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tv   Bloomberg Markets Asia  Bloomberg  October 22, 2017 9:00pm-12:00am EDT

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♪ rishaad: it is 9:00 a.m. in hong kong. haidi: i am haidi lun in sydney. this is "bloomberg markets: asia." ♪ rishaad: voters handing shinzo a landslide victory, on track to become japan's longest-serving political leader. like this markets result, the nikkei 225 rising for a record 15th day. the yen is on the slide. rishaad: noble selling is oil
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and sees a million dollar plus loss in the last quarter. haidi: janet yellen defending her time in office as the race for the fed narrows to three. fromad: half an hour from house price figures. we look at tier one cities in particular to see how things go there. this exemplifies how the pressure on these homebuilders are lessening at the moment. n with house price growth and 60% year on year. it has come down with a bank to earth. the prices for shanghai and beijing have been more modest.
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for the latest update on the sauce prices and where the market is going from here. -- those house prices and where the market is going from here. haidi: president xi jinping reiterating this theme, that housing is for living, not speculative buying. in the lastwatching few days of the 19th party congress for news about this reshuffle of the standing committee and news when it comes to the 10-year of the pboc governor. -- tenure of the pboc governor. we do have the ecb policy looking for framework of tightening from the european central bank. also at the top, still watching the fed. race.three horse seeing if president trump that decision this week as well. we are 30 minutes from the open
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in china and hong kong. taiwan and malaysia coming online. sophie: the main focus is the reaction to japan's elections sunday. markets buying into shinzo abe's fresh mandate. the risk on mood sending stocks higher, while bonds take a tumble. watch out the jgb yield curve potentially steepening. korean bond yields continue to bok given the odds of a rate hike. goldman sachs season increase by november. rose 6.9 percent. elsewhere, more clues that global growth remains intact. in taiwan, experts rose to a record. stocks climbing .5%. the benchmark has been range bound over the last two weeks, although there could be strength
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from the trade dependent economy. singaporean stocks gaining .3% ahead of inflation data due out. the singaporean dollar sliding, under pressure with other asian currencies as the dollar extends gains given the focus around trump's tax plan. the dollar shorts are getting savaged. around 114, earlier breaking that handle for the first time since july. the nikkei 2.8%. itit keeps up this pace, could clinch a 15 day rally. if this continues it could push asian stocks to of fresh high. we are just off the peak we saw before the global financial crisis. a last look at noble group shares which have resumed trade in singapore. now 1.3%, continuing to drop we saw on friday when it lost 2.6%.
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noble group has lost 78% over the past year. rishaad: looking at it with more detail, the trials centric relations of this company. the company announced it will sell its oil division ii vitol group. vitols oil division to group. talking to us about what we know that far about this agreement. ok, it has taken a long time coming and was delayed by hurricane harvey. the net result of this is cash proceeds of $600 million. that is based on the financial performance of the end of june. that number could change.
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the $582 million is after that the duction of debt associated with that unit. the question is is this a enough to tide the company over and prepay all its debts? that is the question we are looking for now. saga athis has been a long time in the making. there was news of third-quarter performance. any bright spots out of that? >> probably a bit of surprise for the market. they made a loss of $1.25 billion. after the second quarter, they lost $1.75 billion, so they are losing money at a time when they have to pay back debt. to coal, ironown
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ore, and freight, so the next weeks will be crucial. the creditors, the banks, and the bondholders. rishaad: haidi: another crucial turning point when it comes to noble. thank you so much for that. let's get you caught up to date with first word news. paul allen has the headlines. paul: dollar yen has weakened to the lowest in three months as shinzo abe retained his super majority in parliament. his ruling coalition one two thirds of the seats with abe on track to become japan's longest-serving political leader. partner oneition 310 of the 465 seats in play. the party of hope 150 seats. -- won 50 seats. as many as five members of the
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politburo standing committee may change. lineupt says the new will be revealed on wednesday. only president xi jinping and the premier are staying on. regulator maying be named the next pboc governor. catalonia separatist leader says spain's control of the franco the spanish here at government has invoked part of the constitution that removes catalonia's autonomy and allows direct rule from madrid. the spanish authorities are expected to remove the leader of the separatist party from office. anz bank is settling this case over alleged interest rate rigging. the securities and investment commission is prosecuting anz and other banks, alleging traders sought to manipulate the swap rate between 2010-2012.
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lawyers were scheduled to meet monday morning, but that has been adjourned for 48 hours. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. i am paul allen. thanks for that. coming up, live in tokyo with one of shinzo abe's top advisers for the change is expected for corporate japan. rishaad: later the pboc governor drops hints that his tenure could be coming to a close. this is bloomberg. ♪
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♪ gamble on an abe's early election looks like it may have paid off and one a chance
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to be japan through to 2020 yen. what would four more years of abenomics mean for investors? stephen engle's is standing by. he comes out of this with a stronger mandate. what is that mean for abenomics? >> it looks like a continuation of abenomics. as you rightly said, shinzo abe has continued that mandate. it was a victory a stolen one of crumbling opposition, but a referendum on abenomics with six straight quarters of growth and unemployment below 3%. inhave the stock market areas we have not seen since late 1996 the nikkei 225 up 169 points. the topix up 12 points.
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they are on good runs. we are seeing the yen weakening. nowas at 114 to the dollar, 113.89. that is a three-month low for the yen, and that is good for japanese exporters. it seems the wind is in the sales of the japanese economy and the ruling coalition of shinzo abe and the ldp and the new party. in thes the headline newspaper this morning which sums it all up, basically saying the ldp, big win and the prime minister stays on. so what we will likely see is a continuation of abenomics and shinzo abe's plans to hike of that consumption tax, but not until 2019, and perhaps slow moves to revise the pacifist constitution. rishaad: thank you for that.
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let's get more on this landslide for shinzo abe and get back to with and join yvonne man the company president of suntory , who is a senior economic adviser to shinzo abe himself. rishaad: perfect timing to get his take on all this. yvonne: thank you for joining us. a big win for shinzo abe. tell us more. what this is signal about the political savvy of the prime minister? was this a vote of confidence for shinzo abe? was he the more practical choice? >> both. hugeitely there is a threat from north korea. have stability and
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all of text first of all. -- stability in politics, first of all. second, it is a work in progress, so people believe the current economy is comfortably growing and people want to continue its growth in the future. can he pursue constitutional reform along with economic reforms? >> i think he prefers economic growth is the first priority. them is theof constitutional changes. so i definitely believe he will touch upon economic growth first. get a sense in the japanese consumer with this consumption sales tax, possibly a done deal by 2019. how do you think your typical mom and pop consumer will react
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to this? is demand prone to suffer? >> i don't believe so. at the 3% increase, 80% of the proceeds went to repay the debt, which means the general public does not enjoy the increase of the consumption tax by 3% here it this time -- 3%. the prime minister proposes 80% will go to support because most of the people are concerned about the future of their elder care, including the working force generation. so the policy should change how to use the proceeds of the consumption tax. it is rightful. .ext year he will raise i don't think that will hurt our economy. of threshold to think the prime minister has in
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raising this consumption tax barringe around before some kind of lehman brothers crisis or shock, this will go through, but he has backed away from that before as well. is there a threshold for him this time around? >> the meaningful action for him is to support social welfare, areuse a lot of people afraid of social welfare. the proceeds will be used for social welfare instead of repaying the debt. that is a key point. the people will feel raising the consumption tax will be an official to the general public. , because thetant biggest worry of the general public is social welfare, y car.ally elderl e. i want to ask a
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question about the election itself. was it a situation where we had shinzo abe win it, or we saw the opposition lose this election? that's the point i want to get at. if the opposition lost this election, then does you really have a mandate? >> ok. if i am asked, i think the opposition parties lost. i don't think the general public as ¥2ted spending as much ,rillion for education for free so i think we have to discuss how we use the budget for the better of the society. the biggestabout
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concern of the general public, which is the elderly care, instead of free education. curious, youst spoke about the resilience of the retail environment and consumer sentiment being able to withstand this next consumption tax hike. what is your take away on this kind of reflationary sentiment or animal spirit both in consumer sentiment and how japan inc. the corporate environment is taking it? analysts often say it will take a long time to get to 2% because of this deflationary sentiment being hard to shake. do you still feel like there is optimism? optimism.have that the general
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public is concerned about elderly care. elderly care system should be reengineered by funding from the 2% increase. last time we increased 3%, it did not go to support elderly care so much. if elderly care is well engineered, people will feel comfortable to the future, and then people will be incentivized to spend the money. block for the general public not to spend money is because of the concern to the future. that comes from elderly care, not by themselves, their parents as well, so we have to make use of the proceeds from the 2% increase. that is the key. how to make used of the proceeds wisely, that is the key thing. have been talking
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about labor markets and how it has been the tightest in two decades or so. to do think it is so tough see a breakout in wages? we are seeing hourly wages for part-time workers am a but not full-time workers. idea in society that we will see the inflation back. i'm sure the inflation is gone. consumersass to the .y taking price the reason is again that people are so much afraid of the future because of the elderly care. so elderly care is the most important thing for the government to reengineer. mitigatell suntory
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this consumption tax? will you pass it along to the consumers? or will you be absorbing the costs? >> we would do everything. we will launch innovative products. so this will bring lots of competition among manufacturers, but innovation is the key. >> will innovation be the key and the two expansion as well? andve had this acquisition you're moving into the u.s. economyluggish japanese push you further into international expansion? >> we will advance projects to be oversees more. in the meantime, there is a huge market, a huge need in this country.
