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tv   Bloomberg Markets Asia  Bloomberg  September 24, 2017 9:00pm-12:00am EDT

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morning,headlines this tesla merkel -- chancellor election.s the iraqi kurds vote on independence later today. this is "bloomberg markets: asia ." we are talking about elections
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in new zealand and in germany. before germans went to the polls, we did see what was going on with valuations in the benchmark dax. the dax is showing equity investors are not conflicted. the dax trades at about 13 times its expected profit. that is well below msci priced ratios. ndexes overweight. just half an hour to go before we get these art of the session -- start of the session in hong kong and shanghai.
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it is now 135. there has been guff of interest rates going up. we have been doing this for years. once has oit faulted. rashaad: every time i go to england, my trip becomes more expensive. entering the 4th quarter. high grade.f expect thos three to hike. equity markets doing good. japanesef the weaker
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yen, it is no longer here. a little into em's. getting out of the bond markets, we are seeing yields of. up. percent. is up 0.4 starte seen a downpouturn to flow. watch out. this is your 200 day moving average. there is your chart. 51 on our terminal. we could be talking about elections in japan. the last time we went to the neverin japan the topix
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looked back. pop on 2016, massive that day. you had a tight range when you have doubts on the currency market. reflation back up. highest.ld be the there we go. 15 are just past the 20 15t peak. we are up for six straight weeks in the asia perspective. rsi, 30 is your oversold. so far it has held quite nicely.
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tenure high on the asia-pacific. rashaad: thanks so much for that. let's get you some of the first word news. paul allen for that. a snap election in prospect. says a weekend poll of japanese voters disapprove of abe's plan to call a snap election. opposition parties and other critics say he is trying to cling to power despite the scandals of resignations. the air force flew as close to north korea in a century. said u.s. aggression is the reason his country needs nuclear
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weapons. president trump has ordered new travel restrictions on eight countries, replacing his into soon to ban -- his expire ban on six muslim majority nations. the president says it will admit no one it cannot vet properly. ascribing the new ban tougher the better. for 15%, trump called down from the current 35 and an announcement is expected on wednesday. the plan is to cut the top individual tax rate despite earlier administration promises of no cuts.
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tighteralled for a corporate economy. he said the banking system needs to improve international health. the indian economy expanded at the slowest pace in three years. panic.eed for there is merely a need for analysis and responsive action. global news 24 hours a day powered by more than 27 journal of and analysts in over 120 countries. this is bloomberg. ♪ rashaad: a bit of an upsetting night. inconclusive reports in new zealand. thanks for joining us.
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power merkel, she had won but she cannot be convinced she's getting a mandate. >> it will be interesting to see how she builds that coalition. if she has to go with the free democrats. that would mean giving something away. his germany going to be a bit looser on the fiscal side. europe is thinking about what happened with the insurgency. rashaad: this is the rise of the right, which is causing consternation. >> this is not something she needs to worry about in the near term but thinking about the next election, she will have to say --her party bolseter will want to retain power in the next term. peoplethey get to those
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who voted for the extreme right and bring them into the center? rashaad: a lot of anger in germany because of the refugee policy which she instituted. that is perhaps why she has inconclusive results in part. >> i think understanding where the social aspects of where the policies have been need to change. csu and spd need to think about it. new zealand, there has not been an outright majority for the national party and they have to think of what kind of coalition they have to build. no one has a clear mandate. thatations are split and is going to make the job tougher for governments around the
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world. expectationre is an we will see abe capitalizing on the residual support he has left. >> we saw news about a proposed fiscal plan he put out recently. that is in advance of something election.he general they need the mandate of how they stimulate the economy and protective hand on a nationalistic front from any tensions in the korean peninsula. rashaad: that is front and center when it comes to global politics and with what is going on with geopolitical nerves and how they filtered through into market sentiment. >> when you think about it, you say you want to be flexible.
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invested areto be with benchmarks is not going to help. the environment today is about targeted investing. rashaad: we will go to that in the next segment. we will talk about active investing. more on the way but also we go to hong kong. its main take. place in a new report on best place to invest in apex properties. china has been slapping sanctions on north korea but will they actually work? this is bloomberg. ♪
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rashaad: this is " bloomberg markets." we are talking about alpha politics but let's move on to investment strategy. active and passive investing and how passive has been in the foreground. you are saying now the active. >> the cycle is going to be much longer than most people expect. we have entered the new phase where liquidity is flowing out of the market. what that means is there's going to be a lot more dispersion and markets. there's going to be a lot of ways to capitalize by choosing the best from the worst. and choosing sectors that suffer from rising rates. it is about being more selective both geographically and
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pictorially -- in the sectors. rashaad: it is a crowded trade that you are still into it? >> we think it is one of the most interesting sectors to be in. we would like for european and chinese banks over the u.s. the u.s. have interesting angles in terms of the regulation -- extent youat to what get the deregulation of financial balance sheet and leverage ratios in the u.s. an easier call to make is in europe, japan and china. rashaad: what about technology? that has been the absolute king of the stock market around the world. every time i ask the question it is seemingly redundant. >> over the long-term technology
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firms will make market share. they tend to trade sidewards. tech mayformance of take a backseat through the end of the year. we want to think about what could be a headwind to those strong earnings those companies have been generating. we have seen regulation. antitrust and esg factors. environmental, societal and governments issues where we have seen uber coming under pressure in london last week. rashaad: we will see what happens. you could argue it is politically motivated. some have done that. >> i think governments will use any type of reason to bring some of these companies under bear
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and it could be under the issue of taxation. do these companies pay the right amount of tax and is that something we as investors need to think about when factoring in future earnings. otherd: there are some places with momentum. stability being the watchword rather than the acceleration of growth. >> we think stability is something, we have seen the downgrade for moody's last week think that is fair. moreink china has gotten stable. the party congress will
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bring some stability. rashaad: if we do not have inflation we cannot inflate the debt? >> growth is going to be the primary goal of every government out there. no government is going to want to choke off growth. mild inflation is going to be something we are going to live with for a wild. strong inflation is hard to generate. surroundingue automation and robotics which tends to keep wages under wraps. rashaad: what is your real thought of the day? >> people think this is a cycle that is just about to end. i do not think that is the case. growth is going to persist. we have a synchronized great around the world -- growth
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around the world. rashaad: china is calling for restraint on all sides. this is after more accusations and reviews from the united states and north korea. china also putting sanctions on pyongyang. tom, what have we got? on saturday, this is when china started to take steps to of oilown on exports and natural gas. of north korean textiles. this is after another sanction where they stop the import of north korean seafood to china as well. ordered the pboc had
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down's lenders to close north korean owned accounts in those banks. it is another example of these pressure points being put in place by the chinese authorities. it is something china has come under pressure on from washington to act. we got some reporting from my colleague who went along the chinese border of north korea and did some digging into the economic impact and the economic pain is being felt by chinese communities and traders who spent years training with north korea. there are still smuggling routes but saturday was the latest round of sanctions imposed by
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china on the north korean regime. anythingcan we glean about china's relationship with north korea on this? >> it certainly seems to have deteriorated. it has been down a downward sector for a while since kim jong-un's brother was killed. he was seen as much of an ally to beijing. hear from sense you the experts and historians that the relationship continues to sour and china is prepared to take certain steps to further pressure the north korean regime. they continue to say that this crisis best be resolved diplomatically. they are allied on russia on that. they want to see the u.s. sit
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down for talks. they want to see this freeze for freeze, the united states freezes there military exercises and north korea freezes their test. that is what the chinese want. many in washington want to see china cut off all exports altogether. that's not something beijing is prepared to do. rashaad: a bit of breaking news coming through. chinese fix in fix.ncy seeing its weakest end of august. also they have been injecting more money in the form of reverse repos, keeping liquidity
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in the system stable. this is bloomberg. ♪
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rashaad: you are back with "bloomberg markets." withdrawlcrapping charges after they tried to save their reputation. they are acting immediately. the banks are trying to head off calls for wide-ranging inquiry into the industry. moving to new zealand where this company is prepared to
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beingmate.k in fonterra chief executive says it is a good result. >> we are quite pleased with the results. the payout to farmers is significantly higher and we were able to stick to the 40 cents of dividend we did last year and we have a strong internal capital. rashaad: reports from the uk's say uber is ready to make concessions to win back its london license. this at two days after uber said it would find that suspension in court. meetingsr lyft held
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with london's transport officials over the past year. this is what it looks like, start of the trading day in hong kong. futures on the way up. who knew that phones would start doing everything?
