tv Bloomberg Markets Asia Bloomberg January 24, 2018 10:00pm-11:00pm EST
strong currency also on the agenda great >> and are we seeing the end of an era? indicating change is coming at -- if we look at the index, that is up. is up and if we look across, a little bit of strength. thailand opens a couple of minutes ago. >> when you look at 19 straight days, we were a little higher at
the open. moment.g just a let's have a look at this chart here. what we have done here is put together the amount of money. we put the amount together and we put it on the charts. if you takeaways away from this. first is 15 days into this rally, that is where the money started to come in. daysve seen the past few or so, so much -- not so much. it also tells us there is a lot of money. all a it could cause a little bit of disruption.
monday, tuesday and wednesday, not so much. that is one chart you want to follow. this want to mention morning, about an hour for there.opened, a surprise first time since the crisis, so what we have done is taken a look at some of the indicators. was a very2016 battier. 2018, how can we sustain that? see,rolling over that we hear is the global price index. thatct, -- just zoom in on one and as you can see, does
this mean it gets worse from here? it is something to watch. >> looking at what is happening for south korea as well. >> thanks, the governor has not been reselected to a senior policymaking body. the -- down from theep he was bank for it reappointed in 2013. president trump says he is willing to talk under both as part of the investigation into alleged collusion with russia. speaking at the white house, he
says i'm looking forward to it. a panel of brazilian judges has voted to uphold the conviction and increase his present to more than 12 years. the stock exchange closed at a record high on the news and the reality up 3%. -- most of the money will go to the bank whose ratio is 25% more than double that of the overall sector. loan growth fell to a 25-year-old -- 25 year low.
i'm paul allen. this is bloomberg. economicent trump's -- landed ined -- rossrce secretary wilbur is already underway. flex very confusing signals out of washington. us.oins chris, who do i listen to? commerce or treasury? >> the treasury is in charge of dollar policy and has been for some time. wilbur ross was trying
to highlight there were two parts of steve mnuchin's comments on the dollar and it was not just one-sided. he did not say a weaker dollar is good for your straight, but he also said over the long-term, a strong dollar would reflect a strong u.s. economy. .hose are not new comments he said that last year and president trump also make comments that were bearish on the dollar. i think what is important is that the treasury secretary in a davosigh-profile forum in where he will hold meetings with political and business leaders around the world used this language that he had used before , that a weaker dollar is good for trade area it was a clear signal that this is a different approach than previous
administrations. it started under the treasury secretary back in the 1990's. it is true that some of the treasury secretary since then has not been big fans. the first two under president bush were not really comfortable with it. to of them even tried redefine it. this is really out of sync with what we have heard from the past. theory underpinning the u.s. dollar and also the geopolitics. this is something we need to bear in mind. is it something we need to factor in?
not so sure about geopolitics. it is hard to see investors saying that will not invest simply because i don't like the political contours of the occupant of the white house. say thatt is fair to by putting this on the trade balance, people are not -- people in the market are getting a much more sensitive about the current deficit. a couple of years ago, the current deficit was there, it as sensitive of an issue. it is increasingly becoming a narrative in the market that point deficits are problem with the u.s. and the u.s. needs to attract money from overseas in order to finance these.
i think the key is the other countries now respond to the administration. how do japanese officials respond? how do european officials respond? do we see a cycle of ratcheting up rhetoric question mark so far, we haven't. >> what everyone wants to know is it kind of feels to me that it is a little overdone. there is a reason that the dollar is weak. >> i think the number of analysts anticipate there is further dollar weakness in store. if you look at the rest of the year, the focus right now is on when and to what extent the europeans and japanese will be rolling back stimulus. people know the federal reserve
will continue its gradual half of raising rates so the focus is really on the other guys and if , then,art to roll back a weakening of the dollar. all the more so if it continues with its protectionist rhetoric during -- rhetoric. up next, more on washington's impact on the dollar and trade. this is bloomberg.
the trump administration, saying it strongly of -- linkng us is capital international chairman and ceo. thanks for joining us are you reading into the trade between the u.s. and china? asked i think this is another game that the administration is taking things obviously from a much different angle from the previous administration treated i read much into it. talk.k this is really sentimentome positive . at the end of the day, i think it is worse. >> it is a sugar rush, but the real progress happens behind closed doors, bringing you allies on board, but that does not give you the immediate headline that you want.
