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tv   Bloomberg Markets Asia  Bloomberg  March 8, 2018 8:00pm-11:00pm EST

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>> history in the making. president trump is to meet kim jong un, the unprecedented talks expected by may. it's a remarkable turnaround for the north. kim is said to be halting his weapons testings and is committed to denuke larization. such a meeting with rewrite geopolitical rules. no sitting american president has ever met with a north korean leader. in hong kong, this is "bloomberg markets." >> we're starting this morning
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with dramatic news. president trump accepting an invitation to meet north korean leader kim jong un and that meeting will be happening by may. this is, as we've been reporting, an unprecedented news. no sitting american president has ever met a north korean leader. >> president trump appreciated the briefing and said he would meet kim jong un by may to achieve permanent denuke larization -- denuclearization. the republic of korea along with the united states, japan and our many partners around the world remain fully and resolutely committed to the complete denuclearization of the korean peninsula. along with president trump, we are optimistic about continuing a diplomatic process to test the possibility of a peaceful
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resolution. >> on the phone line from seoul, thomas. thank you for joining us. what's your reaction to this? >> hi. good morning. my reaction to this, sorry, yes. this is certainly an opportunity for a breakthrough. a big opportunity for a breakthrough. in what was a stalemate in north korea's nuclear weapons production. it looks like, i think it's also a sign of the strength of the alliance between r.o.k. and u.s. the coordination between the south korean government and the u.s. government. that beer we're all on the same page and there could be flexibility in the way you get to the end. but both governments are adhering to the maximum pressure campaign to denukize the korean peninsula -- denuclearize the keene peninsula. >> what could be achieved here and how much can the regime in
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pyongyang be relied on to keep to their propositions looking ahead? if there is an agreement even? >> well, right. that's a big and important question. however, this is a case where i believe the u.s. and all the major elements of the u.s. government don't want to miss an opportunity to denuclearize the korean peninsula. as you know, nuclear bombs on the korean peninsula in the hands of the north koreans are ultimately destabilizing for peace and prosperity in south korea as well as the region. there's the risk of proliferation. plus it prevents the north korean people themselves from improving their livelihoods. so it hasn't worked in the past. but maybe things are different now with the sanctions and also the coercive diplomacy in the form of sanctions. but also keeping strong
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litary options in support of diplomacy. >> thomas, in diplomatic circles, how will this be perceived? will it be seen as a win for kim junk snun what it perhaps does is -- kim jong un? what it does is perhaps legitimatizes his regime. and does it give him faith? >> no, i don't think so. because remember, there's no concessions on the part of south korea or the united tates. neither south korea nor the united states have accepted the suspension to suspension plan where north korea suspends its testing and ballistic missile launches in exchange for the u.s. and r.o.k. spending their military alliance exercises. those exercises will take place in april and may this year. the sanctions will continue to
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be enforced. in fact, will probably be strengthened as time goes by. and i think perhaps the big difference here is that for the first time north korea is changing its calculus. >> and what is it changing its calculus to ultimately? >> it's never done that before as the way i look at the history of diplomacy. to denuclearize north korea in the past 20, 25 years. this is an opportunity. we'll have to see how it plays out. in the past, north korea has never, you know, actually taken concrete steps to denuclearize and join the international community. maybe things were different. maybe they're not. but i believe the u.s. government and the south korean government don't want to miss this opportunity. i wouldn't say there's a breakthrough yet. i would say there's a big opportunity for a breakthrough.
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>> how important is it where they meet? >> you know, i think that's important. thing to important recognize with kim jong un meeting the president of south korea is that it won't be in pyongyang. , will be on the south side below the demarcation line on the south korea side. so, i think this is -- i think it's very important where they meet. i think it would be great if they meet in mar-a-lago. i don't know if that's possible. i think it would be very important to get kim jong un out of north korea so he can present this as another -- he can't present this as another homage to people coming and paying tribute to north korea. >> absolutely. that would again lend to the idea of face and gathering more of that. how is this going to be perceived in the halls of beijing, in your view?
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>> beijing ultimately i think wants a denuclearized north korea. it also wants to maintain its influence on the whole korean peninsula, both north korea and south korea and we see this with the economic retaliation that beijing is orchestrating because the south korean government has accepted the installation of the anti-missile system. the defensive system in south korea. t ultimately i think china's strategic interest is for a peaceful denuke larization of the korean peninsula -- denuke larization of the korean -- denuclearization of the korean peninsula. china is enforcing sanctions. although there's a lot of evasion, i think they're doing a lot more than, say, russia in this case. >> thank you so much for joining us and your reaction to all of this. we've also got market rations going on.