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in hong at the peak kong as we approach the trading day. a bit of a downside from the hang seng. looking at a snap election in japan. mario draghi will address eu lawmakers later today. fed chair janet yellen is in cleveland on tuesday. fed vice chair stanley fischer, or i should say outgoing vice chair. and we have eu-brexit negotiations continuing.
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we have a lot to get to, not least the possibility of a japanese snap election and indecisiveness in new zealand even after the election. and not quite the result angela forkel was hoping for ou germany. down 0.1wi dollar percent. substantial pressure coming through. when you look at the currencies, you have the euro, the kiwi, to a lesser extent the sterling -- take it awayry and from what we are seeing broadly speaking. risk on. bonds are up. gold up. movement coming through in a lot
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of these em currencies. peso coming off a fairly good day on friday. record high on the philippine composite. just to give you a sense of the broader picture. floor.ding the icbc down 1%. -- 14 point close, are downng seng we 130 points. oil markets up 7%. this chart takes you back to 2015. rate.g to reach upper expectation?m or
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the oil producers are looking to extend the cuts beyond march. up implemented 100% of the curves. tothe rest remains opend see this out because three. let me scrapping the with -- a look at sterling. sterling.ot it is the median forecast. the rally taking it well past where the market says. 129. we need to get an adjustment. we have managed to retrace this 50 percent mark.
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this big drop after the brexit vote. there is very little to indicate where we go from here. let's see what happens. should i book a holiday. get to the first word news headlines. fell against the dollar after the general election result. angela merkel's cdu came out on top but faces tough coalition talks after the spd fell out. afd won 13migrant vote, putting the far right back in parliament for the first time since world war ii. >> a major challenge has come,
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the fact that the asd has entered the -- afd has entered the parliament. we want to gain back those solvingf the afd by their problems, giving them solutions and by good politics. productionan says curves have started to stabilize. they say attention must be set on rising output in nigeria and libya. for changes calls in the deal because of recent turmoil. he did not elaborate. fitch ratings say the first of false on bonds by chinese government financed vehicles are becoming more likely.
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the agency says more than $600,000 in bonds remain outstanding. fitch sees the greatest risk in aser tier bonds such property with urban development. the growing dispute over respect for the u.s. national anthem as now drawn in stevie wonder. he made his protest in new york after president trump says that appellees who fail to stand for the and him should be fired. white houseed ana appearance by stephen curry w hich caused reaction on twitter. this is bloomberg. ♪ the japanese prime minister shinzo abe expected to a snap election.
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stephen engle is with me now. what do we know? it is becoming more a snap unpor but then the opposition has been in disarray. >> there is another splinter party the formed by associate of the popular tokyo governor, the first female governor of tokyo. that is one of the reasons why shinzo abe is going to announce this snap poll. it could come on october 22. with the splinter party being formed, they want to jump on them getting some national traction. you have the opposition in disarray, you have this new party which does not have new traction yet. n the tokyo metropolitan election in july that they do not have a big capital national base.
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is that the real reason, we have the opposition in disarray. is this a chance for him to deliver? >> the third arrow. abenomics, this is going to be a referendum on the nearly five years of abenomics. they have pushed back the target for the inflation of 2%. unprecedented monetary easing. government spending, has begun what it is trying to achieve? the voters are suggesting -- 64 percent of respondents say they do not favor a snap election. there has been cronyism allegations scandals. mess in a big
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japanese politics right now. rashaad: thank you very much for that. >> he is expected to announce a ¥2 trillion stimulus package which is streaking -- rashaad: thank you very much indeed. to prime minister bill english claiming a mandate to form the government. theid fall shy of majority. the opposition refusing to concede this week. concede defeat. what is the latest? >> we are in a stalemate situation with english having produced quite a stunning result points clear of the
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shy ofpposition is just what he needs. he has no coalition to lean on. itshe other side labor and green ally could form a government with winston peters. we have the king maker in the middle and we have to figure out which way he gives. rashaad: what should we be looking out for? two sidesent: the are expected to start coalition negotiations in the coming days. that's his last 2-3 weeks. past experience shows that he will try to extract the highest possible price he can for his support. we do not have any
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indications about where he might lean. rashaad: coming up, hong kong has been rendered the top property market. we will find out why they make that call. this is bloomberg. ♪
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rashaad: you are back with " bloomberg markets ". based homebuilder has a value of $5 billion. afraid, why?g be sumax,ke ever grand and
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kaisa has not made any promise to deleverage. rashaad: this is a company that defaulted on its dollar debt. it is coming back from a debt. in mainland china. investors are looking at this saying it could be the next evergrande. evergrande has pledged to reduce its leverage. rashaad: that is why it is not the next evergrande? the company needs to have a concrete plan to try to reduce a leverage ratio. in the second quarter earnings, it said it would improve the debt structure. but it has not said anything about reducing the debt level. rashaad: country garden is down.
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it has fallen 7%. it has hit thed pause on expansion. this is a new story developing. to what else is going on. the state group colliers has said demand for property in asia firm.mained andrew, a lot of through this story. >> specific transaction values have been strong if you exclude australia and look only at asia. transaction volumes in the first 19% to the year are up
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61 billion u.s. dollars. the markets, which were particularly strong if you are focusing on urban centers. hong kong right at the top. rashaad: what is the driving that? strength across the board. we saw strong demand for office properties, hotels, retail is beginning to turn in hong kong. it is important to note is that properties completed do not include purchases for undeveloped land. chinese investors and chinese developers have a strong preference for undeveloped land. if you had included undeveloped
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land in the figures, hong kong would have been stronger still. rashaad: let's get to the number singaporember three, coming back having a tough time. >> singapore is a very interesting market. it is one of collier's top cities to invest in. if you look at singapore, the economy had been weak and there the economyith accelerating. investors and it is the investment interest was strong in hong kong and we saw a recovery in occupier markets. colliers did its rent
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research, we were surprised. retail, industrial as well as office beginning to pick up. that is the background to another large deal just last week. rashaad: i noticed to the ropped comparedd to what they were a year ago. and asia as a whole, economies have accelerated since the start of the year. china, hong kong, and singapore is no exception. intois feeding through strength and occupying markets. singapore is one of the few gateways cities globally where residential prices have fallen over the past few years. they are down about 11%.
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residential property is certainly a category we would highlight for investment potential. rashaad: what about looking ahead? you said singapore is your top call looking ahead. >> we continue to like singapore, hong kong and saying shanghai. office, in some areas, property on hong kong island is yielding about 2%. the average is higher. the average for hong kong is about 2.7. that is a load number and you have to bear that in mind. rashaad: is there an unsung hero, a city that you think has a good future and is below the radar? across asiaooking
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will be a focus on gateways cities for the time being. every time investors will start imelook at -- over t investors will start to look at the tier two cities. western china. it is one of the terminal points railways.adways -- it will probably build up along the old maritime trading route. but only 5-10 years you, there is to be substantial investment looking straight west through central asia. that is where a market like that has a chance to shine.
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we specialize in physical property. on the whole we would say look for physical property assets. rashaad: in some markets it is difficult. if you look at asia-pacific as a whole, one reason why japan and australia have been weak, there is just a shortage of stock to buy. it is difficult to find landlords willing to sell. oneaad what last quest -- what we sawn, with was country garden. >> the chinese have restrictions
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on overseas investments. if you look at the first half in asia and globally, chinese 'purchases of income producing properties declined but it did not prevent seas,antial investment over notably in hong kong in underdeveloped land. the restrictions have been titans. -- tightened. it is quote possible, probable that chinese investment in completed properties will moderate further. having said that, the new
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restrictions specifically exclude belt and road investments. the chinese renminbi is strengthened against the u.s. dollar 5% so far this year. the chinese are confident the renminbi is not on a downward slide. it has stabilized. the chinese will be pragmatic inll be their application of the rules. unless the renminbi starts to slide rapidly, which we do not expect, we do not think that. quotite the reverse. they will continue to strengthen.