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that is the health consciousness, medicine and longer longevity needs, so we would like to catch those needs by launching innovative products. >> like what? >> such as a drink with nutrition to be very good getting rid of fat. good for diabetics. so nutrition will be very important. >> how do you see this relationship that shinzo abe has with president trump? it seems to be quite cozy. they have been reaffirming the u.s.-japanese alliance. is that beneficial for suntory? >> absolutely it is good because ,e spend as much as ¥2 trillion $20 billion, so the relation between the two countries is critical for suntory.
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i believe the relations will last forever. rishaad: i want to get back to your business. you just sold an australian unit which did branded foods. what do you plan to do with the rest of the coffee business here? do you plan more divestments? if you do, where is the focus of your company? what direction is it going in then?
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+++ big plan. we like to make some synergies using the coffee business to other countries, especially asian countries. haidi: just before we let you go, what are your prospects when it comes in particular to the chinese market, across asia, in terms of how potential geopolitical tensions could arise and impact your retail business. we have seen that with japanese brands in china. is that something that is always a risk to your business? because thehink so japanese government led by prime minister shinzo abe is now trying to have the better relations with china by sending oneany as 4000 delegates to road, one belt. that is a huge investment to improve the relation with china, so i don't think we will have any conflict in business with china. , butnot 100% comfortable we try to penetrate china as well. >> real quickly, your outlook for yen?
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what level would be optimal for suntory? >> 113. >> so staying around these levels. >> it should not be over 120. >> thank you very much for your time. back to you. rishaad: thank you indeed for that. down to theing you start of the session in the trading week in hong kong. let's look at the prospects in the premarket session. just quickly tell you what is going on with it. .25%, futuresby contract showing a bit of a gain too. that is what we have for the start of the trading day. a lot of news to digest, not least of which japanese election results.
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also, china property prices for september out in a couple of moments. we will have them for you as they come across the bloomberg terminal. this is indeed bloomberg. ♪
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9:29 in hong kong. catalonian separatists and another deadline from a drip. gdp out in the u.s. on friday. -- deadline from the dread. gdp out of the u.s. on friday. we have the ecb out with its latest interest rates. trading day somewhat being dictated by the nikkei on the way up, the yen on the way down, and a huge landslide for
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the primary minister in tokyo. haidi: that's right. it on the expectation that will heighten the chance governor kuroda will get another term when it comes to the boj and continuity when it comes to abenomics. have ultra-loose monetary policy out of japan for some time to come and flexible fiscal policy as well. we are waiting news out of the congress in china about its reshuffle in the politburo standing committee. sophie is taking a look at the open. sophie: stocks in hong kong in china joining the party. chinese large cap snapping a two day drop. c said the chinese and hong kong stock market saw an inflow of $913 million last week. dollar strength except, the offshore yuan trading near a
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two-week low, brooding .3% this morning. the pboc weakened the daily fix by the most since october 9. taking a look in shanghai. this benchmark rising for a second straight day. telcos in pole position, but materials under pressure as china vow no return for shuttered steelmakers. i went to check on some stock movers. , a 95% riseng kong in nine months, income gaining 3%. tesla suppliers in china on a wall street journal report that tesla may set up a factory in shanghai. there, but lithium battery producers under pressure. price dataproperty out from the mainland coming through the terminal now. what is the latest? rishaad: new home house prices
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august. the devil is in the detail. shanghai and shenzhen no change month on month. shenzhen has been on an absolute tear. beijing home prices on the way down. they are up .5% year on year. we will have a look at this in more detail, but first, let's have a look at first word news. paul: a powerful storm expected to hit tokyo after drenching the country sunday. of typhoon is packing wind 160 kilometers per hour. to bringill expected driving rain and floods. itsyoda has halted work at car plans while airlines canceled hundreds of flights.
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the u.k. national trade secretary said a hard brexit would not leave the nightmare some fear. the divorce without an agreement remains a possibility, but fox told that such a scenario would mean britain this subject to the terms and conditions of the wto. a bloomberg survey says the ecb will cut monthly bond purchases to $35 billion, stretching out remaining capacity until it waits for inflation to pick up. the ecb makes its next policy decision on thursday. the new zealand prime minister says she believes in the benefits of free trade and will pursue new agreements. she has indicated support for the transpacific heart to ship and intends to clamp down on foreign property speculators.
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power just three months after taking control of her party. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. haidi: china property prices crossing the bloomberg. let's get reaction from tom mackenzie in beijing. as the congress continues, xi reiterating that homes are for living in, not speculating are buying. >> such a key part of the economy. like the number of house price rises rising in the smallest number we have seen. 44 compared to 46 for august.
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we have seen those curbs put in , now being rolled out to second tier cities. it is becoming a restrictive environment. they have always tried to get a bit of a goldilocks mix on this. they do want to take some of the heat out. that seems to be continuing. president xi jinping making this a key part of his speech when saying properties are for living in, not speculating. it will take a societal shift. to others needhour houses. most people seem to expect that house prices will not fall considerably. that is the word on the street
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when you talk to most residents. we also heard from the banking regulator. they say they will more tightly control loans for property markets. bloomberg intelligence saying they do expect to see a slowdown prices, and investment in the real estate sector. they say there will be a balance because a lot of the developers have bought of land and they expect conditions to remain comfortable, so there will not be a sharp tikka down for -- ick down in consumption. they will keep a strict, tight control on the property sector here because it is so key to the economy. rishaad: the pboc will be looking closely at this data, but there is talk of retirement again for the pboc governor.
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this seems to have some mileage. tom: you are right. we have heard these rumors and speculation about the governor and his position in the past, but our sources told us ahead of this party congress that he atld indeed be stepping down some point between now and march of next year. he has been asked by journalist what will happen for him, trying to avoid those questions. we also know there are at least three potential nominees to take wer, although the sources have been speaking to at the pboc have yet to make a firm decision. a bankingning is regulator, also a key advisor to president xi jinping, and the current ice governor of the pboc.
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-- vice governor of the pboc. policy been told that direction is unlikely to change dramatically. in terms of monetary policy, that want change. the mood to liberalize the yuan that president xi jinping and the pboc governor talked about, that trajectory will continue. whoever takes over will have to confront the debt problems in the deleveraging campaign, but we are not expecting a dramatic will getd indications of who will take over as pboc governor. wednesday is when we find out how many of the men at the top of chinese politics have changed positions. much,d: thank you very tom mackenzie on the streets of beijing. the race to head the fed is something also closely monitored. it seems down to three. president trump has said he has not a decision.
