tv Bloomberg Markets Asia Bloomberg December 27, 2017 8:00pm-9:00pm EST
rishaad: asia-pacific stocks flirting with another benchmark high, another direction coming from wall street overnight. the best year of equities since 2013 is ending with someone of a whimper. investors turned to what the new year will bring. at retail sales smashing expectations in november. consumers begin to open their wallets. this is bloomberg markets. ♪ equities on the wall
street, pretty lackluster. the bond market is where the action is. us the flattening of the yield curve taking place. there is almost this final push for this to happen. yield on to an tenure treasuries just 50.6 basis points, closing to this decade low which is reached on december 6. a small part of this really coming from markets shifting to a new benchmark, one of the biggest single session shifts. the final flattening push, it appears to be money managers that essentially want windowdressing to tighten up their portfolios before the year finishes. that is the bond market. a look at what is going on with the start of the trading day at singapore, taipei, and kuala lumpur. it's get a look at what is going on and how things are shaping up.
>> lets kickoff with the open in besti with clocking the they in two weeks, continuing the advance. the year's games have not been able to claim the 11,000 mark given some investor caution around iphone sales. we see stocks under pressure, and in kuala lumpur, we see a flat open. it's get a quick check of the assets in focus. rebounding just a touch after the decline. the recent drop has wrought about year-end flows and exacerbated the flattening of the yield curve. bitcoin has gyrations. they continue after losing that level overnight. slipping.d, we see it oil is still set for a fourth monthly gain. with the treasury
moving to japanese stocks fluctuating as they are slipping in tokyo and energy shares are also under pressure in japan as well as in south korea but the cost be is being kept afloat by i.t. and health care stocks. and the korean won also gaining ground along with most other regional currencies barring the same dollar. take a look at equity movers in focus because we have health gains.ocks helping jumping on expectations for a deal according to management. as stock has risen as much 17% to a june 2016 high. rising to an october 2012 high after announcing an investment plan to produce home. the worst performer. this week, it did announced plans to extend to 2020.
>> lets have a look at what is going on in terms of first word news and find out in sydney where paul allen is. china's most powerful figures meet in the new year to discuss the first amendment to the constitution since 2004. they offered no details on changes but said the decision was made at a bureau meeting on wednesday. the constitution was first adopted in 1982 and has been revised four times since the communist party central committee will review any amendments later in january. the world's most valuable spirits maker has a bullish year. said to raise the price of liquor, the first hike in five years. they want to grow revenue by at least 10% in 2018. they expect total profit for the current year to have risen by almost 60%.
bitcoin slipped below $15,000 after the biggest rally in two weeks into the route wiped away more than $9,000. futures on the exchange slipped more than 3% and volatility as to the debate about how to value the digital coin which surged this year. to likes continue grifter -- cryptocurrencies, but seen as a safer alternative. investment returns in china, the value added takes effect on january 1 and is part of a broader outcome of how companies pay taxes in the world's second-biggest economy. hedge funds are already under officials britney. rival products such as mutual funds are partly exempt from the new charge. to take charge of a $1.3 billion due to the corporate tax change in the united states. lowering the rate from dirty 5% to 21% will benefit companies
and requires them to recalculate. bank of america will take a $3 billion charge while credit suisse is expecting a $2.3 allion hit which will remain third straight annual loss. a global news 24 hours a day powered by more than 2700 and analysts in more than 120 countries. i'm paul allen. this is bloomberg. rishaad: the japan korea economy, we joined from tokyo. tell us about this and how do these numbers set up? >> the narrative is still in place. the global economy continues to fuel growth. it is the second highest on the year. and that is double digits for
most of the year. , and globaltoday demand continues to fuel production in japan. as well as capital investments. the trend is still intact. it's been a running theme this year helped on by the yen and where it is. thate face of it, it sees -- seems that these november figures dip into that narrative. >> that is true. we are continuing to see strong demand globally. that is fueling into capital investment here. it fuel't quite seen higher wages that are needed to really pick up spending and fuel inflation. side ofar, the exports the equation is certainly doing the job.