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check,: our market looking at elections in germany and how they are affecting sentiment in this part of the world. and possible snap elections out of japan. this is bloomberg. ♪
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rashaad: this is bloomberg markets. we are having a look at business flash headlines. retailer is being considered for 28 million. advantageing to take of a local market leader. a rex and mortars company
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that will receive an exclusive store on amazon. are pushing into the growing market for restaurant delivery. amazon began a restaurant delivery service in seattle and has been expanding to other cities. it has a major foothold in the grocery industry after its acquisition of whole foods. softbank is willing to accept a sprint.k merger with softbank does expect a premium over sprint's market cap. what have we got prospect here on bloomberg markets?
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euro currency moved to the downside after the worst the next decade election results for angela merkel.
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rashaad: almost 10:00 a.m. in hong kong. results out of germany. chancellor angela merkel faces coalition talks. the far right back in parliament. and the kiwi anti-immigrant party holding the key to power in the new zealand election. and shinzo abe to call a snap election. voters unimpressed. this is bloomberg markets.
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also we have a meeting in beijing about brexit. it is about trade as the united states become more important to china as it overtakes the european union in the coming its biggest trading partner. the growth of the you total trade, that is in white and they had been ahead of the united states. for thel trade is less you than what the united states does with china looking at what is going on with a lot of politics, here is david ingles in the market action. dated: when you look across the district that's a different
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sectors,--this is your asia-pacific chart. property down 1%. in, this is on the back that several chinese city has put in restrictions on home purchases. you cannot look at the entire country as one. pockets of china seeing substantial gains. it more little bu pronounced. shanghai, theat property index is down to 2.1 percent.
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in the tech space you have a aac in things like technology. apple had a bad week. this is simply part of the follow-through affect. we are down to-3%. looks comingsia off the highs of the day. as taiwan starts to drag on the overall benchmark. bonds market offered up mostly, yields coming off highs of the day. japanese 10 year of 10 basis points. one market you want to what closely in figure four. -- is singapore. 3254, whichen below
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is the moving average. you how that ehe 50 percent level is wher that 200 day moving averages. 3152 is the level to watch. dollar-yen, just bring that back. when you look at the yield and the fed, that widening spread between the treasury and jpd. back above itsn, 200 day moving average. it is the property story in china getting traction. rashaad: adding so much
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negativity and sentiment being cut with regard to that sector. by kyoto newsoll says two thirds of japanese voters disapprove of prime minister shinzo abe's plan to call a snap election. abe is expected to dissolve the lower house. opposition parties say he is trying to cling to power despite a string of scandals and recognitions. u.s. air force c-1 bombers flew their closest to north korea --s century shortly after a he says u.s. aggression is the reason his country needs a nuclear weapons. trump has ordered new
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travel restrictions on eight countries, replacing is soon to expire ban on six majority muslim nation. it targets muslims from libya, syria, somalia and targets chad and venezuela. he describe the new ban as the tougher the better. republicans on capitol hill seem to be targeting a tax rate of 25%. lan is set to cut the top individual tax rate from 35 percent despite earlier administration like it of no cut of theistration pledges no cut for the higher earners. this is bloomberg. ♪ rashaad: inconclusive election
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in new zealand and germany saw change for the kiwi and the euro. ad in japan, could see bumpy rie for the yen. prism are fx investors looking at this through? >> we highlighted the fact that if there was not a strong majority for merkel there would be euro weakness. the question is what does it mean for the policy going for it. investors are going to be following announcements on policy given the fact that the afd is not only nationalists but
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anti-euro to some extent. given how much the euro has appreciated, although a lot of that has been due to the strengthening of economic data in europe and the increasing positive sentiment to the eurozone. there has been declining concern about political uncertainty in various elections. this election has brought renewed uncertainty. rashaad: is it also fair to say nothing has changed with the economic fundamentals story? >> that is absolutely right. haseconomic story in europe been one of broad-based improvement. flowingas finally been through the eurozone. there look at indicators has been an improvement in
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economic activity in the eurozone. the gap is inflation. a stronger euro may have impact on ecb policy. if you look at economic growth, it's clear the trend has been one of improvement. rashaad: mario draghi talking to eu lawmakers. he doesn't talk much about the strength of the euro. is that because historically we as the euro at 158 as a high. if you were to say it was stronger now, you would admit the economic recovery is fragile. >> there is concern that if the euro continues to strengthen it will have an impact on economic
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recovery. is the euro overvalued? no. it is roughly around the value of historical averages. was it was over 150, it overvalued. draghi has talked about volatility. the euro is not volatile at this point. there are some creeping concerns but i would not say it has reached a level where the ecb is particularly worried about the euro. rashaad: a quick word about what is happening in japan . shinzo abe supposed to say something about snap elections. how do we look at this? >> we know there is speculation
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of snap election. abe is taking advantage of the disarray among the opposition. he wants to solidify his vision going forward. onhas this focus constitutional change and this may give the ability to push forward the constitutional change. is unlikely wet will see the bank of japan easing. still a number of questions on the economic front. trend,nomy is above inflation is not picking up but the bank of japan is unlikely to do anything about this. rashaad: stick around with us.
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we have much more to talk about, bank of japan and the fed. let's more on the way. ♪
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♪ rashaad: you are with bloomberg markets. with theue our chat rates strategy. we were talking about japan, talking about the yen and above trend growth. amazing growth numbers. is it time for the bank of japan --have they thought about doing something about their bond program? >> it is still very early days. growth has been above trend.
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trend growth is low, but the problem is wage pressures have not been picking up. inflation trajectory is subdued. we are going to have governor kuroda replaced or staying. we will find out what happens with the bank of japan. there has been a shift of members on the bank of japan board. some time later next year we will see a shift in the yield curve target slightly higher. it is way too early at this point. rashaad: there has to be a line in the sand at some stage? -- for dollar-yen
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dollar-yen, it could continue to hedge higher but we are ending up at the top of its most recent range. where is the line in the sand? someone say there is no inflation at the moment in japan. it's hard to say the boj is shifting policy despite the growth outlook? rashaad: on the dollar itself and theit's hard to say the posf tightening coming into play in october, what happens then? >> we have been a in year where the dollar has been on a way down trend. dollard see a bit of a andce if the market price
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more fed rate hikes. the last meeting was more hawkish than anticipated. we are looking for the fed to hike twice next year. the markets have not uprising that it. at policy, you mentioned tax cuts, there is a focus on potential tax reform or stimulus in the u.s. the probability is very low in the market. if we see signs of that moving forward, it could get the dollar more short-term upside into we think is a longer-term downward trend in the dollar. 128aad: sterling going up, to 135. is it too much good news being priced in? >> it is hard to say. in the past we have been bullish
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sterling when it was close to priced i think a lot is in. question marks about policy and what is going to happen with the brexit process. if you look at the speech by theresa may in florence, it was welcomed by european officials but there is a lot to go through , all of this stuff is still very much in certain. the risk is the market may have gotten a little bit above themselves in terms of the moving sterling. rashaad: always a pleasure talking to you. let's take a look at what is going on in oil markets. barrel.
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this is after major producers have agreed to maintain out the cuts into march. rising tensiond in iraq. hold their referendum. our correspondent is tokyo. let's start off with this decision. walk us through this decision from friday's opec meeting. and its allies won two toaight the course -- want stay the course. working andt is the goals are to reduce global
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inventories. arehe u.s, inventories above the five-year average but they are coming down. the argument from opec is the production cut they implemented in january are working. rashaad: other issues that opec has left unresolved? >> i think there are and he had the iranian oil minister bring this up. two countries exempt from these cuts are libya and nigeria. they had a low production in january because of civil strife. as those countries stabilize, production may rise. there is a worry that if they produce --if they boost production, it could undermine the global cuts by opec.