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let's have a look at the odds with kathleen hays. trump speaking to fox business. did he say anything we did not know already? >> the interview focused on tax reform. perhaps the rest of it will be released in the next 24 hours. in terms of what trump said to the the race for the next fed chair. there seem to be five in the race and he was leaning towards three of them. "yes, people say it is down to two." , "and i'd like yellen a lot and him looking at three people." so you can throw janet yellen in there. he also said, "i am also eying a couple of others."
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i think the interesting thing is jeromeasked if you like paul powell and john taylor so much how about putting them in the top two positions? "in my thinking a couple of other things are in my thinking." secretary mnuchin is pushing for jerome powell. mike pence once john taylor in the position. let's look at the tv 3203, the latest reading as of thursday from the predicted website, a betting website. the turquoise line is the chance that jerome powell wins the race, 70%. you see taylor and yellen down along the bottom. jerome powell, why do people think he is a logical choice? he is seen continuing the policy of gradual interest rate
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increases. we know trump wants to look at banking regulations. tois viewed as to being open looking at the rules and regulations. haidi: as we have been talking hawk, taylor is seen as a out of the candidates we are talking about. is that a good enough reason for him to not get the top job? >> it is why his chances seem so low. tells you where the funds rate should be. they talk about it, but don't really follow it. btp 6917, you can tell they don't follow it. if they did, you would be up there well over 3% on the fed funds rate. the yellow line is modified, 2.5%. the turquoise line shows where the fed is now. maybe john taylor has been snared by his own rule. is too rigid and
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wonder whether john taylor could compromise, collaborate, lead the whole group of the fomc. when the crisis was started and the fed was buying treasuries and mortgage bonds, he mocked the purchases and warned they were a bad idea. he warned a build up of bank reserves would boost inflation. to a former fed official who said people are oversimplifying what he says. people put words in his mouth. he is kind of a strawman that people are batting down. he said that rule is a framework for debate and not rigid. a conservative republican from idaho once to get rid of yellen and see the fed changing direction. let's hear what janet yellen had to say. she defended quantitative easing and all the tools so unpopular with conservative republicans. she said the economy is stronger today than it would have been without them. use so, the fed may need to
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unconventional tools again. she continues to speak her mind loud and clearly. she met with trump last week as well. it is probably down to those three top names. maybe this week we will find out who the president has chosen. will get more certainty when it comes to that global central-bank policy given that we are expecting governor kuroda in japan to stick around for another term. coming up, after the victory, we discuss shinzo abe's agenda with his ldp colleague up next. this is bloomberg. ♪
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haidi: let's get back to the election in japan, where shinzo abe saw his ruling coalition
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maintain its majority, giving him a chance to lead the country to 2021. yvonne: thank you. my guest is here. talk us through the national election results right now. how does the ldp view this election win for shinzo abe? was this a vote of confidence or by default? policy, we can evaluate the great landslide victory of the ldp and leadership up prime minister abe. another reason that you mentioned, a confusion of the opposition parties. it gave us a positive under
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which each candidate could more easily join the battles. ministerhe prime expressing humility during his victory speech, saying i know there are people against the ldp and my views as well. ca doesn't wante him to stay even after this victory. how does he change that sentiment? election come the there were several difficulties scandals, the prime minister himself, therefore his popularity rates declined.
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then even though we had the landslide victory of the general election, the prime minister should keep a low profile and carefully handle that landslide only the person who enjoyed the victory, but also he his very careful positionse political , and then he has to re-strengthen his own stable and consistent leadership again. yvonne: given the majority, do you his priority is on constitutional revision. >> everyone mentions the constitutional revision. it became a major part of his job, but it is actually not.
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he has toagenda seriousill be very national security issues because nuclear position of north korea, and also how we can reactivate our japanese economy and speedy aging. those are subjects that are still very serious subjects for us. also many voters for us had serious concerns with the social welfare subsidies rather than the constitutional reforms. this social welfare services still should be given the highest priority of hours. yvonne: you mentioned a little
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bit about north korea. we have president trump coming to japan next month. react to this?n most people in japan are not liking the president at the moment. >> i don't know what sort of reaction are people have when the president trump travels to japan, but we do realize that prime minister abe has a wonderful friendship with president trump, and the trust of the leaderships is always the basis of our security a -- security ally lines, especially under such a situation. , especiallyalliance under such a situation. yvonne: do you see a warming of
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ties because of this? havingthat we are positive political developments in asia because of the victory of prime mr. abe -- prime minister abe. he could quite successfully handled the party combinations. both of the leaderships have strong come a stable domestic political basis on which they can positively negotiate each other. specifically we have a very serious, agenda with north korea's nuclear acquisition. is there another way for japan to play a bigger role? >> president's coming visit to asia may have a very strong positive impact on both the leaderships to commit on a kind
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canapprochement on which we comment more smoothly on how to resolve the north korean issues peacefully and through diplomatic aspects. yvonne: before i let you go, in terms of the diplomacy of things , do you see a potential three-way summit between president xi jinping, shinzo abe , and president moon in south korea? >> i hope we are having the three party talks by the end of december. china, south korea, and japan. the participants of three party talks from china is not xi jinping. it is the prime minister, china's prime minister.
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these three party talks become important diplomatic outcome of us as a result of the political development between us. yvonne: i appreciate your time and perspective on all of this. right, thank you for that. one feature we would like to draw your attention to is our interactive function tv . can see previous interviews and dive into the bloomberg and become part of the conversation as well by sending us instant messages during our program. this is for bloomberg subscribers only. do check it out. tv . ♪
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♪ haidi: a quick check of the business flash headlines. to profita returned next year after al lawson 2017
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as it cuts expenses and improves utilization. the airline is predicting $75 million profit ending in december, but want be able to post a profit for 12 months following a 284 million dollar loss in the first six months of the year. tencent owned china literature seeking to raise more than $1 billion in a hong kong ipo. the online publishing platform is offering shares at between $48 and $55 apiece. proceeds touse the expand its business by developing entertainment products derived from its literary titles and potential acquisitions. rio tinto has held talks with indonesian groups about a potential exits from its interest in the golden copper mines. it is key to sell its heart of the joint venture. no are also told there is
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guarantee talks will culminate in the deal. coming up next, shinzo abe's next move after the election gamble pays off. more analysis. this is bloomberg. ♪
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♪ it is almost 1:00 p.m. here in sydney. rishaad: coming to you from bloomberg's asia headquarters in hong kong, this is bloomberg markets. ♪ haidi: voters handing shinzo abe a landslide victory. are watchingets that result -- are liking that result. the yen is on the slide. haidi: noble falling again on
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its return to trade. sees a quarterly loss. rishaad: other companies in the spotlight. haidi: we are the japanese elections, how the markets are passing these expectations and the bank of japan, kuroda sticking around as well. i want to talk about china, because the congress is still underway in beijing. this we have been keenly watching. environment has such a key thing for resident xi jinping in his keynote address. much more focused on environment as opposed to the economy being the main focus. let's take a look at this chart.
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this is why the environment is key. this is the china air quality index for beijing. it calculates air-quality according to these major pollutants. since the crackdown when it comes to steel mills, the shattering of -- we have seen environmental pollution in beijing in the capital come down somewhat, but still inind, that is the unhealthy for sensitive groups or unhealthy for the broader population. if you go all the way back four years, we have seen days where the level of pollution has gone 300, 500, 600. it comes that apartment time. -- become very urgent time.
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best it -- it comes at a pertinent time. it translates not just to social stability, but also in economic and a health care issue. rishaad: absolutely. that is something we are seeing. india is a huge population as well. new delhi may be one of the worst polluted city in the world. also something which is being discussed and will be discussed in the coming years. an environment that is undergoing some severe degradation. wise, i do think we are seeing much degradation today. haidi: not a bad monday. --sophie: not a bad monday.
