tv Bloomberg Markets Asia Bloomberg October 10, 2017 9:00pm-10:00pm EDT
♪ 9:00 a.m. in hong kong and singapore. i am rishaad salamat. sophie: i am sophie kamaruddin. this is "bloomberg markets: asia." ♪ rishaad: kobe opening with a second sharp loss, admitting faking quality data on products. wasie: corporate governance supposed to be a foundation of abenomics. become antest scandal
election issue. plus -- >> i am outside the hong kong legislative council. we will get the first policy address from carrie lam, expected to deliver comments on affordable housing issues, tax breaks for small businesses, reaching out to disenfranchise youth. rishaad: going over to steve shortly. going to bring up a chart showing where the problems are when it comes to the property market, arguably the most expensive in the world. withages have not kept up in housing market, which is turquoise, the white line average wages in hong kong. be talking about
a taxation system for business, the housing market, expected to announce a public-private partnership to expand access to first-time buyers, public transport, a monthly travel subsidy of as much as 300 hong kong dollars a month. that speech in a couple of hours. sophie: it is costly to live here, so looking forward to what carrie lam has to say, addressing the affordability issue of housing. singapore, taiwan, and malaysia have just, on the line. markets looking good in asia. the msci asia-pacific index holding on to 10 year highs. it is getting close to record, multiyear highs.
suppliers, tech players coming online and getting a good did -- bid. good week for the asx 200, underperforming regional peers. south korea holding onto yesterday's gains. a switch out from the nikkei and dragging on the material space. market is dollar weakness, asian won currencies looking good, the south korean inflows into south korean assets as tensions ease from north korea and after investors dumped out of south korea and investments, but movement coming back into equities and the won. gold rising to a two-week high on tensions in catalonia. i am rishaad salamat let's have a look at key
players. steel coming back online, plunging after that 21% drop yesterday after it revealed more data falsification that involved products dider this after we heard that kobe falsified other data as well. sanrion falling after cutting its forecast and dividend. it has cut that. after itooking good was a top pick for life insurers. picture, tech players in taiwan lifting the regional index, now up by .3%. looking good with wti above $50 a barrel. what we are seeing in kobe
holding down the material space across the region. rishaad: thank you for that. right, the latest first word news headlines, including a story of tensions -- thawing of tensions. >> catalonia has stepped back from an immediate declaration of independence, calling for talks with madrid. supporters of change and opponents shaken by last week's referendum, including the decision of companies to leave. lawmakers, he would pause for talks. sayrts from seoul, korea as pentagon sent bombers president trump discussed north korea with military advisers, coming amid claims that north korean hackers stalled computer
data, part of the loss included plans to remove kim jong-un and a project code-named decapitation. president trump has threatened to dump nafta as justin trudeau arrives for talks. trump said he things the agreement will have to be terminated despite the u.s. chamber of commerce sounding the alarm. candidate is the leading buyer of american exports and tensions are rising. the head of south korea's fair trade commission encouraging foreign investors to speak more about improving corporate governance despite scandals involving conglomerates, the commission chairman says investors have not raised to levels in developed markets. it is a shame for an investors have been so passive in korea and have not raised their act to develop markets.
one of the biggest reasons is the korean government's unpredictability and inconsistency and how it enforces the law. we hope investors will adopt an active and long-term strategy. >> global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. sophie: checking shares of kobe 15.7% as the data scandal widens, admitting , butfying information insists that safety has not been compromised. rishaad: reform is supposed to be a major part of abenomics and could now become a major election issue with the snap hold taking place. ?hat is the latest
what has emerged today? >> the scandal has spread as mentioned. iron ore powder data was falsified. it is used in machine tools and auto-parts, everything from exhausts and power steering to cam shafts. we are still trying to pin down which customer that was. the company has confirmed and we have seen the impact on the share price. sophie: some speculation that the rot may run deeper. had this to say. >> we think they are overstating their profit margins. i suspect the rot runs deeper. it is not just product weird it
is creative accounting, probably understating liabilities, and when they face lawsuits and a cash crunch, they will be in deep trouble. sophie: that is what could be in the offing for kobe steel. what does it say about corporate governance in japan? >> in japan, and expression goes put a lid on anything that is smelly, cover up problems. over the years, we have seen a blown off smelly problems, accounting scandals at olympus and toshiba, product nowty problems with takata, onota falsifying data material used to reinforce buildings against earthquakes, and now kobe steel. this latest one of fax lanes,
trains, and heavy on the minds sayonsumers you can either there is an endemic problem with lots of these issues, or you could say at least they are coming to the surface now and maybe we are on the right path with better quality control. kobe, how can they deal with this crisis? todayst of all, a report says they are looking to selloff its real estate business, and possibly other moves. one problem for kobe steel is the industry has seen consolidation and mergers which put pressure on kobe steel to huge rivals, so it branched out into other businesses, which might have seemed like a good idea the time were notify, but they able to focus on quality control and oversight because they were spread so thin.