rishaad: coming something here henry, we have had corporate scandals. on closer inspection, do these numbers have any impact on industrial production, at least? >> the impact of the corporate scandals has been negligible. like we see a new scandal corrupt every week or two. that is tarnishing the reputations of the companies involved. that in theeeing real economy at. it is mostly a reputational blow. henry, thank you very much indeed. east springs market strategy for 2018 with asian equity portfolio . tokyo,in us again from
rishaad: a quick check of the latest business flash headlines. dealn closing long-term with asset manager tcw taking almost half of the stake owned by the carlyle group. for $490% of the firm million reducing carlyle's holding to 31% of the deal. carlyle'smore than initial investment in 2013. managers go to 44%. the volvo car owner is to become the largest shareholder in a volvo truck's. activist investment, it is said to be worth $3.9 billion. for the first time, they moved
into the heavy truck and bus market. 1mdb pay the sovereign wealth fund, the remainder of arbitration said ahead of a year-end deadline. with 603 million installment training. andup by the prime minister at the center of multiple investigations. alleged corruption and money laundering. let's have a look at emerging-market currencies extending gains against the dollar. let's get the latest on this emerging markets editor and are james joins us. -- andrew james joins us. the foreign exchange market taking it.
>> it gave the currency of boost. a pretty strong finish to the year. gain this on an 11% year. rishaad: is it more of a dollar more than anything else? >> sure. it throughout the year has been mainly down to just the massive big flows seen into emerging-market stocks and bonds. it has been a function of strong growth in the developing and emerging economies. the south african rand surging.
taking over as leader of the anc. coming more about the south korean won. >> perhaps, surprisingly, it has been the best emerging-market currency in asia this year. surprisingly, of course, the nuclear brinkmanship between the u.s. and north korea. the wan is the most liquid currency in asia and it has benefited from the big inflows, particularly in to the bond market. we also have the south korean central bank becoming the first asian central bank to hike interest rates this year. it has helped the juan. in growth number in south korea.
>> that's a lot for that. just through the emerging-market affects and looking at the south korean won. looking atorean won price. asia-pacific markets hunting and on a new record. investments, the equity portfolio specialist. the north korean won price. >> i don't keep track of north korean won. [laughter] rishaad: the tell me about it. from a currency standpoint, it's hard to detect because we were in 2017 and kind of where we were a year ago, everybody thought the theme would be anywhere between seven .2 to 7.5. it was a most a given that the handle would be a seven in front of it. >> and that is her a hard to
predict. the markets did get right is at asian currencies, the u.s. dollar, we didn't see a lot of strength coming from there. the fed did not raise interest rates quicker than anticipated. i think that's the one thing the markets got right. what will be the trade for 2018? it could be up in the air. the focus on fundamentals more than valuations. and he gets into investment strategy. have aelieve japan does lot of merit still. when you look at overall balance sheet that continues to strengthen, a lot of the toxic very different assets.
they are incorporating a lot of that. extent, you have to remember the u.s. dollar trade has gone a little bit differently. the correlation is very high. >> a think it's only the last few months. >> one of those things where if the breakdown continues further, it will be very beneficial to corporate japan. and a very strong story. 25% of japanese trade is with the u.s.. thought in the 15% range. a lot less dependent on the u.s. trade. investors should focus on that. thought in the 15% range. focus on japanese banks, doing very well despite the fact that interest rates are still very low. rishaad: and you get use on the yield curve. a >> they're going
overseas and focusing on southeast asia. and now closed almost half of the interest rate books, they are coming from lending overseas. a lot of these banks are focusing the attention on that. look at the software side, and the hardware side. there is attractiveness and some value there as well. rishaad: we saw on tuesday some sprigs of green shoots of inflation. stronger than anticipated retail sales. a positive picture for the quarter as a whole. how do you interpret that? does this mean 2018 might be the year that the boj take the economy back on track? >> it will be difficult. -san, theyink kuroda song
are emphasizing wage growth. this .5% in wage growth, you need to see a bit more. days this weeke as well, you see consumer confidence coming back and more people coming out and spending. come back a bit and at the same time, you need a bit more of that. moreill need to see a bit positive quarters coming from japan in order to maybe see a bit more actions from the boj. rishaad: stick around from east springs investments and enjoy more details. interactive television function, go to tv . if you are a bloomberg user, you can dive into the securities function. look at the conversation and have that message. more than once during the programming. this is for bloomberg subscribers only.
rishaad: coming to an end and getting the price of what the session is looking like. technology has been one of the key drivers of what been going on the hang seng market. 34% so seen a gain of far this year. it could, perhaps, be something to watch out for in 2018. likely that the tech may be a victim of caution. investments, the asia equity portfolio specialist. huge driver here. that surely can't be repeated.