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bonds are mostly falling in the asian space with optimism. japanese stocks getting a lift from abe's election win. falls for minors and property stocks in shanghai. the kospi has swung to losses as well as the hang seng. the hong kong dollar is continuing to reverse depreciation we have seen over the course of 2017. perhaps the market is cautious more debt will be issued, which will cause raised rates. real estate stocks are leading on the hung saying this monday. nudging towards the 6.64 handle. check out what is going on in the bond space. i want to highlight chinese yields. we are seeing the five-year
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yield retreating from a 2014 high. it remains elevated. you have been climbing amid regulators leveraging efforts. seeing yields supportive for the bond market. the nikkei is not course for a record rally. 11thopix is looking at an day of gains. this is before japanese stocks began to consolidate. there could be room for further gains to go. much forank you so that markets reacting very aggressively to the japanese election result. let's get you caught up with the rest of the first word news. paul hobbs -- paul has the
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headlines. paul: five members of china's committee may change when the communist party congress ends this week. the new lineup will be revealed on wednesday with only president she shaping and the premier staying on. -- with only the president and the premier staying on. separatist leader says it is reminiscent of the franco dictatorship. they have until 10:00 local time monday to make his position on independence clear. spanish authorities are expected to remove him from office. australia's financial regulators are making its case over alleged interest rate rigging. they allege traders saw to
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manipulate the stock rate between 2010 and 2012. lawyers were scheduled to meet in federal court monday morning, but that has been adjourned for 48 hours. rex tillerson is calling on european allies to support new u.s. sanctions on iran, saying countries doing this with iran do so at their own risk. tillerson is also visiting qatar, pakistan, and india. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. prime minister shinzo abe's gamble may have won him a chance to lead japan through the end of 2021.
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some say this is merely a victory by default by him. ?ny surprises yvonne: not a lot. given the disarray in the opposition, this was pretty much a default win, largely priced in the market. we are seeing quite a reaction on the nikkei 225 today. and how much the coalition was able to grab on sunday. able to grab 312, maintaining that super majority. we saw be close second-place can down to the constitutional democratic party, which was a newly formed party. the party of hope underperforming, given the optimism we had seen.
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the tokyo governor was not in japan during the election. she was in a conference in paris. she was expecting this result, and she did speak with reporters saying this was a toss result and was sorry for unpleasant feelings and actions. we saw signs of humility coming from shinzo abe, despite the victory. he isime minister saying treating the win as a signal there are still some who have a harsh view of him as low as the ldp. he will work to rebuild that trust. haidi: interesting acknowledgment of the criticism and that he won this by default. at the end of the day, he has
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that majority, so does the party now switch to this constitutional reform agenda? what are we expecting? yvonne: that is the assumption. now that he is maintained this two thirds a majority in the lower house that he can push forward in this divisive policy revising of article nine. that isheard guests say the assumption, but the fact that he built the selection of the way to gauge public opinion on this bill that is that to -- en, the fact that he means he is serious about implanting in pushing forward when it comes to the more tough structural reforms. that was interesting to hear. that are people saying even this constitutional reform
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is going to be a tough sell, despite the landslide victory, the cause it has to go through a public referendum. -- because it has to go through a public referendum. haidi: thank you so much for that. coming up, we continue this conversation around the japanese election result, a landslide victory. a gamble paying off for shinzo abe. expectation.on and nicholas smith will be joining us. later, what next for the abe government? this is bloomberg. ♪
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there is a huge threat from north korea, so we need to stop very strong stability and politics, and secondly, he has a plan. economics should be continued. it is a work in progress, so people believe the current growing, and people want to continue growing towards the future. >> the possibility of this debt crisis, if we look at longtime lownal yield, it is very compared to nominal gdp growth. the japanese that is temporarily sustainable. -- the japanese debt is
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temporarily sustainable. >> [indiscernible] some of the views from today's guests on japan's election result. let's take you to the tokyo stock exchange for more reaction to the landslide win. steve is there for us. investors clearly seem to initially like this longest winning streak since 1988. kuroda nymex will be in place for longer. will be in place for longer. guest: at least it is a rally
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today with a clear mandate coming from the coalition. the supernode -- the super majority they are likely to maintain, at least two thirds, more than two thirds in the house, and it looks like -- stors as you mentioned, the yen weakening. what does this mean? does it still have some legs? let's put the question to our guest, nicholas smith. when he first saw you this morning them in a surprise on your face. this was a expected result? nicholas: absolutely. i said i don't know what people are cooing so much. abe is going to do better than
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expected. in the end, the democrats were split into. reporter: not much of a gamble. it was well-timed? nicholas: it was expertly handled by abe. he was a model of humility. peopleed to make sure turned out to vote for him. it worked out well. reporter: connector in the bud? is 65as: as it is, she years old and a four years she will be on the edge of what is electable. she wasn't-reporter: here is that the time. she thought -- she saw this conclusion as well. nicholas: absolutely. voters thatn for she is not want to stick with, being in paris. you come inen i saw
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this morning, i ask you, are stocks overbought? you go, no, they are cheap. why? there has been strong earnings growth, high upgrade rates. we are about to start a new season and the chances are it is going to be a blowout success. reporter: how much does corporate dependent and a fitted from this weaker yen, and how much we could is a go against the dollar? nicholas: it helps. not as much as most people think. it is not a mercantile economy that depends on a week yen. weak yen.aon a it helps sentiment. reporter: we know the democratic
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party got split, then the cdp .ame along it seems the opposition is in further disarray right now. will they be able to put up much of a fight to shinzo abe on the controversial issues like the consumption tax, changes to the strategyion, the exit on the monetary easing policy? changing the constitution. i think what he will do is a .imited change raiset believe wants to the -- in the first place. he is a strong believer in fiscal and monetary stimulus.
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reporter: do you think continued monetary easing will be his path forward, or when will be be -- when will there be a chance to taper? nicholas: from a politician's point of view, change is risk. for the time being, they will keep the present team in place. the day after tomorrow is kuroda's birthday. he doesn't necessarily want another five years. if he doesn't continue, they were probably get somebody similar and the policies will stay the same for the first table future. reporter: what are the chances he convinces kuroda tuesday on? -- kuroda to stay on? nicholas: there is a chance. how parliament to we get this 2% inflation target -- how far along until we get this
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2% inflation target? lower.s: it is measuring -- re probably it is tough. it is questionable whether they really need to percent. where should investors be looking if you think there are legs on this rally? nicholas: if you believe we nomics, theth kuroda and goods. rates financial stocks. he went to be looking at insurer banks and brokers. stocks, you probably
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what to be looking at u.s. and not japanese. beyou probably want to looking at u.s. and not japanese. if north korea were to go wrong, the effect would be huge. government isbe's relatively low. reporter: despite the scandals that have happened with kobe steel and others. nicholas: we have a strong tailwind behind us. reporter: think is a much. -- thank you so much. sending it back to you. up, when ofing australia's biggest banks settling allegations of interest
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rate rigging. the regulator is still looking to prosecute to other lenders. this is bloomberg. ♪ ♪
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australia'sf biggest banks has settled right rating allegations -- rate ggingng -- rate ri allegations. two other lenders are also accused of misconduct. our finance reporter joins us from melbourne. what do we know about the settlement deal? reporter: still very little details at this stage. the regulator has said and is putting together formal settlementn what the will be. they will present it on wednesday in court. , first, what the
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size of the assessment. the regulators say it wanted -- they wanted to be a credible outcome second, whether there is a admission of liability. that could set up other legal cases and jurisdictions. it is very unlikely there will be suggested forward admission. -- it is very unlikely there will be such a straightforward admission. rishaad: what does it mean for the other two wonders? -- for the other two lenders? settlementhis is one so there is no pressure on them to come to a settlement, but it is not a direct read through. all of the case there's are slightly different. slightly the cases are different. othernot given that the two are necessarily going to settle. it probably raises the changes.