to see as selloff of assets to deal with liabilities and help it sharpen its focus on its core business. rishaad: thank you. the managing editor there in seoul, korea. a corporate governance look as well and the next hour of bloomberg markets. at 10:10 hongs us kong time. next, deeper into the market impact of the kobe scandal. this is bloomberg. ♪
on the companies listing mainland at record pace, three 52 have confirmed ipos in shanghai and shenzhen. ofe, surpassing the record 349 in 2010. 76 average in size and million dollars, the lowest since 2005, prompting concern from some analysts who say smaller deal sizes .2 weakness. biggest china is the growth opportunity and could provide decades of expansion with the u.s. slowing down, starbucks betting on china's growing middle-class boosting demand for coffee. kevin johnson told us the target is 5000 outlets by 2021. >> we are now 2800 stores in china. we have committed to build 500 year for the next five years. china is the biggest growth opportunity before us. to grow.will continue
the u.s. and china are the two growth engines for starbucks. sophie: the conduct of australia's big four banks review underway. toldeo of westpac lawmakers that money laundering is a scourge on society and a major challenge for the banking industry. commonwealth bank facing legal action over allegations it breached money laundering and terror financing laws. many asian markets at record highs. street asfrom wall well, the dow up to levels we have not seen before. and some regards. investors rushing into equities. economice had noble laureate saying he does not quite make sense of this. our next guest will tell us more about what to expect, holding
30% in cash, pretty telling. nader naeimi is head of dynamic markets at amp. cash, this is the right way to go? >> yeah. if you want to have a diversified portfolio, the defensive side like fixed income, very expensive. volatility at historical lows, and play within sectors at lows, sparks not take much of a and volatility to put a portfolio out of whack. toing 30% cash is expensive carry, but gives you a great option to buy the market when
the correction comes. corrections will calm. the more people give up on the idea of correction, the more probability of correction. sophie: equity markets are rising in japan, i tussle between buyers and sellers. sliding,e automakers the latest with the kobe steel scandal. is this shaking your confidence in japan? when you look at the japanese share market, kobe steel and their competitors, cobain is under pressure -- kobe steel is under pressure. you look at the case. it seems to be quite isolated a company. they wanted to compete with big players in the industry and got involved in errors they should not have. much for the mean broader japanese economy or stock market, and for that
reason you will see the japanese share market has shrugged that off. don't want to be a kobe steel shareholder right now, but the materials and industrials in japan makes sense. rishaad: we have a situation where we had problems with the banks that has been sorted out. is that one of the reasons why you are heavily exposed on that front? >> absolutely. that is very important. withd central banks negative interest rates, qe, monetary policy divergence, downward pressure on bond yields, where as now we are starting to central banks pointing to exits, bond yields stabilizing, and banks in better shape. of view,ofit point banks were under pressure anduse yields were down flat, and now that is changing.
the yield curve is steepening and the japanese share market. that bodes well for japanese banks and the japanese economy. rishaad: is that the principal reason you are into japanese banks because of this yield curve manipulation by the boj, or there must be more to it than just that? >> there is more to it. if you look at the japanese economy, we are seeing growth deigning traction underneath those low inflation numbers. wage growth is picking up. employment statistics are strong, corporate profitability strong. added to that, central banks are still maintaining easy monetary policy and good growth, and the environment is going from quantitative easing to quantitative tightening favors banks, and japanese banks in particular because they are the ones that were badly impacted
during the quantitative easing. yield curvehan manipulation. it is a growth story around japanese and a new environment that favor financials. feeling goodre about chinese banks, so why is that the case? of the same.nks not long ago everyone was worried about hard landing, collapse, debt leverage. chinese authorities have proven they have the means and the will to stop any big downfall from any high corporate debt issues in some areas. if you look at the nonperforming loans and the banking sector in china, now they are declining. we are starting to see foreigners looking for nonperforming assets to buy.