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the other issue which opec has no control over, u.s. producers are producing 9.5 billion a day. those are two issues opec is looking at. rashaad: we have to take a break but on the other side, looking at the indian finance your saying balance --indian finance minister saying balance is key to boosting the economy. ♪
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♪ this is bloomberg markets. we take a look at india's finance minister. he is urging businesses not to by a despite being bruised
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slowing down of the economy. >> are we getting enough fbi, we are. there policy changes taking place, certainly there are. there's investment going into civil and infrastructure sector. for liberalizing is plausible. it point,omes my final how do you maintain the balancing act between continuing to spend in an
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timemy and at the same maintain the standards of fi scal prudence. that last part is the current challenge we are facing. this seems to be the logical course in order to get back. think there is a need for panic. is a need for analysis and responsive action. time that if investment is not coming up, the government needs to take the role? not have toy, we do targetatic about
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numbers. >> whichever way i answer your question will lead to further speculation. if you read between the lines, you'll probably find some response. rashaad: the indian finance minister jaitley speaking in the bloomberg india economic room. we have reports from the u.k. saying uber is ready to make concessions to win back in london license. two days after uber said it would fight back suspension in court. meanwhile, the telegraph saying advantage,y to take having meetings with the city transport officials. banks scrapping
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withdrawal charges after they save their reputations after a series of scandals. the banks are trying to head off call for a wide-ranging inquiry into the industry and a $6 billion levy over the next four years. it isnd's compnay says willing to maintain a steak in beingmate. up, we are talking president donald trump as he aims to to take focus on tax reform. inre are different target the white house as well as on capitol hill. we are looking at the difference as we discussed what is going on in washington dc, looking at
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politics, north korea and what is going on with the nfl. that is all the way. this is bloomberg. ♪
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♪ i'm paul allen with the first word headlines. the euro fell against the dollar after the german election results. angela merkel cbo came out on top but now faces tough coalition talks after her current partner, the spd rolled out the deal. merkel was expected to talk through the business to free democrats. the process that could take weeks. the anti-immigrant after he wants 13% of the vote. major news challenges in front of us. namely the effect of the ft has entered the federal parliament.
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analyze this closely and a depth because we want to gain back those voters of the -- by the afdng by solving problems and certainly by good politics. the kiwi also fell after an inconclusive result in new is a -- in new zealand. coalition talks are on the agenda after the prime minister 158 seats in the 120 strong house of representatives. the opposition led the party of under a term of 45 seats. both leaders are expected to talk to the anti-immigration new zealand first party. the discussions could drag on for weeks. iran says production curves are starting to stabilize the oil markets. they must be paid to rising outlooks in libya and nigeria. called for changes in the deal that exempted the
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two countries because of the recent turmoil. however, he did not elaborate. opec and some independent suppliers have agreed to curve through much to drain the global oil glut. a first fall on bombs by chinese local government financing vehicles are becoming more likely. the agency says more than 600 billion dollars of such bonds remain outstanding that were issued after beijing with the drew backing in 2014. -- withdrew backing in 2014. global news, 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. i'm paul allen. this is bloomberg. rishaad: we are looking at what is happening in terms of the markets. we are seeing declines. a couple of exceptions. notably the nikkei 225. the pop -- the path --
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possibility that it could be called early this afternoon. for the yen.ivers the end wakening has helped some of those exporters in japan. by 6/10 ofhe upside 1%. otherwise, there is a general sense of weakness out there. we have the hang seng, one of the worst performance. tell me why. let's look at the country garden, it said earlier it would put -- hit the positive button on their -- the pause button on their plans. it is at 7%. what we have is restrictions and mainland cities being rolled out. this is a gain for home price gains. we are seeing weakness in china's property. eight large cities in total tightening. most of them banning cells within two to three years of purchases. that means no flipping of homes.
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news for these developer stocks. let's find up more on what is going on with this. our real estate editor shirt -- editor nejra cehic, is with us. tell us about the impact and beyond that. nejra: this is been something that has been going on for more than a year at this point. chinese officials have been very in the searchrein we have seen in home prices in china. some of the biggest cities and the harshest penalties and restrictions are beijing and shanghai. we have seen some of the other follow suit with tightening and making sure that as buyers move away from these bigger cities, they are obviously -- there is demand can they are looking to buy. they span out into suburbs, smaller cities, and second-tier cities.
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now we are seeing a more coordinated rolling out of these restrictions across the board. makes thehat question, where are we in this tightening cycle? sree: everybody is aware that we are coming up on the party congress later in october. one of the key priorities for chinese authorities right now is to make sure that systemic risks and financial bubbles are not emerging in any parts of the market. so, with that looming large, we are definitely at the stage where -- we are, i would say, almost there in terms of the tightening cycle. once that is over, we may see that authorities may have a little bit more room to relax on those curves. have,d: a soundbite we talking to him earlier on.
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was he talking about the authorities of the end the day, doing what is necessary. >> we think the chinese will be practical. will be pragmatic in their application of the rules. and, unless the -- it starts to slide, which we do not expect, we certainly do not think that -- quite the reverse. an eighth three to five-year view, they will continue to strengthen. rishaad: capital control is one of those things that needs to be listened if people are to invest in asia. what is the outlook? fact remains that chinese people have an insatiable demand for property at this point. whether it is domestic property or overseas property. that demand will go away is that they do not have
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the money to invest it which is not happening anytime soon. while these restrictions can make it more difficult and take the profit out of the market, the fundamentals, they see -- they appear strong for the property sector in general, given there is so much defensible income that chinese buyers are interested in putting into property. rishaad: the question is, how much further do they have to run? that was the first -- everything else falling back by the wayside this morning. tough times if you are a tiny's -- a chinese property investor. let's head to the u.s., we have republican tax report -- tax negotiations. they face at least one obstacle from their own side. that is -- you guessed it -- president donald trump who wants a bigger cut. jodi schneider joins us from
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singapore. is it reasonable to expect any action on this front this week? >> it is tough to see how they would move forward quickly. especially if you have the president with wanting 15% and congress wanting 20%. the current rate is 35%. that is the statutory rate. very few companies pay that because of deductions. that is where this gets complicated. not only the right, but what do you do about these discussion -- deductions? what do you do about things like pass through businesses? businesses that pay their taxes on their own individual side of the tax code because they are not incorporated. there is a lot of those businesses. it is a complicated task to get this through. that is why the tax code has not been rewritten in the u.s. since 1986. clearly, president trump his administration and congressional republicans need a legislative win. that may well be one of the things at the top of the
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butda for the white house, again, things get overshadowed by things which are not that political, trump's fight the nfl. jodi: that's right. that came up over the weekend. who could have predicted that? president trump made comments about the nfl and about players taking many. -- taking the knee. in social media, and also the players and their owners supported them. we saw a very interesting set of sunday games before the games in the u.s. that has overshadowed any talk about tax reform or much else, today. that has a way of making things go off course. the looks like president trump did this to set aside his base, his base seems happy with this diversion. it does detract from moving things ahead on the legislative calendar. you, jodi.ank
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jodie snyder in singapore. and that whole nfl scandal. coming up, are we in a sweet spot for asian credit? think so. hear their conviction trades as we hunt for real yield. that is next. ♪
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♪ you are watching bloomberg markets. about to face a federal reserve speakers that could make or break traders to embrace the december rate hike that is a given out. 70% chance of it. let's get the insight. give us your take on this. the outcome from the most
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recent federal reserve meeting was one of no prizes. the information around balance sheets, tapering if you well, or that moderation was well telegraphed by the market. when you looked at the prepared remarks, the q&a statement and also looking at the underlying things, the fact that the market inpricing at a 70% hike december is probably about right. it is not 100% done deal. rishaad: certainly not. >> i think the main thing we have to lurk out for -- look out for is inflation. thether parts of inflation -- in the u.s. economy. will we get a hint of it and the data and then it goes away. >> our forecast will see inflation increasing at a modest paste. core asposed -- both well as cbt type indicators. we will not see it until march, april, or the second quarter of next european we should not be too concern about aggressive