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rishaad: thank you very much. seng started the session up. we are down at the moment. this is a look at what is going on. they hang hang -- the hang seng dropping 170 points. maybe a new governor coming in at the pboc. the congress still creating the move music for what is going on. malaysia, and we have middle a and jakarta. andnd we have manila jakarta. the hang seng on the way down.
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we are looking at this in a little bit more detail. to shake up looking the standing committee. a look at who is in and who is out. ♪ retail.
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>> i am paul allen with the first word headlines. dollar-yen has weakened to its lowest as shinzo abe retains his super majority in parliament. the ruling coalition winning to thirds of the seats putting shinzo abe on track to become japan's longest-serving political leader. ldp and the coalition party won 310 seats in play. the party of hope 150 seats. on 50 seats. liam fox set a hard brexit would not be the nightmare some predict. britain's divorce from
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europe remains a possibility. means britainmply being subject to the terms and conditions of the wto. ecb will cut the monthly bond purchases to $35 billion next year, stretching out the programs remaining capacity. respondents of the bank would continue buying for nine months, take the program to what some official kiev the limit at just over 2.5 trillion euros. the ecb makes its next policy decision thursday. the new zealand prime minister believes in the benefits of free trade and will pursue new agreements and has indicated support for the tpp and intends to clamp down on foreign property speculators. she is new zealand's youngest prime minister and the most youthful female leader in the world. she won power three months after taking control of her party.
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global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. i am paul allen. thank you for that. over asmarkets to mull we kickoff trading. when it comes to the political continuingcongress in beijing, expecting that shuffle of top leadership and key events on monetary policy as well, expectations of new leadership at the fed and the ecb policy decision. looking at what is going on in shinzo abe japan, that landslide victory for shinzo abe helping the nikkei up, the yen down. looking at europe, a simmering catalan separatists
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in barcelona. we have gdp out of the u.s. as well. japan is on its lunch frank. sophie: the session looking broadly risk on despite potential risks. higher,ei 225 almost 1% the yen sliding, although it has eased, retreating from that 114 level. have he ofge caps their advance, looking little change now. hong kong equities have extended losses. the kospi has swung to declines, and the won down .1%. that increase in treasury yields boosting the dollar, but the won given exportpport
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data for october is looking favorable. third quarter gdp data due thursday for south korea. the beelds sliding after ok governor said in a parliamentary address said the future could be a rate hike if the economy is solid and inflation approaches the target. rishaad: thank you very much indeed. officials talking and noteir war on smog affecting the growth target of 6.5%. prevent shuttered or illegal steel plans from returning to the market, but that won't stop the economy growing beyond $12 trillion this year. let's get to tom mackenzie in beijing. already in china, 37
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million tons of steel production have been scrapped this year. in a broader context, in the first nine months, steel production was above 2016 by 6%. is so shift seen between august and september where still production fell by 3 million tons. the chief economic planning group here in china said they would continue as part of overcapacity they are trying to curb and production and pollution curbs they are putting into place. take a listen to what the vice chairman had to say. >> we will stick to the mission of reducing steel capacity. prevent shuttered and illegal steel plans from returning to the market. china's steel industry still has a considerable capacity. out demand and supply and continue reform on the supply side. tom: we are seeing the impacts
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of this on steel prices. there is an impact as well, potentially european and u.s. producers of steel. the official also said they hope to transition 1.1 million jobs in two other services and sectors of the chinese economy. haidi: the congress is ongoing in beijing. it wraps up wednesday, we expect to see the new lineup for the standing committee. any idea what that could look like? that is where the focus shift is, to win state when they expect to unveiled the politburo standing committee. postouth china morning reported over the weekend that five out of the seven would be changing hands. we know that premier league k
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chang will remain in place and premie president xi jinping as . change, seven remain, but five jobs change hands. we will find out the answers on wednesday. there is also speculation over the weekend as to the fate of the pboc governor. he is expected to retire between now and march 2018. haidi: thank you so much for that. tom mackenzie covering the china congress in beijing. let's get back to the other major political event, the japanese elections, the currency falling to the lowest in three months and japanese equities gaining after shinzo abe's landslide election victory over the weekend. his ruling coalition retained its two thirds majority and now has the chance of becoming
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japan's longest-serving political leader. with an ldps that lawmaker from tokyo. just initial reactions to this result?e a lot of critics saying this was a victory by default because of how disparate and disorganized the opposition was. the prime minister himself sounding the sense of humility, of lessons learned, that he needs to do better going forward. what is the take away from the result over the weekend? it is a victory of the ldp. the ruling party is the failure of the opposition party. it could not hold itself united. the other thing is the people of japan sees the governing capability of the ldp and the
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ruling party more trustful than any other. japanese people experience quite whenhtmare five years ago was in decline. i think that is the two reasons for this victory. haidi: i want to correct myself. i said you were in tokyo. osaka.e in n the verdict is out as to whether abenomics has worked, but what is the economic mandate that prime minister abe walks away with? should he put into place this tax hike and what are the consolidation plans for the government? made it clear we will
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increase the consumer tax to change the consumer tax for the younger people. we tried to make the welfare system to focus on the ugly and younger generations. i think that will help more people to consume. cannoter thing is we give up the promise that by 2020 the balance has to be adjusted. under the administration, the economy has been inflated in a that theexample, no and 8 has hit a high million tourists, now that becomes 24 million people coming spend ¥4and they
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trillion over this time. many people see the results of abenomics now taking effect. , the voters,le trusted the continuation of abenomics. i think that is the sign we are seeing now. here,d: tell me something how much of a mandate does he really have at the end of the day? it seems like a hollow victory with opposition that was so inept you could argue. >> i see it in the different way. it is true as i said in the beginning that the huge victory for the ldp is the failure of the opposing parties side. at the same time because the japanese people experienced devastation that politics can bring five years ago, and for five years the of the p has
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governed -- the ldp has governed the nation well in economy and diplomacy. timeelection is the first in japanese history for the people to think about the security issues, especially north korean issues. which party can be most trusted in the crisis? that is the victory. that is the reason of the victory i think. rishaad: what does it mean in terms of the to do list? what should he be concentrating on at the moment? we have the possibility he will try to revise the pacifist constitution here. what should he do for store get on with? >> the constitution is not the first priority. it takes time. has made iter abe
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clear that although we had the two thirds majority under the coalition, but still the constitution is an important thee and he's not planning proposal without the losing side. it takes time. i think the priority for the economyarty now is the and how to tackle the north korean issue together with the u.s. and allied countries around. what do you think the chances are of getting that third term? >> i think it is already fixed come in my opinion. he will get the election for the third term. i'm not sure how he will take the third time. some people say 2020, but it is too early to say. forthird time election prime minister abe is promised,
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almost. haidi: it feels like his image in japan is a large reason he was driven to this landslide victory, his management of regional geopolitics in the north korean issue. president trump visiting japan next month. we have a three-way summit that he wants to host in japan. it is quite sensitive for shinzo abe to be handling these quite tense relationships. that is the reason why the japanese people chose premise dropping -- chose prime minister abe. others whohink of could hold with mr. trump mr. xi jinping, or mr. putin. this time the north korean issue has become the real threat to
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the japanese people. i was just going to islow on with the question, the opposition so beaten down i suppose that he faces real opposition within his own political party? >> will because this time the realize the majority, more than we expected, he is in position, his position within the ldp remains pretty strong. emergings we see now vis-à-vis the opposing parties, unlike before the election people expected the party, the opposition party, the party that gains the votes is not the party , but the constitutional
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democracy party which was newly created. will beanagement between the ldp and the comp are compromise between the ldp and the newly emerged constitutional democratic party. rishaad: thank you so much for joining us. , let's tell you what's on the way. room to grow, whether the yen is undervalued. we will look at that with a deep blue local investments. this is bloomberg. ♪
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electionan victory in japan, the yen the lowest in three months against the greenback. our next guest believes the currency has room to appreciate. if you want yield, you are not getting it in the bond market. >> the global emerging market presents a good opportunity to rishaad: not japan? japan, japanese stocks are still offering good value. no matter what the japanese yen will trade long-term. is aapanese yen in my view magic trading opportunity for the long-term. the market is so favoring a stronger dollar yen or weaker yen.