>> you can never say never. at 2017, half of the gains really comes from software. is a quarter of all the gains during the market cap. these companies have done very well in 2017. they have continued to keep driving further. potentially on a short-term we suspect investors should focus on some of the unloved factors. that is really overlooked this year. in china,e sectors banks had really been overlooked. just on the face of it, you look at the hang seng. a screaming value.
you have the need and you start thinking that those stocks, do they come back? you have this move. it will that -- will that be the theme in 2018? >> is not a strong as we have seen in 2017, but you do still get fairly good market performances in 2018 and it has to come from some of these dollar stocks. seal -- you see oil hovering back and it could be a benefit in terms of earnings growth. utilities have not done very well this year, with them being the hang seng index. and at the same time, telecoms operators have not been well. and potentially, some of the mobile operators could potentially make. so there can be some of these coming back for some of the sectors. when we are going to a cyclical
are of recovery, banks driving the cyclical recovery. thereen you look at 2017, are i.t. stocks driving that recovery. you do continue to see the recovery and he see the banks do well. rishaad: should. will be the top markets looking into the year? i will that be the case. >> 2018 is looking to be a very solid year for china as well as india. india's side, we talk about valuations. it we look at earnings growth. india is turning things around. expecting seeing anywhere from 17% to 18% earnings growth for corporate india in 2018. and in china's case, valuations are still quite attractive.
and evaluations are quite high but earnings growth when you look at chinese companies is roughly 15%. .ocus on asia in particular it does look like a very attractive country as well. who are you looking at? >> we do tend to sort of want to avoid some of those countries and these markets have done well over the last few years. rishaad: he is in asia portfolio specialist. at the other side of it, the next question about bitcoin.
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♪ p.m. in hong kong, 8:29 p.m. on the eastern seaboard of the united dates. especially with record highs, it is a muted session. little effectively volume and perhaps trading some volatility. half a percentage point from the record of the asia-pacific index. looking at stronger-than-expected data out of japan, retail sales and industrial production beating economist estimates. curveattening bond yield
which is the top stories as well. a bit later on today. the open is practically upon us. the market is up. let's see what the open is looking like. >> we have some pressure coming through from chinese stocks, the shanghai composite fighting for a second session. we see a mixed picture from the , sliding and small-cap about .2%. see the hang seng coming from a fourth day as the gauges resuming gains this thursday. maker --ck on liquor this after the company says it expects annual profit to double this year as compared to 2016. raising prices for the signature drink for the first time in five years.
it will boost revenue by 10% in 2018. a quick check on the copper producers. ground next year. the copper is writing that wave higher. take a look at the breakdown. we do have consumer discretionary stocks. recovering from yesterday's optical as well. also on the up here, keep an eye returns,tax investment taking effect on january 1. that is expected to deal a blow to the company's hedge fund industry which is already under heavy regulatory scrutiny. barring consumer staples in hong kong. to go quick look at chinese carmakers. on the rise, expected to become a top shareholder.
energyetting up a new venture with one of its units, shares jumping. the stock outperforms at credit suisse and we also are on the rise. ms. the china is extending tax breaks to 2020. in afterue to jump storing as much as 50% on wednesday. it means onion, and resuming trade. the company says the former ceo is seeking to wind up a controlling shareholder. it does appear the mood on main street in the u.s. is a little less cherry.