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inflation, no are about an aggressive rate hike at this stage. rishaad: well, what happens if we get two interest rate hikes next year? that has not been factored into the market. has that been factored into the bond market? >> in terms of the official pricing, not a lot is priced into the bond market. it is -- there are not large moves we are talking about. 2 hikes are not a significant -- are not a significant move. ok .ond markets were in a we should see a little bit of upward bias. , isaad: u.s. bond market that attractive in any way in your opinion compared to a bond market in the eurozone? is probably.s., it more about curve positioning and how do take on credit risk. for example, if you are looking
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at the u.s. interest rate curve, the long end has really nice low or negatively correlated attributes to riskier assets. if you look at the most recent moves, we have seen the short and act to yield higher. the long and has been stable. you can position yourself to curve flatness if you're looking at the u.s. rates curve. rishaad: it is never a good thing though, because it is not bearing on facilities at all. >> there are still a good amount of slopes on the treasury curves. if you look at the short-term measures, we have a long way to go. you would be watching out for an inverted curve. we are long way from that. rishaad: a lot of what happens here is to- the idea talk about asia and asia credit and where we are going with that. what are the highlights and what are the low lights. we just finished first half results in asian credit. it has been an excellent first half. so it should bp or do we have
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had a good run in terms of fiscal and monetary polity -- policy. beenorporate's of reporting good numbers, industrials have seen a real output prices. and commodity prices have a lot to do with that as well. the property, despite the recent equity moves, have put in good numbers. fundamentals are good. valuations are hiked. it is about selection. if you look at asian credit returns, it has been dominated by a handful. two ideas and craddick names. -- audio syncretic names. that haslassic one impacted a lot of credit investors, a name we have not been involved in is noble group this is been a -- this is a credit that bonds have moved significantly. that idiosyncratic issuer and
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credit selection could be -- could contribute or percent or 2% year to date in total returns. when we look at where we are with spreads or fundamentals and yields, six and 12 months of avoiding those sort of idiosyncratic events is what is going to be important or that is what we're focused on a. rishaad: talking about sovereigns, what about -- if you look at the cost of it, it was called the box fee because it was locked in this range. it seems like geopolitical tensions -- has it made have they where he, done away -- the same again when it comes to bounds? >> with the offshore u.s. dollar, we have not actually seen significant spread moves. the market has seen these sorts of geopolitical events come through in the past. we're not over this current event. if we saw korean, especially the
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high-quality sovereign ends and sovereign papers, if we saw those spreads widen, quite meaningfully, that would be a buying opportunity. the other trade to think about domestically in bonds land within korea is looking at local korean rates. the india fees, these are low yielding in the grand theme of government bond yields. stable bes for a very ok. they probably are going to be on hold for 12 months. that puts some of their long government bonds in local currency. they probably will be on for quite a while to come. rishaad: something which you would describe as being it is a betow, which goes against the grain. one aspect we have to think about is clearly china. we have to be thinking about a lot of those risks that are
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happening within china. we have had a strong fiscal push over the last 12, 18, 24 months. that still has quite a bit of way to run,. leave because a lot of that spending, both government and regional government has been focused on infrastructure. not all of it, but a lot of it. that does come along with property investment, quite a significant of property investment, has a tale of 6, 12, 18 months as construction. --se purchase contribute to projects contribute to economic growth. that is likely to keep credit spreads in the sentiment around china bubbling along for longer. i think some people are expecting a slowdown sooner. it might be we may not see that until 2018. rishaad: this is one of the reasons i love this job, i have had to bring people with completely different views -- two people come on with completely different gives.
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there is one thing you can a great ron, deleveraging. that has an impact. >> there are a couple ways to think about this. we have seen measures around debt to gdp stabilize. we are a long way from seeing meaningful deleveraging. rishaad: again, you get to this stage where people are saying there is deleveraging, and during its final stages, and you say -- have other people saying it has not even begun. >> i would be along the lines that we are at the beginning of deleveraging china. let's put it into context. as a credit investor, we left deleveraging. who are deleveraging means all other things being equal, higher ratings, lower leverage, better interest rate coverage, and higher credit spreads. conceptually, with an asian credit markets, deleveraging equals tighter spreads. or justified current tighter spreads. it can have an impact on growth. that is why you have to pick
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your sectors p are you want to be defensive around utilities less cyclical. as well as quality financials. we have been covering asian credit and running page and highly -- running asian high-level yields. we have a pretty good gauge. we have seen lots of credits come and go. i am extremely confident in our ability to pick the right credits and the right sectors. rishaad: think you are much for joining us. coming up, u.s. wilbur ross speaking to us about the timeline for a new deal on nafta. that interview coming up in just a moment. ♪
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♪ rishaad: we are back. we are talking about u.s. rossess -- u.s. wilbur setting a timeline. around the end of the year. the talks have been seen as lacking and ross told bloomberg that low tariffs in the united states is because of that, a disadvantage. they have the reason so many free trade agreements is that they are basic -- that their basic tariff structure is high.
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that is one of the structural disadvantages we have in going to a new free trade agreement, say with europe or with japan. we have given away so much on a unilateral basis. there is not much to give them. take europe. europe charges 10% tariff on autos. we charged 2.5%. how am i going -- how are we going to get them to drop a 10% tariff just to get relief from 2.5%? you would have to trade-off other industry. disarmament in the trade area is an impediment to making trade freer globally. we do not have that much ability to trade down tariffs. >> three very specific questions on after. when do you expect we will see a new deal? >> that needs to be somewhere close to year end.
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for several reasons. the mexican presidential election is july, next year. canadian provincial elections are around the same time. midterm elections here are in november. our trade promotion authority expires in july. given the nature of congress nowadays, we do not know whether that is even going to be renewed. as you move into two have -- into 2018, it will get more difficult to get a deal. timing is no magic silver bullet to december 31. but more or less around the end of the year. >> if you get come out of that new deal, realistically what you can expect, how many jobs will it add to the united states? >> tens of thousands, maybe 100,000. >> what will be the increased cost to automakers? the price has to go up. >> autos are not the only one. >> it is an important one. >> it is.
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there are other things that can help reduce the deficit. phil ands to import jay. they already import some from us. importing lng would be a good help. xml imports a lot of food products from us. they also import some from elsewhere. importing a higher percentage from us would also help the trade deficit. >> wouldn't the wall hurt that? >> the wall is a separate topic. it relates more to board of security. i think it is clear that board of security is becoming important. you know, a very interesting thing, with all the enhanced search procedures on the airlines, tourism to the u.s. is up. are naysayers that say when we put in these new screenings it would kill tourism. tourism is up 4%. that is a very healthy growth. u.s. commerce secretary
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wilbur ross speaking to david westin. up, we will get updates on big stories of the day. elections and possibility of a snap election. >> yes, whether or not he will capitalize on his popularity right now. that is something to watch. we will ask that of kendo. head of asia, multi-asset. long title. just call yourself -- >> it is a great head. he has great thoughts on a lot of things. stay tuned. that is bloomberg markets in the next hour. ♪
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♪ >> that almost 11:00 in hong kong. >> we are in the middle of the first trading day of the week. welcome to "bloomberg markets: asia." . ♪ >> hong kong leads the asia-pacific down at the start of a new week. chinese developers are taking a hammering. david: the euro coming under pressure after this inconclusive results. chancellor -- angela merkel faces talks. the far right is back in parliament. angie: uncertainty in new england -- new zealand.
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the kiwi fell with an anti-immigrant party holding the key to power. to japantention turns where it shinzo is expected to call a snap election. two thirds of voters are unimpressed. busy week of elections. we are focused on the kiwi, the euro. we are looking at the sterling. we will be focused on one we get that. the other big story, but started -- a lothe markets was of these chinese cities, when you look at our markets, take a look at my bloomberg. very simple. you get a sense of which part of the markets is feeling it the most. 2% down across the property. a lot of that comes down to china. we are down about 4/10 of 1%. putting a lot of pressure on the overall benchmark. angie: in fact, let's head over to the big board here.