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even still, the market has priced in shinzo abe's landslide victory already. rishaad: that is one market you look at. you were telling me emerging markets is where you see your hunt for yield focused on. you are looking at some countries that have had a horrid time economically as of late. >> brazil and russia are the long-term stories. they just get out of their recessions. they are in the early cycles of economic expansion. meanwhile, both countries are discountoying the fear , so there is still some juice left. undergoing a, also regime shift. they have taken that the terror medicine of the fiscal reform --
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the bitter medicine of the fiscal reform and is developing in the right direction. i like those three countries bonds which can offer yield around 10%. rishaad: the brazilian 10 year yield bond, 11.5% earlier this year, but 9.6% now. 17% twos yielding years ago. the real yield now is 6% to 7%. there has been chatter about china. positivity about china in particular when it comes to equities. some talks we will see another leg up when it comes to a-shares.
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is this an allocation or rotational story or better fundamentals? >> speaking of the fundamentals it is hard to say. not will depend on the investment horizon. long-term, china's fundamental economy is likely to continue the up trend for the second term of president xi jinping. there are still some fundamental headwinds for the next 3-6 months. are still bullish the assets due to rotation for international and the mystic money. on one hand -- domestic money. the msci inclusion is taking
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effect next spring. ,ogether with the bond connect affect thevents will international yields and the domestic market. on the other hand, for the assetic, there is also rotation taking place in the domestic financial market i believe. as you may already know, more and more chinese cities are not only fora ban the purchase but for the sale in the housing market. at means the housing market will accommodate less fresh capital going forward. , thee meanwhile, china is government has found to continue the financial deleveraging. we are out of time.
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great to chat with you. lots more to come. this is bloomberg. ♪
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♪ this is "bloomberg markets: asia." rishaad: looking ahead, angie
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and david will be updating us on the big stories of the day so far. japan, japan -- haidi: and japan? >> presidents shinzo abe getting congratulations here it snap elections paid off. that was to be expected, but what does this mean for monetary policy, governor kuroda? i guess that is what we are talking about next. what about constitutional reform, casinos even? he will probably be around when the olympics are held. about that and more. we are also whelping
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aghast in singapore. how is he betting lng? he is betting big. finally, china home prices. angie: it is the big three cities which have shown a bit of a stuttering. thing.ctually a current >> what else elsewhere? they cashelopers as out their five-year plan. all that and more in the next hour. ♪
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angie: it is almost 11:00 in hong kong. i am angie lau. david: we are in the middle of the first asian trading session of the week, a fairly good when we should note. welcome to "bloomberg markets: asia." ♪ agie: voters hand shinzo abe landslide victory come on track to become japan's longest-serving political leader. 225 rising forei a 15th straight day, the yen weaker, but pairing declines. social curbs are having
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an effect in china. noble sees a billion dollar plus quarterly loss in returns to trading. xi jinping said homes or for living, not for speculation. the markets hearing that. the property curbs have been in place a while. it is interesting that it is starting to take hold. let's look deeper into our bloomberg. dive along with me into the bloomberg, 3881. the wife mind is beijing. the purple line is shenzhen. the yellow line the shanghai. seeing even as of 2015 despite all of the talk about property curbs, just the
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rise in demand. property curbs in place, it is slowing. volume property market will probably grow more slowly in the fourth quarter. we heard from the housing minister yesterday in beijing, and he said the market is likely to keep its current status this year. to bloomberg intelligence, they are looking .t a property sector david: final demand depends on this. that is one story. today is about japan. at 9627.ok there is a lot to be said when you talk about markets in japan.
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yes, the longest win streak on record. the nikkei 225 right now at its most overheated since abenomics began. at 29%, it is not so much about the overall index. the number of constituents that are showing overbought signals, not quite as it much during the trump trade in late 2016 and the start of abenomics in 2012. it's hot, not that hot just yet. let's move things along. we are moving into earnings season. this is what is driving your markets. it is the best earnings year so far going back to 2000. you are seeing these earnings upgrades. you see these upgrades the last number fromecord
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corporate japan. we are expecting that to come in when things kickoff in a few days. , 9628, andis chart it has never been this good going back to 2000. storyes this abenomics not play into this boj story? this is the yield curve in japan. you 2012,lly shows your steep yield curve. you go into october-november 2000. here is your reflation. 100-120ot quite safe at basis points. the boj is in the mix.
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elsewhere you get this reflation trade. the will perhaps help to reflate a little bit more. that is how it looks at the moment. it was steeper back then. right now, not quite as much. fancy, fancy stuff here. we are 3% short from a record high, at 167 on your regional benchmark. the story of cross currency markets, reflation. ,hat is pulling up dollar-yen 114 .50 is the level you want to watch. substantialwith markets picking up, japan and hong kong. there is a little buffer before we hit our next support level.
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very quickly before i go, a quick look at the bond markets in south korea. some words from the be ok governorthat he -- bok that he will need more time to figure out whether this economy is solid. integral as their regional barometer for exports there. let's get first word news now. poste south china morning says five members of china's politburo standing committee may change when the coming his party congress in's this week. the new lineup will be revealed on wednesday. only president xi jinping and the premier are staying on. maychief banking regulator be that next pboc governor. spain is says
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reminiscent of the franco did or dictatorship. until 10:00 a.m. to make its position on independence clear. the spanish authority is expected to remove the separatist leader from office. anz bank is settling its case over alleged interest rate rigging. soughtallegedly traders to manipulate the benchmark rate between 2010-2012. lawyers were scheduled to meet monday morning am a but that has been adjourned for 48 hours. rex tillerson is calling on european allies to support new u.s. sanctions on iran, saying countries doing business with do so at their own risks. the u.s. is fostering a new
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alliance between saudi arabia and iraq to counter iran's efforts in the region. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. electioninzo abe's gamble has paid off with his coalition maintaining its two thirds majority and putting him on track to be japan's longest-serving political leader. david: let's get more on this story live out of the tokyo stock exchange. a bigger mandate now. the question is what he does with it. yeah, that's right. we can see a lot clear, not only because the typhoon has passed, clarity and some the political landscape. we could see shinzo abe in power
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for another four years, at least his ruling coalition has that strong mandate, that super majority in the lower house. what are the priorities now? the chief cabinet secretary saying in the last hour that they need to speed up abenomics and that the economy is the top priority. they could mean more fiscal spending, more monetary easing, and more abenomics. that got them this super majority in the lower house. it did not heard that the opposition was in complete as the democratic party splintered in the run-up to the snap election, then we saw even the party of hope coming into third place. she was not even in tokyo. she was in paris, seeing a
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foregone conclusion to the results here. the stock market is up and the yen is weaker. certainly not a foregone conclusion on the economic recovery. what about monetary policy and governor kuroda? any buzz about that? with nicolapoke smith, a japan strategist, unlikely governor kuroda will be asked to stay beyond his term. could perhaps flown someone very similar, at least someone similar to those policies, so we are likely to see continued monetary easing and strong fiscal stimulus from abenomics. 2%y have nowhere near that to
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inflation target they need to meet. david: at the moment we are way away from that. everybody in the g-10 20 and the other direction to mobilize policy. it shows you the challenges of the economy are still there. plea be watching for? is the sales tax a foregone conclusion? >> yes and no. a lot can transpire over the next year and a half until that proposed hike in consumption tax would be put forward. this is not the mandate to do it, but it is a highly controversial step. they don't want that kind of
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negative headwind against the economy. right now we have some wind in the sales because we have had six straight quarters of economic growth. continued easing or will he need to tapering going forward? the opposition is in disarray, so he has a mandate to can a new fiscal spending and to ease monetary policy, but until when do they do that? will there be a time to eggs it? that is a question as well. angie: not just the electorate, but global markets. we will leave it there. coming up, analysis of the japanese election. what shinzo abe's win means for the markets. shake upina set to
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its ruling committee. who is likely to make the cuts. this is bloomberg. ♪
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♪ this is "bloomberg markets: asia." noble group plunged on its return to the market in singapore. it confirmed it is selling its oil trading business to vitol and it sees a loss of up to $1.25 billion in the third quarter. nobel niece cash urgently. -- needs catch urgently. the stock is plunge more than 75% this year. broadsoft, 1.7 billion
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dollars market value, has been working to seek buyers. cisco is said to be close to a broadsoft deal. has told ussource the transaction has not been finalized in the details may change. -- a: after al lawson 2017 garuda is17, predicting profit, but not the 12 months following a $284 million loss in the first six months of the year. david: back to the markets. lots of headlines, a big win for shinzo abe in japan. property prices in china cooling slightly. the race for the fed appears to be narrowing. there is that little matter in catalonia, a deadline again. that is something to watch for
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later on. the market reaction is all fun and games. the party continues. joins us now to help us parse through what is important. with that.s start he has a bigger mandate now. is there anything incrementally that he can push through that he was not able to in the previous five years? what needs to be put in place for abenomics to get sped up? laborcan accelerate market reform, which is the most important thing, getting people .o turn over quicker the mandate he wanted was for a constitutional reform. aimlso achieved a secondary , the collapse of the opposition. over all he has a political mandate and opportunities for macroeconomic reform.