>> this is flying, make a big splash, flied out. play behind sort of that. out. push your chest i think the real issue is this administration has been long on talk and short on action. -- what is the follow-through. i think that is the real challenge. i don't think it happens or it i don't think we start trade wars. i think the positive takeaway is is now completely off the table. there's no way the u.s. can go back to that commentary after
mnuchin i think is really under the political game and what they need to do. this is a stimulus on the back of the tax cuts are is now you have u.s. exports, but like i said i don't think this really plays out much deeper than that. >> a very big microphone coming up. what you think he will say? you think he will go on on how unfair the trade settings are? or do you think he will be like this is what i've done? >> i think you guys would never have me back if i told you what i think he's going to do. >> what i think he should say is that this u.s. is open for business.
however, those are the words. the actions have not suggested that. i think he needs to speak to the audience that is there. globe andking to the people that want to do business and understand what this administration is trying to prove. there needs to be consistency. what i do think he will do is spend a lot of time patting himself on the back and what he attributes to be the trump factor in the global community right now. i don't think that is what people want to hear. >> a you are off the view that we might be hiding a little bit. can i get the chart that shows
you the current lapse -- collapse of the dollar. perhaps it adds another possible rate hike to the three or four we are allegedly pricing at the moment. text there's a lot of chatter that rates are going to go quicker than anybody saw. aboutways very cautious that happening without seeing the real data or having a firm evidence of inflation. we've often said the economist making a business decision is not always the best way to travel so for 10 years, the world has been looking for inflation and it has been hoping and praying. it is now showing up may slower than people wanted it to your it there's a reason that after 10 years of patients we have to go
andcomplete opposite way two things -- the global economy delegate for that. and iill not go over well just worry that everyone is quick to prove that this thing by worked in the proof goes taking breaks up. wage growth in the u.s. really bothers me. it shows that u.s. workers are -- lacent and they i'm not so sure that is a great thing there. >> i believe the play right now is playing out in front of us. what is left out of flashes play to me, i think the
the market is very powerful. we have been looking and hoping for it. we understand where the direction is and i think what happens now is people say there's confidence here. there has been a huge effort to deleverage in china. it doesn't happen overnight. it is a seven-year plan. i think what really matters is if you have the financials leading the rally, you can don't needbanks rallies when they have impaired balance sheets. i think that is where the money goes and should go right now. has ak just to catch up big move ahead just to get even.
>> the economy is doing well and it is not like they are raising rates. lineaghi has a very thin to walk. he needs to get across this idea of gradualism. surenk he needs to make the yields don't back up and we need to get the time election going and smooth without a debt problem. think he really has to articulate the fact he has control over this thing and people can be confident they understand what is going on. as long as it is articulated, i think it is ok.
>> malaysia is out with its shares today. 16 economists think the bank will raise the central rate. we have a terminal chart that shows what has been happening in malaysia. you have that. period when it was above and the middle of 2016 is when rates went down. obviously, this is a question of inflation and oil as well.