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gm go your function. these developers are leaving the laggards across the region. hong kong most notable among them. it is down 9/10 of 1% or below that 20,000 mark, as we hear that a lot of these big chinese cities are reinforcing some tightening measures as part of this nationwide tightening of the very hot property sector. i definitely want to talk about what we have been seeing on the heels of that german and new zealand election. the politics driving the kiwi and the euro modestly weaker to the u.s. dollar. i want to talk about the yen. it is at 112. weaker ahead of more politics, sheen joe abe speech is expected to announce a stimulus package to help trigger growth in the
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economy. it is also expected that he is going to call a snap election officially. anyway, that is really what is helping support nikkei to 25 to see gains of 6/10 of 1%. that weaker yen. yuan is that spot 95. advancing the most in two weeks. as we felt that new -- those north korean tensions baiting. certainly offset by south korean exporters selling dollars ahead of that ten-day national holiday. way, we have got trump's new travel ban, it will include north korea along with iran, syria, venezuela, and syria, starting october 18. take a look at nikkei to 25. feeling that support from the weaker yen. thestrials, energy, through
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rest, we are seeing selloffs in financials and utilities. as david alluded to, the red we are seeing in hong kong really predominantly due to real estate as he noted. and as we will be talking preppy our about these chinese developers under pressure today because of some policy tightening. usually the case for a 2% done. thank you for that update. let's get you caught up on your first word news with paul allen. republicans on capitol hill are said to be tightening .ight corporate tax rate of 20% higher than president trump's preferred rate. he calls for 50%, down from the current 35%. that announcement is it acted on wednesday. the plan is set to top -- cut the top individual tax rate from 39.6% to 35%, despite earlier of fortration pledges the highest earners per
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president trump has ordered new travel restrictions on eight countries replacing his soon to expire ban on six majority muslim nations. the new order targets travelers from iran, libya, syria, yemen, and somalia, and also affects china, north korea, and venezuela. the president says the u.s. will come no one that cannot properly, describing the new ban as the tougher, the better. u.s. air one bs bombers flew close to north korea. hours before pyongyang's foreign minister told the yuan the president trump's threat mean he is the one on a suicide mission. aggression is the reason his country needs nuclear weapons. chancellor engler merkel cdu came out on top of the german election. now faces tough coalition talks after her+++
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a deal. merkel is expected to talk to the pro business free democrats -- the anti-immigrant afd 113% of the vote, putting the far right back in parliament for the first time since world war ii. >> major new challenge has been in front of us. namely the fact that the afd has entered the federal parliament. we shall certainly analyze this closely and in depth because we want to gain back those voters of the afd by solving their problems, by giving them solutions and certainly by good politics. paul: global news, 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. i'm paul allen. this is bloomberg. the euro has dropped on a german result which is facing tough talks.
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mark joining us from singapore. mark, how big has the euro rob in? >> it has not been impressive so far. there has been a small bit of weakness across the board. it appears to be overtaken by other stories, both the yen and the kiwi be more dominant. i think we are seeing euro trade heavily. that will continue to be the case into the european day. i do not think this german story is the dominant story. even in european politics, we soon will be overtaken by the on octobereferendum 1 for independence. which i think is a much bigger risk to the euro area. investors have not been focusing on that. that is next week, if i'm not mistaken. october 1. help us understand why that is important. mark: i think what is happening there is there has been a heavy-handed response by the finish -- spanish government.
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inch is raised independence the region. catalonia is not the only region in spain that has the inclinations. it sets a precedent if i get any kind of victory here. there is a chance they hold the symbolic vote. it has not been officially libel. they tried declaring independence to other way, there is likely to be civil unrest. that will raise more tensions that europe has structure imbalances. there are still divisions happening within the eurozone. it will, on the back of this german election, it will make them more nervous about the italian election next year. inrall, political tensions europe are rising. germany is the first step. spain will be the next step. you are flagging for what a lot of people have been very sanguine about. a lot of money managers, including franklin templeton, thought with the german french and dutch elections behind us and complete, the political risk might have been abated somewhat. what you are flagging is
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especially for those eurosceptics, and the intensifying talk surrounding that, that my not be the case. so fart was the theme this year. that the euro crisis trading was abating. and we were seeing lowering of that risk premium in europe. it acceleratedat after macron one the french election. i think this german election and the spanish referendum vote next week will be the start of this process of pricing or political risk premium back into the euro. this will last for a few weeks, at least. whether it lasts longer depends on what happens in catalan and how long the coalition negotiations take in germany. i think it is a whole theme that was priced over several months and now it is being price back in a little bit. david: mark, appreciate your comments. mark cudmore joining us live out youycamore -- singapore or
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can get more on mark's work and all of that. very quick takes there appeared very interesting. solid work put in. if i'm not mistaken, this is the one you are looking at now. on the story today, the chinese stock story, developers seeing pressure as we get underway. angie: we are going to take a look at that story and coming up, we will be taking a look at long-term market impacts of germany's election result with baring asset management. tata: details of what motors is saving up its cash for. we will have a look at that story next. ♪ -- this is bloomberg. ♪
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♪ david: this is "bloomberg
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markets: asia." thanks are scrapping withdrawal charges at atm's as they try to salvage their reputations after a series of scandals. the charge will go from next month while cba coming up, and westpac say they are acting immediately. the banks are trying to head up calls for wide-ranging inquiries and fight back against a $6 billion levy over the next four years. david: have a look at new zealand. it is retaining its stake in a food producer retain. despite the impairment loss [indiscernible] 26 million u.s. dollars. that contributed to an 11% job -- drop. just over $540 million. ceo spearing says overall, it is a good result. >> we are actually quite pleased with the result and the farmers
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are please. because the pay to the farmers is significantly higher. we were able to stick 42% of dividends which we did last year. we are having a strong capital. angie: reports from the u.k. say uber is randy -- ready to make concessions to win back its license. sunday times spoke to tom elbridge. the sunday telegraph says rival ride taylor left try to take advantage of uber's london low, having held a series of meetings with transport officials in the past year. developers in hong kong after more cities on the chinese mainland posing restrictions to quote the property market. had to thisve positive and in phase of more scrutiny. more on that story and the broader implications with our guests this hour, he is head of
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asia multi-assets. nice to see you. it has been a wild. >> thank you for having me. have beeny would better if markets were up today. but you have to start with the story. 2.5% drop on shanghai property stocks should be the biggest drop since four months. the question i am asking myself, if i do not have exposure to chinese property stocks, does this affect my investment? >> no, i don't think so. , the propertyent developers have done extremely well. if you have a look at the charts, less than a few weeks ago, they had to reason strongly. it is happening to many other stocks which have done well. been please note that has -- there has been outflow from a southbound. southboundt of the basket of stocks we share,
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mainly chinese investors who love to buy. wraps this is a profit taking exercise. angie: is it a short-term correction? >> i think so. if in the price were to fall further, i am sure there would be a few long-term investors who would like to buy into this. this is a long-term growth theme. the property ownership in china is a long-term growth theme. are stilluseholds getting richer, and therefore they will want to upgrade. they will want to have bigger homes. just to turn our attention to germany, the other big story. we are trying to understand the market implications. we are talking about euro weakness right now. broadly, angela merkel did not do as well we thought she would do. that change the fundamental positive story in european equities still? >> i don't think so.
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no. i think what it means is populism is still alive in some shape or form in europe. we may talk about the spanish institution later. i think it is part of that. as a result of this, i think governments will be more focused on trying to appease the types of households who did not measuresrom the easing which have been implemented over the last four years. i think that is a good thing. that means more fiscal spending in europe. if that were to happen, in an economy which is already doing well, then that, if anything, should prolong the rally in equities. but the europe -- euro has done well. that is way the lack thereof of middle-class in quantitative easing and we are felt the anger in american politics as well,
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but there is an immigration frustration to this as well. across europe and not just in germany. >> that is correct. even over the last six months, i think over -- in germany, they have tightened the rules in terms of can stay and who can't stay. to thedo not adapt german legal and social system, then there is a risk that you might not be able to stay. they are proceeding with that. angie: i wonder, in terms of risk for investors, is this a tangible risk? >> from our viewpoint, no. i don't think so. i think everywhere in the world, the immigration rules have tightened somewhat. they have. everywhere. in australia, in the u.s., in the u.k., in europe, everywhere.