you look at the very way should in on those banks, still very low. hishave a way should in very positive and the fundamental backdrop is moving from bad to potentially good, so there is value in momentum to benefit from chinese banks. massive rund a lately, so the story for chinese banks, asian banks, by on on weakness.uy party congress coming up, expecting anything for that very quickly? >> not really. current leadership will emerge and economictical points because they have done a good job in maintaining a steady ship going into the party. rishaad: always a pleasure to see you. capital.imi at amp
♪ we check in on the premarket in hong kong. upside, .5%,e futures indicating a higher start for the benchmark in hong kong on the back of another record high for the dow, up now to 22,830 in new york. sophie: the possibility of a wider yuan trading band is back in the spotlight with the pboc giving evidence to speculation the level could be increased. today, the reference rate stronger.
our china market reporter is here to hash this out. what is the speculation on the widening of the band? it can only move 2% above or below the daily fixing, and that has not change for a while. we have had speculation that the band it could be widened to because of commentary coming out of the state media supporting greater flexibility. pboc governor added fuel to that speculation when he said the time is right that china should go back to pressing on with reforms. rishaad: he has been saying that for a while, hasn't he? before, stepping up exchange rate reform, but is this a good time at the moment? >> this is a better time relative to a year ago. strong ands been
capital flows have stabilize because capital herbs have then stepped up, but it looks like if chinaan band is widen, does not have to worry about that this stabilizing depreciation that used to worry policymakers so it would be a good move to signal its commitment to those reforms. sophie: i want to pull up this chart. has not tested either side of the trading band, so what would it mean at this point? onlookers would tell you that widening the trading band does not have much symbolic beyond the signal right now. what they would need to see to prove the commitment is less intervention and a market-based fixing. sophie: thank you so much.
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♪ 9:29 here. we are counting down to the start of the wednesday session. tailwinds coming through from that record for the dow jones industrials. tensions with madrid stepping back. kobe steel sending shockwaves through corporate japan. it is time for that u.s. earnings season to get into gear. we have retail sales in the u.s. and inflation figures this week. sophie: stocks at a decade
highs. retreating slightly given concerns around the kobe and implications for japan inc. 2007 levels,ar appetite on the table. markets have just opened. here is juliette saly with the latest. we are seeing the hang seng index holding on to 10 year highs, jumping higher by .4% on the open. volumes lower than normal. was an interesting session in china yesterday with that strong start out of the blocks, then a selloff on reports that hedge funds were selling out of ranking stocks. we saw chinese markets rally flatthe close, now looking
on the mainland indices on the open. the shanghai composite down one point, csi 300 down, but a volatile session. the broader picture, taiwan leading gains, up by 1%, back online after that holiday yesterday. from all strays market, a solid read on consumer confidence today, and quite a bit of upside in commodities players. gold holding onto two week highs on tensions in catalonia. out from the a dip nikkei and the topix today. from the drag materials players in terms of kobe steel weighing on that index. the stocks in the region down .2%. energy players rallying. by .8%, wti above
$50 a barrel. market, anian interesting chart on the bloomberg showing the foreign hasoff of indonesian shares hit 29 straight days. investors cashing in on $1.3 billion in the equities since the end of august even though we have seen positive sentiment push that index higher, up 12% for the year. that will be one to watch. this stage, it is looking like hong kong holding on to 10 year highs and a flat start from the shanghai composite and csi 300. sophie: thank you so much. right, the state of the world's third biggest economy .enter stage, the second day let's find out more with paul
allen. the campaign underway in japan with candidates in search four hundred 65 seats on the line has shinzo abe seeks to bolster his mandate and revive the economy. he faces the challenge of renewed opposition led by the tokyo governor and criticism that his first five years have failed to kickstart growth. trigger anger of brexit supporters after declining to say she would vote to leave the eu and a potential future referendum. lastaid she voted remain year, but things move on. her deputy later said he things the u.k. is better off inside the block. both said there is no chance of a second vote. thailand's return to democracy set to happen next year after the military government said elections will be held in november 2018. the army seized power three
years ago, pledging to restore stability after unrest. under theill be held military backed constitution that gives soldiers, judges, and bureaucrats the power to stifle elected politicians. peters won't decide which party to support until after his self-imposed thursday deadline. he has met bill english and will hold more talks on wednesday. peters has railed against foreign interests buying dizzy when assets and wants to lower immigration and reform the central bank. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. rishaad: we are looking at the imf, meetings starting off in washington. let's look at what they will be saying about growth.