>> consumer confidence fell from a 17 year high as people became less upbeat about jobs in the economy. new york-based confidence index fell to a three-month low of 122.1. even so, most people remain optimistic. a share of respondents expecting comes to rise and climbed the highest since march. it has said to increase borrowing to shore up spending as income declines. the finance ministry says it slows andllection plans to offset the $7.8 billion borrowing by curbing treasury bills. the worst rout since records
began. u.s. demand for jews has been falling for years and given the investor harvest, interest is shrinking as fewer people want to use futures to hedge. prices have slumped about 17% this month alone and 60 day volatility is at its lowest in three years. the richest people on earth became a little better off in 2017. the stock markets setting new records to help the world's wealthiest and in and stretch really and dollars this year, more than four times again in 2016. added more than $34 billion to his fortune, knocking bill gates off the top of the list of the world's richest. he held the number one spot since may of 2013. than 2700 more journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg.
rishaad: in china, the value taking effect. the world's second-biggest economy. manager it affect asset looking at this earlier? it is awfully complicated and did opaque. >> we have spoken to some tax experts on this. and also spoken to the hedge fund manager. grips.getting to it may have exemptions. everyone is still assessing exactly what it means.
a lot of fuzziness in the rules out there. it is hard to notice where things are at. what has been the response from the hedge fund community? tohe was telling them how split the extra cost. speculating that china has thousands of hedge funds. a securities are you later came out with pretty strong language and in the end,
it was the regulators people are doing it. we have regulatory scrutiny and now we have this extra tax burden as well. >> let's get to bitcoin now. of a wildn the back 2017, a particularly while december as well. dramatic declines and a barrage of warnings from doubters. a barrage of people saying it could go even higher. me, how does bitcoin interpret it?
we simply don't know. the rearview mirror, what are they seeing? >> overall, people are pretty nervous. look at last friday, almost a week ago. the amount of fear and dread was really high. or 10,000.11,000 this is the end. nervous.e very are on those feelings those people's minds. even the biggest bitcoin bulls didn't expected to rise in this amount of time and in a short amount of time. i think a lot of people are very nervous about if we will see a large correction. we did see a large correction a week ago.
there is not much trading during the holidays. grinding higher, and if we break that 10,000, where do we go? the key numbers are 10000 and 19,000. we will see that play out over the next few weeks. expect to see a lot of trading. in the first couple of weeks, we will see either 10,000 or 19,000 tested. that is what i'm hearing from people. rishaad: the thing is, we have people like mike nova grad saying 8000, somebody saying 50,000. tell us about some of the calls out there. break 10,000, the
has sold00, 6000, it around a lot. probably not likely that it will break through 6000 or so. it seems to be the technical floor people are talking about. those are the downsides. as far as the upside, i think it is clear is 19,000. there is no real kind of number. selling will take their sell orders off the order books because frankly, nobody knows how high it could go. when you have that little liquidity on the south side, it means it was is to blast through and push it higher. that is what we saw in early december when a jump from 10,000 to 18,000 in a matter of days. to 6000 isside, 5000 what i'm hearing if it does break 10,000. rishaad: great to have you in tokyo talking about bitcoin. bank of america merrill lynch
rishaad: a quick check of the latest business flash headlines. softbank leading a $3.3 billion deal for fortress. u.s.irst publicly traded private equity company is the listed shares on wednesday morning before the announcement and the stock closed his last 785, almost 60% below the ipo price. eight dollars and eight cents a share back in february. clients can, climbing 39% down to close to selling assets to get out of debt restructuring. also cut by $6 billion. the stock has more than doubled
amid speculation that this man has obtained the necessary agreements to sell off assets to fend off insolvency. survey on u.s. share list facing opposition, the count is challenged by drilling info which will offer a daily update to the number of .xplorers it put satellite centers on 90% of land-based u.s. rigs to provide faster information. the next big thing is friday. japan is had a few more signs of recovery. unexpected retail sale and output for november. let's find out what the implication is. bank of america merrill lynch ,ecurity, the fx strategist these numbers are good. pretty strong. what is your take away.
>> i think it was a pretty good number. strength is busy. i think we are seeing our kind of recovery in domestic demand, both in capital expenditure and in consumers on the back of tight output gap. , consumers are starting to spend. it the continuous tightening of the labor market. december 18 will be a different year. good growth it was this year. but it will be driven by domestic demand strength. it would be a remarkable sea change for the japanese economy, but can that return to japan's streets and engender that inflation?