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i think that is a global phenomenon. that does not mean that immigration has stopped. it is being scrutinized a bit more. i do not think it has a major investment implication. david: even in the bond markets, i was looking at it now, when you look at the spread between the 10 year, the french 10-year and the spanish 10-year, it tells me that it is a bit more acute to spain. speaking to your point, should i be worried about this upcoming referendum in catalan? >> i think one has to pay attention to that. the tensions have been brewing for decades, for centuries. i think it is worthwhile following it. at the end of the day, would they want to really gain their independence at the cost of all financial ties to the spanish government? i am not so sure whether they would be prepared to do that. angie: in terms of investment for asian clients looking at to europe, what is -- what are the calls you are making now? we equally overweight in
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asia. we love the asian equity markets rally. we think there is more to come. asian economies are doing well. european economy has been upwards, relative to the u.s. and japan. actually, the europe economy -- european economies are doing well. earnings have been revised upwards. and valuations like in the case of asia, are not too expensive. from our viewpoint, the third two regions that are overweight in our portfolio. following the elections in germany, that is not going to change our view. david: and we might get one in japan. >> yes, indeed. we will start in japan and if you minutes. we want to get the take -- your take. certainly we have to talk about it. we will be -- he will be rejoining us in a few minutes. stay with us. this is bloomberg. ♪
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♪ angie: this is "bloomberg markets: asia." there was a weekend poll we are talking with japan, saying two thirds of japanese voters disapprove of the prime minister's plan to call a snap election. the cabinet announced an extraordinary session. --re are they is expected other critics are trying to say he is trying to cling onto power despite a string of scandals and resignation. angie: let's bring in our guest once again. head of asian multifaceted management. we take a look at paul numbers by kyoto news, also we take a look at the latest poll by if there was a snap election, shinzo abe would take it away at no problem. does that reinforce your optimism about japan? >> our optimism about japan is
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placed on the fundamentals, rather than the political side of it. i think if we look at political events in japan over the last 5, 10 years. it is difficult to make money on that. he only thing that can help us is economic growth which is actually doing ok and japan. angie: would you credit that to shinzo abe? >> absolutely. the two and three arrows, they are questions on the effectiveness of the implementation of that. [indiscernible] >> you are right. that cynical view is totally correct. because a yen of 110 is better than a end of 85. it does help, definitely. i think what is more important for japan is a continuation of economic growth. which we are seeing. a continuation of growing's. and cheap valuations. the key to the nikkei as we all
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know is the yen. the yen has been weakening because bank of japan has, in budgest meeting, did not on the normalization of the qe program, nor the negative interest rate. as a result, the yen is happy to weaken. that is why the nikkei is doing quite well. weiously, in a short-term, have the political situation in japan. angie: where do you see the yen going by the years and? 115. think it will hit weakening by another 2% to 3%. the key is whether it will weaken beyond 115. if it goes to 120, then you have to own the nikkei. you have to really on the nikkei because we think that if the yen word to touch one day, the nikkei would be up 10% or 50%. david: what stops it from going
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from 115 two 120? this is tied to the spread. mentioned it will do anything until the time we start dying off. in the fed will start normalizing. what is the difference between 115 and 120? >> if u.s. interest rates were to be higher, and jgb's are 0.5, five basis points, if it anchors at that level because of qb, and if u.s. treasuries were declined from current levels of 2.2 22.5, then i think there is going to be pressure on the yen. because we think that domestic investors in japan will be buying treasuries. angie: a lot of money managers say, stay away from the etf's. you got a pic -- got to pick
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specific specters. how would you place the nikkei? would you do a broad laced -- place?aste -- rod placed >> we have always believed when you look at the nikkei or japanese equity market, you need to be focused from the bottom-up viewpoint. it is very much the case. if the yen were to weaken and you need to own some exporting, especially the quality ones, and it is -- if the u.s. treasury 2.5, for a weak yen, you have to on the financials as well. if u.s. treasury were to get to that, then the global financials will do quite well. the steeper yield curve to extract value from the financials. in that sense, you would own the japanese financials. angie: good ideas. david: we have to leave it
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there. thank you for coming on. 414 is your morning close. we will get you the real been in a few minutes. this is bloomberg. ♪
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i'm paul allen. china's major steelmaking have is ordered half of its processing gloves to shut as part of an anti-pollution drive ahead of winter and next month's communist party congress. the eastern city of tangshan will limit capacity by 50% from today as the kurds will remain in effects until -- in effect until further notice. iran says production kurds are starting to stabilize the oil market, attention must be paid to rising outlet in the bni jerod. they call for changes in the
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deal that exempted the two countries because of the recent turmoil. he did not elaborate. opec and some independent suppliers have agreed to curve and out to drain the global oil glut. defaults on bonds by chinese local government financing vehicles are becoming more likely. the agency says more than $600 billion of such bonds remain outstanding that were issued after beijing withdrew backing for them in 2014. they have mix commercial with policy activities, such as profit -- property with urban development. global news, 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. -- >> we are seeing property stocks and hong kong leading it lower. it is off by one point 2%. the real estate hector as a whole down by 1.7% as we heard this news that chinese cities
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are putting curves to call these overheated property market. taiwan is a laggard. down 9/10 of 1%. you're seeing those apple suppliers coming under increasing pressure and south korea's market down .5%. we have a comeback. hold onto on to those gains. up 4/10 of 1%. this is the story as we see the yen it weaken ahead. the yen down by 2/10 of 1%. are seeing the dollar hold onto its positive gain. a lot of these currencies coming underwater. in terms of stocks, have a look at htc come up 7%. it was the top performer on the regional index on friday. it remains that on the back of these $1.1 billion deal from google that has been a few more broker upgrades. over the past session and over the weekend. a lot of advise on that stock. as you can see, it faces
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property developers coming under pressure. downry -- an hd developer 20%. that is a checkup markets across asia. this monday on bloomberg television. thank you for the market update. let's get more on what juliet was talking about. you have a look -- look at my the biggest job since june. maybe three and a half months. the other thing i want to point out is when you look within this index, just to break things down, 22 down, 20 are up. story.n industry we are down 2.5%. angie: short-term or long-term? interesting to hear from can go if you are long-term, that is an
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opportunity to buy and. let's get more on this with our asia investing real estate editor. tell us about the impact on these curves. a lot of people feel that this is a big hit for eastern developers. >> a part of what is happening today, there is a sense that run-up authorities is a to the party congress in october are even more determined to stamp out any kind of speculative bubble in china's markets. just as recently as last week, there was a sense that chinese authorities may have more room and flexibility to ease the pedal of china's property market, given that there was some indications that growth slowed. clearly, today's move, or the move over the weekend, shows that there is still more to come in terms of tightening. david: where are we on this
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tightening cycle? i guess since we have new ones, we're not quite done. sree: we are not quite done. were is some sense that as finish off with the party congress and most of the risk that chinese authorities are worried about, will be addressed at that point. it might be the tail end of that tightening cycle -- tightening cycle. that is certainly what many of the developers are hoping, that there is not much left to do at this point after so much tightening. angie: what is the outlook for the sector? sree: for now, it there is so much demand for homes in china, whether it is domestic homes or overseas property. you have a wealthy middle-class, and a rising rank of the middle class in the newer wealthy individuals in china. so this demand is going to go unabated for many years. david: actually, i think we
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touched on it a little bit. but my toughness to the pointer to what are these new property tightening curves and where are we seeing them? are we talking pier 1, restrictions on buying? mostly to step -- stamp out speculative buying. it is mainly curbs on flipping of property. these are not the biggest cities. shanghai and beijing are some of the biggest cities have been ahead of this because they saw some of the most overheated price increases. so they were the most harsh in imposing restrictions. these are some of the smaller cities. angie: thank is a much for that. that is one big story we are watching. rossther one is wilbur talking about china. it is interesting because the has been coming out of the trump administration, including trade representative robert lighthizer last week, pulling out china for being
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very self insular and -- david: selfish. the sameguess we mean thing when it comes to global world trade. i want to bring up this chart here. because it is how important this trade relationship is. as the u.s. overtakes the eu in china when it comes to china trade. and essentially, this is what is at stake here. they are almost equal in footing with of the u.s. and the blue chart, the blue bar chart ofy're just peeking out dominance, is what we're talking about. will the ross heading to china. maybe paving the way -- wilbur ross heading to china. maybe paving the way. david: they say it comes off not very acrimoniously. it is a very important trade
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relationship. when i was studying there, it was the eu that was the biggest trade partner. now the u.s. come a little bit higher. we are joined by our china correspondent. tell us what is on the agenda. wilbur ross will be meeting with the vice premier here. he will also likely be meeting with a mere leaker chain. they will be having something of a press call later this afternoon. as you alluded to, there are a number of topics that will be on the agenda for ross in these meetings. one is this greater market access he wants to see for u.s. firms. he has long lambasted china for what he sees as protectionist starts. of ross's.ugbear he wants to talk about north
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korea and we have started to see china imposing some of these later sanctions. whether that was oil or the banning of textiles imports from north korea. as well, laying the groundwork for this visit by trump which is expected in november. a red flag for trump is the trade imbalance. we have a chart, global news, 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. chart, g #btv it compares the u.s. trade balance from 1999. and china. the differences start. the deficit is continuing to increase. it was around 143 .5 billion u.s. dollars. china's u.s. is try deficit with china. in august, it ticked up by $48 billion. that is an area he will want to address. that chart illustrates where they need to go to. a lot on the agenda for ross on this short visit to beijing.