analysis from bloomberg's economy editor. we have the december inflation data expected. is that enough for the central bank to hold the trigger -- trigger? >> the overwhelming seem to think so. i think it looks very likely they will want to tighten today. i think the inflation numbers are seeing higher fuel prices that, i thinkon the reason most economists think the rate hike is likely today is
indicatedentral banks in this last decision in november that it can reduce some of the accommodations, so i think given the outlook, we're looking at a policy tightening today. >> i'm a very impatient person so i want to look almost beyond this rate hike. you think it will be one and done or one in more -- and more question marks is i think if they do hike today for if they keep the market unchanged, the forward guidance is going to be key. for now, most of our thinking that one hike should be enough and then watch how the inflation outlook hands out. but weon is picking up,
are not seeing any inflation spiral. growth is pretty strong and so i is anthe expectation interest rate hike would be enough to keep those at they. what is also complicating at the moment is the strong currency. it is trading near a two-year high. that is going to be beneficial to the inflation outcome and will also influence the interest rate outlook. >> thank you. we also have elections of course. the lunchheading into break into china. lots more to talk about. kong time is when
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>> we are heading into the afternoon in seoul. when you look at the markets, we are digesting the disappointing surprise when you look at gdp numbers. first contraction since the global financial crisis. the end of currencythe end of cp still. >> a gray day in hong kong. 2/10th ofeng is down the present. still up this year around 14%. you're watching "bloomberg markets: asia." >> let's get you a quick check
of your first word headlines. paul: the world's second richest person is warning president trump's america first campaign could damage influence around the world. bill gates said other countries are raising their presence as the u.s. pulls back. he says there is a soft power. washington poor. mr. gates poor. mr. gates: that is the area where i have chosen to take the stuff created through microsoft, and warren buffett has been so generous in providing. i understand that money could be very well spent. i am in there, saying, come on, let's keep up the good work. paul: the wall street journal
says lg will raise money for washing machineswashington now d power. gates urged the president to do more to help the and dryers after the white house decision to raise tariffs. an lg spokesperson says the company is making adjustments, because the penalties were more severe than recommended by the international trade commission. a two-day technical glitch on the ho chi minh stock exchange. asia-pacific markets have had several trading halts recently. indonesia cell phone -- indonesia suffered a disruption in july. singapore exchange was shut last july by a technical malfunction. spacex testfired its biggest newest rapid ahead -- biggest and newest rocket ahead of a prelaunch test at the kennedy space center. all 3 boosters, 27 engines all, were tested. spacex's elon musk says
everything went well. it will carry a tesla roadster the woman to musk. musk.dster belonging to 2700 journalists in 120 countries. this is bloomberg. >> china is amongst the spotlight with its strength and challenges, drawing lots of attention. >> i think in china the authorities get it. that may not have been the case years ago, but certainly they get the implications. financialhat stability is giving the preeminence it is given, the authorities are convinced they can only move around the road of financial development. i think this is very good news. or quitehinese have, f
a little while, been superb at free-trade rhetoric and even more super at protectionist behavior. you have to separate the language from the activities. anytime the u.s. does anything to deal with a problem, we are called protectionist. plans to further measures in banking, securities, and ensuring access. many foreign friends want to know when these measures will materialize. let me respond here. we will increment these measures within this year. the earlier, the better. >> some of the comments from davos on china. attractchina's plan to
investment. from talk of stuffed up -- stepped up reforms. >> i am not sure reforms are at the top of the do do list now. it is more about consolidating power in asian, getting the new team set up. -- in beiging and getting the new team set up. 3.7n terms of the currency, -- the strength of the currency almost closing in to those pre-2015 devaluation highs. how much more can the chinese stomach? >> you will find in the coming years, that becomes an interest rate issue. ithat will have a dramatic impat
on currency rates and interest issues. it will be quite a problematic issue for china coming up. >> they have two bad options, the pboc. >> they only have bad options. >> would it be a good idea to follow the fed, or do they do what they used to do, and not pay attention to the fed and do a little tweaking? brock: the fed promised us 3 rate increases in 2015. if the pboc doesn't follow along, you will see currency lowssures, r&b out welf pressures that are enormous. the bond market should continue. that is not an attractive option. if the pboc follows along, what you see are debt intensive sectors, such as steel, coal,
real estate, that all caps pushed one step closer to insolvency. then you have to revisit annual growth projections, which is not option.nt the pboc is somewhat in a vice. what will they do in a situation where they have little control and bad options? they revealed the strategy of december, when the fed raised 25 basis points,the pboc the next day raised 5 basis points. a small increase, but all they thought they could get the market to bear. the next day, china tried to ameliorate this pressure and remove steel export tariffs. they knew this would upset donald trump. three days later donald trump labeled china a strategic competitor. they don't have good options. they will try and thread a
needle. in doing so, alll economic policy, including trade issues, becomes subservient to this meta issue. >> we talked about this report yesterday, where china ordered its state-owned enterprises to turn a profit. i don't know how you can do that in a system where you just order profits to show up. old industries, steel, are government owned. i can't imagine them letting these fail if you have to make profits. brock: that is right. that is why when they raised rates, they old industries, mova struggling industry. china can't have a major soe sector become insolvent. not only are there larger banking issues involved, but they can't have much of the government business apparatus go under. that is why they are being
careful. it begs the question of when the fed meets again in march, where they are widely expected to raise rates again. play the steel export card. it will be an interesting few weeks. as china moves yuan strength. as china moves up the manufacturing chain, its exports do you buy into that? brock: that is the goal, and it certainly makes a lot of sense, but there is ado you buy into sd birds have flown the cage, but the new ones have not taken route. it is a nice theory. i question whether china can survive that kind of economic stress right now. perhaps in the future at some point. >> you know of what about conglomerates - a lot about conglomerates.