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let's get to the author of "nuclear showdown." he also joins us on the phone. gourde, thanks for joining us. what do you make again of all this? >> i think there are a couple of things at play. first of all, the sanctions are starting to bite kim jong un. he's starting to realize that it's a good time to talk to president trump because things will probably get worse later on. also what's stunning is that president trump agreed to talk and agreed to do so by a certain date. or a certain month. and i think here what's going on, which normally you wouldn't do something like that, such a quick acceptance, i think what president trump is trying to do is to prevent a rift with the south korean president who very much wants these talks to go on. and moon, for his part, wants these talks quickly because there's june 13 elections in south korea. they're going to be filling seats in the national assembly where moon's party is still a
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minority. and so therefore everyone has a lot at stake here. especially president moon. >> danny russell is a former cnn director for the asia policy at the white house and security council. he says that trump will likely claim this as a success. but he says it's 100% a kim jong un agreement, or should i say play, because he initiated them and he's driving them. how does he feel about that? >> we really don't know. we won't know and maybe won't know for years or maybe never. but we do know that sanctions are starting to bite the regime . for instance, there are reports that north korea's foreign currency reserves at the current rate of depletion will run dry in october. that sold who are defected on november 13 -- soldier who defected at november 13 had uncooked kernels of corn in his die gentlemen'stific track meaning he was -- digestive
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track meaning he was scrounging for food. there's things we're seeing that show regime is serious about cutting out the money. one more thing. office 39, which is the kim regime's slush fund, is apparently running out of money as well well. that's another indication that the sanctions are starting to bite. >> how serious do you think he is about denuclearization? ultimately this is his guarantee of sovereignty and his guarantee against preemptive action against his state. >> he certainly doesn't want to do that. but he might understand, he might be at the position. i didn't think they'd be here yet. i thought it would take another six months. he might be of the view that he has no choice. remember, he needs money to keep the loyalty of senior regime members by giving them gifts like mercedes and rolexes. he doesn't have the money to do that. there's some indication that he doesn't. then this regime could fall apart. because that has been the glue to keep the senior regime
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elements in place behind the kim ruler. he already has a deterrent and that is the ability to destroy seoul and its environment -- environments with chemical, biological weapons. high explosives. so, yes, he'd like more of a deterrent, but he realizes that he's already secure. so i think that there's a lot that we don't know and kim may decide that this is a good time to strike a deal with trump. >> let's look at this as another angle. this is a repeat behavior. one could say that north korea's being rewarded for bad behavior. we've been here before where they agree to things in order to get money. and then renege on those promises. it could be a rental agreement even, pyongyang has paid off to get his nuclear program. at the same time not having those necessary guarantees here as well. ultimately north korea needs the money. that's what you're getting at it? >> yes.
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and the important thing for president trump is not to relax the sanctions. he needs to increase them during negotiations. also, he needs to consider what he might do with russian aye and chinese sanctions bust -- and chinese sanctions busting which has been quite blatant the last couple of months. so there's a lot here for president trump to do. the one big trap is that he relaxes the pressure during the course of negotiations at the behest of the north koreans or even the south koreans or the chinese. the last time this occurred, which was in 2005, 2007, when the u.s. put sanctions on a north korean bank at the behest 2006, we and around released the money in 2007, and the north koreans pocketed the concessions and walked away from the talks. we've got to prevent that from happening. >> thank you so much for your time. gourde chang. we'll get more analysis, if you
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go to -- all of that coming from bloomberg's experts, analysts. market reaction of course being felt in korea and beyond. particularly tokyo. >> yeah. plenty of moving parts which are boosting agent stocks. the nikkei 225 rising over 2%. we're seeing safe havens and gold being dented today. given the latest developments on north korea, you're seeing he kospi 1.6%. we are seeing korean paper fall, the five-year yield jumping over 11 basis points. we're keeping an eye on korean debt risk as well. another item to keep in mind on this friday, you have the 11-member t.p.p. having been signed and that could take effect by the year's end. with the b.o.j. decision, chinese inflation on the cards, and the yen that is headed for a weekly loss ahead of kuroda coming up to bat.
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and of course ahead of the u.s. jobs data. now on the trade front, we're seeing some relief coming through, given the tariffs in sydney. they are gaining ground. it's hopeful that they might see exemptions given the reprieve provided to mexico and canada while nafta negotiations are ongoing. but we are getting mr. murtha:s of discontent coming through from japan and china over those u.s. tariffs. let's see what's moving the dial in korea. focusing on corruption stuffs which are leading the charge. perhaps some bets -- that better korean ties will enerate business for builders. now checking in on some other equity movers in seoul that i want to highlight. hyundai elevator jumping. this company holds a stake in an interkorean business. checking on that stock. we also have chemical and focus, fert lieder --
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fertilizer to the north and we have tourism related stocks also gaining ground. >> thank you very much. looking at some of the other impacts, looking at the bond market, having a look at credit default stops, these in essence ensure against a default on ebt and the cost of ensuring korean's sovereign bonds against nonpayment, falling for a fourth day here as well after this announcement. this of course that donald trump's agreed to meet kim jong un. prices dropping again one basis point at moment to 45.5 basis points here in hong kong. on track for its lowest close since january 24, according to data coming from barclays and elsewhere. joining us is global head of equities and global emerging markets. thank you very much indeed for joining us. i'm going to ask you to not put on a geopolitical hat but put your normal hat on and talk to me about what this means for markets regionally speaking.