>> that is the key question for next year. , and it is is strong tightening. obviously, inflation is still low in terms of the absolute growth. i think in 2018, we are likely to see gradual acceleration on the back of a weaker exchange rate and tightening gdp gap. however, it will take time. companies will have to be confident enough to increase their output prices. and for that to happen, consumption should continue to strengthen. and it will be a key thing to watch. this is nicely into how much will be dependent on what goes on with the yen. reliant,coming less
and people are predicting weakness for the currency ahead? >> this year, one of the biggest surprises to the market is equity strength. yen.te quite stable i think it this point, we should not attribute this to real domestic strength. it was basically export strength or than by external economies. this was the first time that japan's export really grew. despite japanese yen strength. is, i would say, starting 4.4 in the japanese economy. we will see domestic economy think this i
morning's data may have been just the beginning of that cycle kicking in. rishaad: the bank of japan will look at it and think about the of policyy normalization sometime in the new year? klaxon think the bank of japan think the bank of japan will start normalizing policy in the second half of 2018. but it is not a preset course. there are several conditions reallygovernor kuroda starts communicating to the markets about normalization. the economy should continue with strength. as i said, domestic inflation will have to accelerate on the domestic factor. and i do think levels should be higher than the current levels.
the bank of japan had that in terms of potential market shock that the policy normalization would hold. be u.s.e sequence would yields. and finally, i think the bank of japan can consider normalizing its policy. think he so much, from the bank of america merrill lynch here. we have reports of sub demand for the iphone x. could some of the skepticism and appleby unfounded? next. -- of apple be unfounded? next. ♪
iphone x have prompted skeptical calls on the new smart phone. reports of shipment protections have been weighing on apple shares this week. the cofounder of luke ventures joined daybreak america to ring us his take on the prospect. >> it sounds bad when you need to put in some context. every year, going into a cycle, apple will rewind six months and give these reports to their suppliers. every year as the cycle starts in the month of december, we will hear about a contraction of orders. the reason why apple does this, think about a coach telling a runner to run a three minute mile. apple only wants them to run a four-minute mile. we always hear this back.
take these numbers for face value and the production in the would implyr, it about 50% of the phones in the next year will be the iphone x. expecting thatre number to be 25% to 30%. this is, i think, expected. >> take us back to the fourth quarter, eight and 10 out of the same time. do you know if they made it up in the fourth quarter. >> the builders and suppliers of a struggling to keep up. we're just reaching. live.
there isn't a lot of demand. you have supply. theres are going to be for the iphone x. it was a positive thing. why positive? they are onted that track and telling the suppliers to build 30 million iphone x's in the march quarter. if you normalize that for the year, it implies that half of the phones are the higher-priced iphone x. to boil the apple story down over the next quarter's, it is this idea that the average selling price will be going up. that will be the key factor investors will focus on. >> doing no of customers are
getting more price sensitive when it comes to apple? >> we look back at what the supply is and really tight. the simple takeaway is this. are going to go up meaningfully, greater than 15% this year. it is important to know that the vast majority of people that buy iphones, they buy them on a monthly basis. you're talking $40 to $48 a month and that eight dollars difference israel for most people. >> -- is real for most people. >> do they have to sell more of them? >> i think it's both cylinders. your phone is the highest utility you will get for any technology. cracks what about overseas? china has been a big target for apple. there has been thought when you get to those kind of prices, it
gets a lot cheaper for competitors over there. >> i don't have as good of a sense there. there has been a boom and bust. the iphone 6 cycle three years ago, they did exceptionally well in china. the last two years, it has been more down. i expect the first bits of iphone x will do well and then competition will chip away. rishaad: that was gene munster on bloomberg daybreak: americas. speaking of, apple ceo tim cook receiving a 74% rise in his annual bonus for 2017. it is to the company posting higher revenue and his incentive pay totaling $9.3 million to the end of september. he also took him 3 million in on thisnd a previously list equity award of $89 million. it takes his total to about $102 million. have the canadian
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