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it has to do with the popularity of his response to north korea that encouraged him to call that snap election. if he does remove the pacifist language from the constitution, what does that mean for defense stocks and military institutions? majority have a super in the upper house in lower house, but he also needs to pass a referendum. it is a bit like the vote on the catalonia referendum. , so technology companies as well. if you think about it in the are industries that tend to benefit. angie: what about nuclear ambitions? david: a a lot depends on north korea.
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,f that becomes a flashpoint you may see japan entertaining options on nuclear arms. it is probably unlikely from now. where is the potential growth of japan? whether henderstand has managed to structurally change the makeup of the economy over the last five years. would not call it smoke and mirrors. you have seen some rebound in consumer spending largely driven by salaries growth. in have not seen an increase expenditure for investment. that is the weakness of the abenomics program. you are seeing growth this year to 20 1.5% and 2%, higher than
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recent years. it's not doing anything to that 2% inflation goal. >> we are nowhere near that. the last time i was in the studio was the day of the boj meeting. members voting for the thereget after 2019, so is recognition they are not anywhere close to that point. his policies will continue for quite some time. remaining fewthe thatal banks in the world injects stimulus into their economy. it almost feels like a sure bet if you look at the nikkei 225 right now. >> you have very stimulative policy, changes in the pension fund legislation rotating
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pension fund assets out of don's. you have some -- out of bonds. the japanese corporate sector has been doing extremely well, so it's not a wonder the equity market is going higher. david: what is the risk of increasing stimulus. what is the risk of a next her shot of tequila and red bull? why don't they increase stimulus? it is a simplistic way of looking at it, but they are already at the frontier anyway. why not just go all out? >> you want to hold something back in reserve in case you get a relapse. american central bank warning to end its holding of a large amount of lawns. -- of bonds.
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the boj will continue that way for quite a long time. they have the option to buy more reit's or etf's. they can expand the program out into the corporate space if necessary. angie: you know who is not buying? chinese homeowners in top-tier one cities. us. mcfarland rejoins plenty more to discuss after the break. chinese property markets and the rest. this is bloomberg. ♪
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♪ this is "bloomberg markets: asia." let's continue our conversation with mark mcfarland. we were talking about a lot of things, but chinese property prices finally slowing down, but
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does that make a trend make? >> it's actually the tier three and tier four cities still growing at a rapid clip. that is where the growth is coming at the moment. there is an interesting thing from the party congress, to try to slow down speculation on homeownership. that will be interesting to see how it affects those cities and property price accumulation. david: we talk about who the next fed governor will be, governor kuroda and other possibilities. that was a buzz last week at some point everybody retires. >> the central bank is trying to achieve two things, t keep over all levels of liquidity
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accommodative to get the growth introducingbut macro prudential measures that try to take away the punch ball from lower credited hours -- credit borrowers. the statement in the last quarterly suggested they were alarmed at the way in which corporate debt has been accumulated angie: . angie: how are you going to pay the old debt back? need to keep cash flow going which is why they will try to keep policy of accommodative and loose so the growth is there to help the solvency ratios.
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david: not coming out with they willgets implies take their foot off the gas when it comes to leveraging. they allow more people? yeshe ultimate answer is about more defaults. p target,ke away the gd part that takes away growth. if you take away the growth need forhere is less the sharp moves in increasing leverage and policy becomes more stable. that is a good thing. david: it is a good thing. let's leave it there. thank you for coming on the program. angie: we are looking forward to
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tokyo, where in they are still celebrating at the ldp. the latest on the japan open next. this is bloomberg. ♪
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this is the latest first word news. dollar-yen weakened to its lowest in three months as shinzo abe retained his majority in parliament. results show the ruling coalition winning two thirds on track to become japan's longest-serving leader. partnerits coalition won 310 seats. the fledgling party of hope won 50 seats. i hard brexit not be as bad as some fear.
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despite progress last week, britain's divorce from europe may proceed without an agreement. that simply means it is subject to the terms and conditions of the wto. new zealand's prime minister says she believes free trade and will pursue new agreements. she has indicated support for the tpp and intends to clamp down on foreign property speculators. leader is new zealand's youngest prime minister and most youthful female leader in the world. she won power three months after taking control of the party. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. sophie: asian stocks set to snap afford a decline led higher by japanese shares. the topix headed for an 11 day
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run while the yen loses ground. check out jgb yields, looking steady. focusing on will be the boj adjusting its strategy and order to steepen the curve. to extendoj likely easing policy, that will make it more likely for treasury yields to rise. options for break above that level. for options.e stocks and china looking little changed while the hang seng is maintaining losses with energy and property stocks striking the most. in the dollarrise weighing on currency markets.
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the won slipping to a two-week mightlthough some support come from third-quarter gdp d ata. that is the market snapshot in hong kong. angie: you know what i want to talk about? the yen. ,hinzo abe, two thirds majority markets went, ok, governor kuroda, monetary stimulus in place driving down the yen. i want to dive into the bloomberg, btv 9161 shows if we 114.49,hat july high of maybe we could see it break through to further weakness at 115, but no. david: we will see how we get there. it depends on what donald trump
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is able to do with tax reform in the u.s. i'm glad you brought it up. can we get my terminal up to show dollar-yen, marking those lines in the sand? 114 the july high, there it is. we could be looking for a triple top. if we blow through that, there is little resistance back to 118-119. watching the nikkei and the topix rocket if and when that does happen. get in our next guest. after decades of being a major importer of natural gas, the u.s. is set to become an exporter thanks to the boom in the growth and lng exports to help the economy.
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welcome. >> thank you. a facility ong the gulf coast of the nine states which will provide the lowest total cost lng in the world. until two years ago, who is the chairman and ceo of should near energy, which started lng exports from the united states. trump scheduled to make his trip to asia in about a week and a half or so. lnghave a lot of these buyers in the region, china, korea, or bigger emerging economies in the region.