six of its units have been suspended. >> do they still have more that are trading? is is this symptomatic of far more widespread issues china will have to undertake, or is it a couple of rogue conglomerates that have to rein in asset expeditions overseas? brock: no, i think the debt issues china has are under considered or underreported. when you see a company like hna or any large mna conglomerates being pressured to straighten out the balance sheets, the market should look at that as a positive development. that means chinese bureaucrats and regulators are acknowledging there is a problem, and taking steps to deal with it. over the short term, that creates dislocation. >> do they close a systemic risk? -- pose a systemic risk, these
companies? brock: beijing agrees. they have taken a number of measures on this issue. >> it wouldn't be fair to say hna is going to collapse this year. it is $70 billion in debt. in this sort of environment, where they are tightening the grips on rolling over debt, would it be feasible for them not to default? a company is able to raise the money that it needs to raise? it depends what we mean by default. its it going under? will it cease operations? absolutely not. will there be some balance sheet reorganization? will some people inside the company have to it depends whatn by default. it take haircuts? that is a pretty strong bet. it will have to go through a
tumultuous period of reorganization, but i fully expect they will come out on the other end. they have underlying businesses that are strong, that are real businesses. it will be difficult, but hna will ultimately be fine. >> you are based in shanghai 2/3 of the time. since they have tightened on corporate debt, has anything been noticeable? brock: in terms of shanghai business? >> right. what is the talk on the ground? is it more expensive to raise money? depends.
some depends. some waysi, it is more difficult. hna probably spends a significant portion of its energy trying to arrange ways, t those problems of life to different segments -- those to differenty segments of the market. most companies are still being financed. >> to different this brings the opportunity for other players in the market. where do you see opportunities in the chinese market? brock: in terms of listed equities, i am a big believer in cash right now. i'm not sure i like the chinese equity markets in general. i would say chinese conglomerates are really beginning in earnest to undertake what i'm calling the great unwinding of their previous deals of the last 3 years. some of these will be sold at what are comparatively favorable prices. picking theherry have my eye on, and
we are seeing in line, and what we are seeing in india. arguably you could say china is 15 years ahead of cleaning up its banking sector, unlocking the ability of its state owned banks to start lending. india, that was a big story, when they recapitalized. nonperforming loans ratio to credit. >> they have been making some progress in terms of tackling the country's that loans problem. said some banks were feeling the pinch of capital buffers. >> we have to keep in mind the perspective of why some of these that loans -- these projects were built when the economy was expected to continue to grow at 12%. then came the slowdown in growth. then came the fall in commodity prices, then the decline in
implementation. what is important is for us not to go just recognition of bad loans. it is important to work on resolution and recovery. i think there is a huge amount of -- created to make that happen. >> we are talking about $210 among the bad debt, worst in the world. have you been happy with the progress so far? on the ecosystem, on the ecosyf progress is being made. the regulatory guidelines layout the resolution that can be done. the most important is the bankruptcy court, which allows you to take companies to the national tribunals and do a recovery and judicial process under the umbrella. watershed watershed year in
terms of cases getting resolved. it is a timeis bound decision that ought to come. sogives a judicial cover, the banks are more likely to take those positions. we have not completed the full round. i am very optimistic this will work very well. >> what is not going too well is that inflation is far from the target. --re do you see rates haead where do you see rates headed? but ilation is going up, think it will remain within the rbi flexible levels of 2% or 4%. therefore, the reduction in interest rate cycle, i think has stopped now. >> do you see an increase anytime soon? >> not soon. i don't expect it to happen as we speak or the recent.