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trump also threatened to impose tariffs on chinese exports. is that likely to come up in these meetings? it was interesting. obviously we had a lot from trump on the campaign trail. then when he took over after the inauguration talking about potential tariffs on china. one of those was steel which does not impact china hugely. the amount of exports from china has fallen off. still, we heard from ross on friday. he spoke to our colleague at bloomberg in new york and said this potential steel traps, at least for the time being, until the u.s. can get its tax bill passed. >> steel, he has announced publicly that he wants that to 32 report delayed until we get through the tax thing. because we do not want to interfere with the legislative agenda. the text thing is the single most important thing on our plate right now. another area of potential
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tariffs is the solar industry. we heard that a federal trade agency said that solar imports from china are damaging some of the u.s. companies. you are seeing a selloff in hong as well as a result. ross led the 100 day trade deal with the u.s. and china. that included things like greater access to u.s. beef and lng. he is probably going to want to build on that. the last few weeks, we have had momentum from chinese side. some potential changes and potential opening up around the financial markets with debts whether that is the jb structure or foreign ownership of banks. also are run the electric vehicle spaces. no doubt, ross will want to push on some of these areas and once to tee up deliverables they can cash in on when president trump comes to beijing in november as expected.
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david: tom, thank you for that update. tom mackenzie joining us live out of beijing. we are talking about india next because there is no need to panic. angie: no need to panic. that is what the minister said. don't worry about investments, even as the third-largest economy expanded at the slowest pace in three years. this is bloomberg. ♪
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♪ -- this is "bloomberg markets: asia." a step back.take this has been one of the markets that has really been the recipient of a massive amount of inflows. a lot of love for both domestic and international. where are we as we enter the fourth quarter? this is a fairly simple one which compares how far divorced
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valuations are in from their five-year average. but that together with the bottom -- broader story. moving higher than their five-year average. people that we speak with here, everyone seems to go for india. reinforces india's finance minister not to panic. and essentially differ investments, despite being bruised by slowing economy -- economies. he calls for companies to boost their spending despite falling returns. fdi?e we getting enough we certainly are. is there a lot of government spending? it is. are there policy changes taking place? certainly there are.
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is there a scope for liberalizing further and areas to send the right signals? it is reasonably possible. there comes the final issue of the point i made, how do you maintain the balancing act inween continuing to spend an and economy, continuing to support your banks and strengthen them, and at the same time maintain some of the best [indiscernible] i think that last part is the current challenge that we are facing. this seems to be the logical course in order to get back. think there is any need for panic.
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there is certainly a need for analysis, and for responsive action to this. we are fully prepared for it. pointt brings me to the -- the government has to pay that role of continuing to spend to keep the economy up so that it does not lead to a deepening slowdown. -- anyou then say that target numbers are stuff, but we need to find a way to keep the findmy moving and possibly spending? answer your way i question, it leads to further speculation and consequences. i think my previous answer, if you read between the lines, you will probably be able to find some response. >> has that panned out the way you thought it would go? >> which one?
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>> the banking cleanup. see, let's see [indiscernible] in the 1980's and 1990's, we try taking it out of a judicial system and into the be rt. the be rtl almost -- almost became like clockwork. we then tried [indiscernible] it did not work. therefore, if you remember in 2001, they did come down. we have tried -- when the emp started rising, the banks were enabling tools. it were -- it was likely. marginally.
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one of the issues was, i think whene system we live in, there was suspicion and lack of trust, fear of consequences, so its move toe began amend the [indiscernible] then the ibc. yous a process by which follow a global pattern and then come to resolutions. i think, eventually, a few show.s will are we able to maintain the timetable which is prescribed to law? to avoid judicial
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interventions? adjust to ato mummified decisions take on commercial considerations? are backed with trust rather than with suspicion? and i think the majority of the system will determine the environment we are able to create under this. ifwe are able to do it, even -- i think it will move further. that is how countries and the world resolve these situations. they have not allowed the crisis of this kind, in a particular account, to persist indefinitely because that does not help. angie: that was the indian prime minister. he was speaking at the bloomberg india economic forum. let's take a look at india markets getting underway. there you have it.
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-- we're seeing a sellout -- selloff following along with the region. nifty and and sex down. it is interesting, we have goldman sachs seeing nifty ride nextse by september of year. they remain overweight on indian equities. a little bit of a buying opportunity if you buy into a -- what goldman sachs is seeing. a big mover today in the equity markets as well. david: thank you, amazon. we are looking at shares. retailers -- have a look at the stocks. up most in eight years. that's thanks to amazon fine if -- buying a 5% stake. 20 million u.s. dollars. we are trading at 485. we were a little bit above 500.
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seeing pressure at the moment. following that story there. we will continue to follow this. the broader story it is amazon versus flip card. who will win out? on thiss ready to spend new background when it comes to e-commerce. one of the bigger markets there you speak to people there, things like payments, online guests come ind optimistic in india. when you look at india, it is similar to what we saw in the mid-2000s. when you look at china. ebay coming in there. alibaba taking ebay out. alibaba winning that war. the optimism surrounding the online -- i was a e-commerce -- but broadly speaking, it has filtered through into a vast amount of money that is being pushed into this market in terms of m&a from the big names like
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alibaba, for example. like amazon, in this case. the story does not end in e-commerce. everything from online payments to ridesharing's, or what have you. the story today, shoppers up the most in eight years. angie: the borders of shoppers sell 5% stake to amazon. coming up, more buying here perhaps. cash for pt you need retirement motors is doing that. saving up for the road ahead. all the details next. this is bloomberg. ♪
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♪ torrent motors is to expand itsd cash pile by 87% or we have a now -- autoning us reporter joining us. what is the strategy here? thanks for having me.
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the strategy is very simple. we spoke to management. they are creating this for a few things. they are holding this cash to meet any unexpected things. they are in a burst overly new products. they would need more cash. they want to boost manufacturing capability to competition. there is a lot of competition getting worse day by day. the skeptic in me -- the business has not done well. they are saving 6 billion in cash for the future. you look back in the last three quarters or so, sales have been falling. they are not negative.
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but they have not exactly grown. what is the problem there? u.s. begin with management. do they think they can turn things around? >> interesting question. tata motors is not making money. upon thedependent business. that is really money spending. [indiscernible] they are claiming to cut down costs over there. they are hoping to boost overseas. they have a rollout called some. they are trying to revive their fortunes of the parent company, while the holding company is convinced the mainstay would be [indiscernible] they will boost their
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manufacturing capacity. and also rollout new products. thank you for that wrap there. he was joining us live out of mumbai. that is about it for us. yousef is standing by. what are you watching today? >> good morning, david. we will be picking up where you left off. some of the big global themes in the german election outcome which raises the prospect of default -- difficult coalition bills. management, head of european investment office, will be coming on the program to break this -- break that down for us. where does the german -- european political road go from here? the cio is coming in for a conversation around gulf credit which has been stabilizing. we are looking forward to
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that. that is it for us on this edition of "bloomberg markets: asia." angie will stick around. yousef is taking my place. that is it for us. this is bloomberg. ♪
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