentioned the fact that we had spillover from tier one cities. intome about the spillover the tier three cities. >> the number one thing for china is to build underground. rishaad: just from the spillover effect, but actually having an underground section -- system. >> that's correct. particularly for upcoming cities. it is a good investment for the city to develop. rishaad: name me one city like that. >> i think wuhan. much.d: ok, thank you so henry chin from cbre. coming up, older, wiser, and richer. may be china and pensioners. we take a look at how japan's elderly are fueling a boom in
rishaad: you are back with "bloomberg markets: asia." rishaad salamat in hong kong. haidi: i'm haidi lun in sydney. up to seven recessions in two decades, so it is easy to forget japan still has a lot of money. that includes more millionaires than anywhere outside the u.s. the retirees are fueling a luxury retired travel boom. where did all these millionaires and their wealth come from? reporter: a net the things that fit been happening in japan is facing society. -- one of the things that has been happening in japan is the aging society. there are millions of people age 65 and above. they are not leaving with a
goldplated love -- watch. they lead with an average bonus of over $200,000. for a couple working together, you can double that. this gives retirees a nice nest egg to start off their vacation. with one of the people we spoke to for our story, she started off -- he started off with a cruise, that hunt, and now is spending money on vacations like rishaad: tomorrow. we've got them spending now, but haven't they always spent? reporter: retirees have spent. reporter:but now there's a lot more of them. about 35 million. just over 20 years ago, there were less than half of that. we've had an increase of almost 20 million retirees in the past couple decades. that is a big new market for these companies. are getting in
on this deal. on the recent -- a recent monday, i went to a train station in ueno to see passengers getting aboard a new luxury train. it's like a revamp of the orient express. piano onboard, michelin star food. there was only one person on board under 60 years old. they have the money and the time, and these are the new things to tap that resource. rishaad: very quickly, what is hot? you,ter: hotter then luxury trains. forget five stars. there was a seven star is trained three years ago and it eastw being copied by jr and west. there are three luxury trains. take your pick. rishaad: [laughter] thank you so much.
♪ announcer: from our studios in new york city, this is "charlie rose." jonathan: good evening. charlie is away. i'm jonathan karl of abc news. we begin with politics. president trump has been on a state visit to france this week. when he returns to washington, he will find russia is still dominating the news. on thursday, senate republicans released the newest version of the bill to repeal and replace the affordable care act. joining me now, megan murphy, the editor of "bloomberg businessweek." and from washington, mike allen, the cofounder of axios. and yoni appelbaum, the senior editor for politics at "the atlantic."