yes, i think we would prepare for an increase. >> would that cycle has happened before we talk to you next year in davos? >> [laughter] >> 12 months is a very long time. >> very diplomatic answer. what are you hoping to hear from president trump? >> since we spoke about the financial sector in banking, one thing we are all forgetting is that the structural changes taking place in an economy is driving the financial position of savings. we talk of demonetization. what that has done is brought in savings from the informal sector to the formal sector. in the last 18 months, india has added $400 billion to financial savings. it is equal to the gdp of some of the countries.
is the kind of momentum we are is the kind of momentum we are seeing in the financial markets. >> what does that mean? there is a lot more market to be invested, or -- more money to be invested, or it fundamentally changes the economy? >> there is more money to be invested. the primary insurance is are all growing. they have done more than they have in the past years. not partmoney, which was of the formal economy, as entrepreneurs start paying taxes accounts, many parts of the economy that were not bankable become bankable. that has an effect of its own on the economy. >> that was the ceo of iciici bank, chanda kohhar. >> coming up, will we get a seventh day of gains in india, o now? stocks too costly for
>> we are minutes into the session over in mumbai. happening in the dollars face. sophie with an update, starting with india. trading -- rupee is looking weaker after a six-day klein. banking shares are in focus after the indian government outlined plans for a $14 billion bailout. let's check in with some of those state-owned banks. lenders may be moving today on htthe modi administration amid
reports it is allowing more investment in the banking sector. cash you won gaining can see this as emergency currencies rising today. asian central banks have a headache when it comes to this currency strength. automation stocks under pressure. meanformer yen going to implications for the boj. a stronger yen means cheaper imports, and making it harder coming out of this deflationary mindset. >> india's biggest drugmaker does not expect the slump in prices to last long. in davos, he said the decline was a temporary cycle. at the end oft the process. i think we have achieved all we
wanted in terms of synergies. i think we achieved all of these synergies. basically, when we look backwards, it was a successful integration. every integration, especially of a large size,basically, when wek is always a challenge for every company. we met the challenge this time quite well. >> it has been a difficult time for some pharmaceuticals, a valuation, stock point of view. we have seen shares decline isdrastically. -19 will be a fy18 better year for your stakeholders and investors? >> for some in the industry? i am an optimistic guy. everything with real
colors. i am quite optimistic. investingng a lot in in specialty products. we have quite a significant activities around developing and acquiring specialty products. a significant020, part of our business will be around specialty products. >> how much will that be? israel: i do not going to tell you, but it is significant. this is what sun is doing. sun is looking at the future. say, we have seen a number of companies in israel. sun is a great company.
>> i am not disputing that at this point. i am wondering if you think the last few difficult years are behind you. israel: i hope this is the case. >> you hope that is the case. your financial 2018 and 2019 will be a market improvement over the last few years? -- marked improvement over the last few years? [laughter] i am not asking for a number. israel: i don't want to make a comment. >> do you think this pursuit of special products will continue both in an organic and inorganic session? -- inorganic fashion? israel: we have extended our r& d. we have acquired more products. we will talk about it more later. >> that is just about it from us.
alisa: i'm alisa parenti in washington, and you are watching "bloomberg technology." let's start with a check of your "first word news." president trump is headed to davos, switzerland, to attend the world economic forum. he is expected to deliver the keynote address at the forum on friday. the president is expected to meet with israeli prime minister benjamin netanyahu, britain's theresa may, and other world leaders. meantime, the president met with a few members of the white house conference of mayors, after the group officially boycotted the meeting. they cited additional pressure by the justice department on so-called "sanctuary cities" for their cancellation. some of mayors still showed up, despite the boycott.