this is the 20 gdp country forecast comparison. there come in pink, 6.7% growth rate. 6.5% in 2016. that eclipses all the others. the world and white is expected to expand at a rate of 3.4 percent, u.s. at 2.2%, europe getting growth this year, and 2.1% there and 1.5% for japan. sophie: the imf weighed in on the monetary-based arrays. check this out on the terminal. the monetary base stays where it is, maybe the global economy will be fine. we are waiting to learn more
about the fed's targeted balance sheet unwind when it releases the september minutes on wednesday. have concernsso about tightening financial conditions, seen by some as a warning to the fed and ecb to move carefully and slowly. sophie: kathleen hays has a central-bank roundup. what is the latest? >> the imf boosted their growth forecasts, but warned rich nations not to get complacent. there are things that could upset this applecart. one thing basic build is concern over tightening financial conditions. shouldid rich nations keep monetary policy loose and tell there are firm signs of inflation. fed is ready to hike rates in december despite inflation far from target.
guessed said the fed can and should move slowly on rates. here is what he said earlier. and thequilibrium unemployment rate is lower than where we are, the labor force participation can be increased. being more relaxed about when we increase interest rates. btv 189.s the yellow line is unemployment, down 4%. the turquoise line is average hourly earnings. i believe what he is talking about may be the natural rate of unemployment, the rate that can be lower could not cause inflation, is still on the horizon. to consider.hing he endorsed janet yellen or
someone like janet yellen to be the next fed chair. let's look at fed minutes coming to :00 wall street time wednesday in the u.s.. this is where people will see if the entire fomc which seem to be looking for a december hike, how far they are behind what janet yellen has been saying lately. world interest-rate projections, , that is thet-hand december meeting with chances nearly 77%. the imf isecb, maybe not too concerned about them. a bloomberg story talks about speaking to ecb sources who are talking about how much to cut bond purchases, which bonds, how long to drag it out, but are in agreement they will not raise
they are well past the in dove the quantitative easing tapering. the pointords, past where they are still buying bonds. they meet on october 25. that makes it sound like they are ready to come to agreement and give a timetable on what will happen with that qe taper. rishaad: the fund must be happy with what is going on with the boj and their played -- pledged to maintain stimulus. is that likely to be affected by the election? >> another terrific bloomberg story pointing out there could wins,lout if the ldp shinzo abe wins, but the party loses seats. there could be dissatisfactions governor kuroda has achieved so far and could put
into jeopardy the deputy -- ther of that the a.j. boj if governor kuroda is not reappointed, but it is hard to believe that no matter how they change course there would be less stimulus. that is important to keep in mind because we want to see how that election goes, but this could be a big plus or less of a plus for governor kuroda. thehe coming days between imf world bank meetings in washington and the institute for international finance meeting, we will hear from governor kuroda, the head of the pob see, janet yellen, mario draghi, and so many more, so keep your eyes on your bloomberg because we will be covering all this, a big team in washington assembling right now and will have all the news you have to know. rishaad: great stuff. sophie: coming up, hot property in hong kong.