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do you have a representative from your company on that trip? and if you can't talk details, should we expect an announcement from you on new contracts? >> no and no. is that brief enough? david: that is very brief. in united states, it is actually companies that send their gas. it is confusion everywhere. we have been doing this for over 10 years. we have never had the active support of the united states in selling our lng. sold 31 million tons out of 35 million tons and all the by ourcts were done commercial teams. and the obama administration towards the end, the state department became very
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supportive of our efforts because they understood the long-term implications, and the trump administration seems to be an agreement with the obama administration in continuing the support for the energy business thatontinuing to advocate america should continue to export this natural gas. the commercial deals will be the responsibility of individual companies in the united states, not the government. speaking, thely cost advantage of u.s. lng has diminished in recent years againstof prices priced cheap shale. how has that affected demand? is that an issue when it comes to the u.s. competing with russia and so on and so forth? there's not a single country anywhere in the world including with that can compete
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united states in terms the cost of natural gas. all of the gas consumed in the at lesstates is produce than one dollar at the well head. since we have run out of markets in the united states, we have to turn to exports. gascost of sending the to the coast light and building the facilities is six into, but not -- is expensive, but not more expensive than anywhere in the world. the challenge we have is in a new model where it is becoming so liquid that it is a true commodity business, we have to come up with the business model. the advantage we have is we have the cheapest natural gas and the ability to build the cheapest equivocation facilities anywhere in the world. angie: cheap is one thing, but
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what about supply and demand? butendous opportunity, there are headwinds of supply-demand balances. what is your outlook there? no, i don't think there are headwinds. i think they are tailwinds. we have the ability to deliver gas on the water in the gulf of mexico at $3.5 to four dollars. from there it is a matter of geography, so it can be delivered in asia had around six dollars, much more competitive than anything else we have seen in the markets today. we consider it a huge opportunity if you do your homework properly in the united states. david: that thing said, more
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the lng project will cost you $12 billion. you are looking to put this in operation by 2022. obtain financing for this project, and if not, where are you looking to obtain financing for this project? >> first, it will cost $15 billion for the liquid for case fication facility. it to the coastline will cost in the neighborhood of $25 billion. i'm flying to hong kong and i will ask for your credit card. i'm kidding, of course. david will probably cut his credit cards before then. >> i will take you that when i
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started 10 years ago come the challenge was the same. the idea was we had to find a new business model that worked because we did not think oil at 100 $50 a barrel one not work on a long-term basis. we came in with the new business model that indicated we would americaning based on gas prices, which everybody thought was totally crazy at the time, but we raise $30 billion on that basis. when you have a good business model and the ability to deliver a project people are looking for , financing is not an issue. there is plenty of financing in the world everywhere. we have done it before. as 120m i have assembled professionals working on all aspects, including the ability
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to get the best financing in the world for these kinds of projects. we are very confident and have done it before. angie: are there opportunities for you in china? it is undeniable that china's appetite for natural gas is huge. the last 12 months, the increase of energy imports from tona is on the order of 30% 40%, which is enormous. they are building a tremendous amount of gas facilities in china presumably with the intention to continue to demand at rapid rates. the only thing that could slow this down is if people did not build the infrastructure in places like the nine at states to continue to deliver to that market. prices go up.s,
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on the basis of what i am seeing today and the ability of know we have in the united states to continue to produce natural gas, china is a tremendous opportunity for us. david: on that note, we look i was going to say we look forward to your trip to hong kong. cards byt my credit the way. my credit limit will not be of much use to you. angie: he probably has more cash in his pocket than our credit limit. david: absolutely. how official up, intervention is hitting house prices in china. this is bloomberg. ♪
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♪ this is "bloomberg markets: asia." inie: china's home prices
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the fewest cities since january last year, adding signs to a property slow down. prices rose in 44 of 70 cities. let's get more from patrick wong. what can we expect in the coming months? isthe situation right now there is a slowing down. see that as well. last month, we see some tightening measures, especially lower tier cities. actually seeing tier one cities lack growth as of last , so it has spread over to
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other cities as well. momentum could be slowing down. david: do we know who these developers are, the biggest exposure, not shanghai, but these other lower tier cities? should we expect those developers to suffer? numbers look at the from individual developers, those focusing on lower tier cities, country garden, nominal sales growth. grand coming down 15%. we could see a further slowing down on those lower tier cities. angie: thank you so much for
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that. home prices certainly an issue in china with the 19th party congress as well. david: for living and for not speculating. they three or day four? angie: it in's tomorrow. that is all i know. david: tuesday, wednesday is when we find out how many of the standing committee will be there and who will be a among the standing committee. let's go to tom mackenzie live in beijing. very close there to the great hall of the people. talk to us about what we should be watching out for over the next 48 hours out of beijing? both you and angie are right that the focus shifts to wednesday. tuesday is when the party congress wraps up. wednesday is when we get an unveiling of the politburo's standing committee.
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we have had reports of the chinad in the south morning post saying five positions will change hands out of the seven. two will remain, president xi jinping and the premier, but it is the other five we are looking at. the big head of the anticorruption drive is likely to be stepping down. intoll tell us how much what degree president xi jinping has been able to stack the deck with his allies. he was very powerful leading up to this party congress, but we expect him to move many of his allies into the politburo and central committee. degree wait to see what of success he has in doing that come and that will give us an indication of how much power he has managed to accrue in the last five years. we are also hearing the pboc governor is likely to step down
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and retire between now and march of next year. that is according to sources at the pboc. he is the longest-serving central bank governor in the g-20, and the pboc saying they have three candidates they are looking at that. one could be a banking regulator, one could be a key economic adviser, and the other could be a deputy governor to the pboc. that is what we are looking for. angie: the u.s. and china both looking for possible new monetary policy heads. let's talk about supply-side reform, because we know that steelmakers are in focus. what exactly are we hearing about those already shuttered. with a be allowed to get back in the markets?
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tom: we heard from the chief economic planning part of the .overnment here seen the prices in rebar already. china will substantially increase market access and improve the business environment. china will offer foreign companies the same treatment as domestic companies before or after dark it access is granted. all the businesses will be viewed equally and treated fairly. steel andard about the cuts in capacity and the pollution curbs from the vice chairman talking about later access to foreign capital and chinese markets. that has been a bugbear from the
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european and u.s. chambers of commerce. many sectors remain closed off and many want to see greater market access. that is what the chairman was talking about over the weekend. ahead.plenty more stay with us. this is bloomberg. ♪
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♪ is suntory time. says he doesn't see a significant impact on consumer spending from the upcoming sales tax hike. consumers will accept it as long as the proceeds are spent on social programs. >> this time the prime minister proposes that he can percent of the total proceeds will go to
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support the social where fair because most of the people are concerned about the future of their elderly care, including working class, working force generation. changes to policy how to use the proceeds of the consumption tax his rightful. he judge at this time next year that he will raise 2%. i don't think that will hurt our economy. >> i want to ask a question about the election itself. was it a situation where we had it, for we sawn the opposition loses election? that's the point i want to get ahead. to theopposition lost opposition lost this election, does he really have a mandate? but if i am asked,
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i think the opposition party lost. i don't think the general public supported his spending as much as ¥2 trillion for education for free, so i think we have to use the deposits for the better of society. i mentioned about the biggest concern of the general public, which is the elderly care instead of free education. >> i'm just curious. you spoke about the resilience of the retail environment and the consumer sentiment and being able to withstand this next consumption tax hike if it does go through late next year. what is your take away on this bothof reflationary spirit
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in consumer sentiment as well as how japan inc. corporate environment is taking it. analysts often say it will take a long time to get to 2% because of this deflationary sentiment being hard to shake. do you feel like there is optimism? >> yes, i have optimism. not 2%. the reason is the general public is concern about elderly care. the elderly care system should be reengineered by funding from the 2% increase. again, a last time we increased 2%, it did not go to support the elderly care so much. is wellly care engineered, people will feel comfortable to the future, then people will be incentivized to spend the money. the stumbling block for the
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general public not to spend money is because of the concern to the future. that comes from elderly care, not by themselves, their parents as well, so we have to make use of the proceeds from the 2% increase. that is the key. angie: that was the ceo of suntory speaking with bloomberg. david: that is it for us. bloomberg markets: middle east coming up at the top of the hour. we have a preview. good morning. a aipac show picking up -- packed show picking up where you left off. theill break it down what japanese election victory means for markets. we widen out the discussion to some other central banks, including the fed and ecb. we will look at crude oil.
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there might be an ipo around the corner in dubai. and more at the top of the hour. this is bloomberg. ♪
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