we have the hang seng index edging higher, led by energy stocks and real estate climbing .5%. one stock rising as much as six point 1%, the highest since may 2013. property gaugehe for the hang seng, gaining over 50% in 2017. rishaad: housing will be one of the major points to address when carrie lam makes her first major policy speech in a little over an hour. let's get more from stephen
engle. what initiatives can we expect , least affordable housing market on the planet? it is a critical issue for carrie lam. her firstssessment of 100 days in office and charting policy going forward. affordable housing and land supply are big issues. come smalluts enterprises in hong kong, and also some social issues, health elderly, and reaching out to disenfranchised youth. she has a long list of needs to addressed. she has about one hour. it will include a q and a. she wants to make it more personal, but affordable housing is a big issue. five years ago, cy leung talked
about making markets more affordable and more democracy, but neither of those issues worked out too well. talk moreuest will about these issues with us. we will be talking about the policy address. aside from the housing market, is hong kong at a pivotal point in its history? think it is. part of that is the integration with china. overintegration has gone the last 30 years, but i expected to go further over the next 10-15 years. in thell be addressed policy speech today, and
specifically china's initiative on the one belt, one road initiative and the subset of , the greater bay area initiative trying to bring chinaer nine cities in plus macau and hong kong, integrate them more closely. >> and stimulate and innovative environment here, technology or other things. a few other initiatives did not work out, so what will make is different, linking these errors and themillion people gdp the size of australia? has saidly carrie lam that hong kong is behind the curve globally on technology, including financial technology as well. a huge technology burst on the hardware side in other provinces, and the
software is building and developing as well. tog kong has the potential be a software contributor, but one of the big issues is labor. so many industries in hong kong are suffering from staff shortages, and i am hoping that carrie lam will address those issues. well, rent iss sky high and property prices are skyhigh. what is the solution? like most things is more supply. affordability in hong kong has been an issue for many years. it goes up, goes down, more affordable, less affordable, and the affordability of problem today is less about not being able to pay down the mortgage. people can afford to pay down the mortgage, but they can't afford to put together the $500 million deposit that needs to be assembled to buy a modest apartment in hong kong. have aof that, you
percent to 15% stamp duties as well. implemented to prevent risks are hurting affordability? >> they are. today, anyone needs to be of the 40%, 50%, 60% deposit. it was 10%, bought, and for many years was 30%, so that is the affordability issue. why is this? hong kong is only producing 45% supply of housing it used to 20 years ago. get more landey supply? they have to open the natural parkland, farmland, or some area not zoned for residential? >> they don't need to go into the parkland. in hong kong acres used for storage and weird kind
of operations. that could be taken back by the government and turned into housing. there is a lot of agricultural land in hong kong that is not being used for agricultural -- agriculture. the change of use of that land be speededg needs to up in the planning needs to be speeded up, and they are working on that. >> what you think about this reported public-private scheme that carrie lam could be announcing? what are the hindrances? the developers? there have been several schemes for affordable housing over the last 30 years. they have stopped as government slow down supply of land for housing. trying to address the problems of the sandwich class. they are in too much money to
get subsidized housing, but not enough to afford the private sector market, 20% to 30% of the to betion, so there needs a reactivation of affordable housing schemes that were in place many years ago. >> rent control? >> definitely not. i don't think that should be on the agenda. i would be surprised to see that, yes. does the failed sale of excelsior hotel tell you about the state of the commercial market right now as far as may be hitting the upper end with murray road at $3 billion? >> i think it tells us the seller was too greedy than anything else. it is fair to say that the commercial property land prices have hit a high point. i would not the surprised to see and easing back of land prices in the commercial and residential markets over the next year or so has interest
rates pick up. that could be one of the knock on effects of the fed tightening in the u.s. >> what is the chances of a sort of crash, some 10%, 20%, 30% correction? 10% to 15% isn of hardly a rounding area -- error. is low indeed. it would not be generated by internal forces. inre is not a lot of death the system. the consumers are under leveraged. the banks are in a good position. there is no supply in the market. conditions that would stimulate a crash are external. a crash in the financial system in china would do that, or war and north korea. >> thank you for coming out.
back to you. rishaad: thank you. one feature on the bloomberg we would like to bring to attention is our interactive tv function at tv . sophie: you can watch us live and see previous interviews. you can dive into any of the securities or bloomberg functions we have been talking about. you can become part of the conversation by sending us instant messages during our shows. this is for bloomberg subscribers only. check it out at tv .
world's wealthiest investors are staying on the sidelines when it comes to cryptocurrencies. 300% thisrging by year. has strong a lot of attention of hedge funds and wealthy individuals. more likely that existing currencies may adopt some features of their crypto siblings. >> people are more curious than willing to invest. i don't think there is any --ningful desire by hottie high net worth individuals to take bets on this. considerir asia x swapping and order to boost capacity. the carrier has launched a review of requirements and the result may be a trade up. the ceo says the 787 dreamliner
is also under consideration. x will said air asia focus on routes 4-8 hours flying time. rishaad: vietnam airlines partnering with their friends to strengthen services, meaning more flight options between hanoi, ho chi minh city, and paris, and opens the doors to destinations in europe and southeast asia. of the mosteen one important markets since its first direct flight to paris and 2003 and where for many years: nice by the french. has launched a charm offensive in the united states, posting transparent price and discount information online and offer three day money back guarantees. a test driveserve when and where they want and complete paperwork on the web. hyundai hopes to revive the feeling of 1999 when it's