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>> i think in terms of the north korean news, i'd say quite positive. there's a more direct impact with regard to sentiment for places like korea and japan who are perhaps more directly impacted by any sort of fallout with disagreement with north korea. so that's ultimately a positive thing. i will say, though, that the devil ultimately is always in the details. so what comes of any sort of meeting between trump and the koreans and indeed any sort of agreement of how they would denukize or indeed support north korea going forward -- denuclearize or indeed support north korea going forward will have clear implications for stocks. that's still way in the future and perhaps i would strike a note of caution that we've been here before with regard to north korea pushing the boundaries and then looking to negotiate before eventually trying to push the boundaries again. so i wouldn't get too carries away but absolutely good news, if it is sustained. >> these headlines eclipsing
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those that were 12 hours ago corne concerning the sign -- concerning the signings of the steel and aluminum. while this is all going on, we have the possibility of a trade war looming. what's your take on that? >> well, generally our take on any sort of protectionist measure is that it's negative. in many cases it's anti-growth and in almost all cases it's inflationary. so any sort of sparking of a trade war or violent or protectionist measures that started in the u.s. and move to other countries as well would be negative overall for the global environment. and the big question, i suppose, that everyone is asking is whether or not president trump is going to follow through or whether this is a negotiating tactic that actually there is going to be more moderate, perhaps agreements eventually put in place. and certainly that's the way that the market has take the
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news this morning. -- taken the news this morning. that mexico and canada would be exempted. as well as opening up potentially room for negotiation with other partners as well. so i think the market has put a relatively positive spin on it. but the devil once again is in the details in terms of how we actually see this playing out. at the end of the day, president trump is playing to two audiences. there is a domestic audience and he's trying to appeal to his base. where perhaps you don't want to see too much give up of ground. and in contrast you have a wider audience in terms of the global partners and indeed many of the congressmen in the u.s. who want to -- want to maintain open trade, globalization. >> we'll be watching this very closely in beijing, i'm assuming. steel and aluminum only make up a fraction of what china sends over to the united states. there's always the threat here and people have been talking about these tariffs being broadened to other industry groups here as well.
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i suppose it's only then that we'd be looking for any real retaliation from the chinese side. >> yes. and while announcements have been with regard to steel and aluminum, the risk is that it spreads wider. and the retaliation, there certainly are areas where china can pressure america, not in least in agriculture, but in many areas as well. we don't really want to get into a negative spiral of tit for tat type trade tariffs in position. so there is scope for all of the affected parties to hurt each other by going down the shoot. so hopefully we don't. how has your investment strategy been evolving through the course of 2018, with the bumpy ride we've had? >> i think i would probably
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describe myself as a paranoid optimist. in so much as i'm quite concerned about the short-term and what could go wrong. but ultimately positive about things in the longer term. and the beginning of the year, there was a lot of subscription to the idea that we were in the goldilocks scenario. global growth was rising. you had earnings growth picking up pretty much across the world. you had low inflation, low interest rates, and as a consequence, people were betting on expanding multiples and indeed stronger markets. but across -- but of course there are at the wings many issues lingering or hiding. and one of the key ones is this protectionist issue which we're seeing and that's what the market is focused on at the moment. beyond that, there are two other big things i would highlight. one is how is china going to delesker, which is one of the key i think priorities in terms of decent financial risk in the chinese market. that has consequences potentially for china and indeed the rest of the world. and the other is what happens when central bankers globally
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start to reduce liquidity or remove the punch bowl that has again implications with regard to interest rates environment, but also with regard to valuations for companies. so there are these concerns i would flag that we should be very much aware of. so i suppose in terms of how our investment strategy has changed, it hasn't changed at all. in so much as remain pretty cautious in terms of the quality of companies we're trying to buy, to get us through any sort of difficulties. but we are, as i said, fairly optimistic on the merging markets, within the context of the global environment, because we do see relative growth picking up and indeed profit growth picking up. >> great having your time on he show. you can of course catch up and watch that interview and others we've been doing by using our interactive function on the bloomberg terminal, tv-go. watch us live, delve into any of the other topics that we do
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go into here and look at the bloomberg functions. you can become part of the conversation as well by sending us instant messages during our programs. this is for bloomberg subscribers only. check it out. tv go. this is bloomberg. ♪
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♪ >> kim jong un and donald trump expected to meet by may. question being here what can we expect also from some of the other pro tag nists in all of this. we have china and of course seoul as well. our chief north asia correspondent is in beijing. as you are there in the chinese capital, tell us about reactions thus far. reporter: well, we got no immediate reaction yet today. but yesterday we did hear from the foreign minister saying that the efforts to get the united states and north korea to talk or at least get the
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north koreans to the table again were at a crucial moment. so he alluded to the fact that, you know, talks are intensifying and also, of course, that kim jong un is maybe more receptive. also urging the u.s. and north korea to have direct talks. perhaps he knew something in the making. as of course we have this overture being released today for donald trump to meet with kim jong un. if i were a betting man i would likely place a wager on beijing being the venue for that possible meeting or the potential meeting. >> tell us what else is going on. we're right in the middle of the congress. we can't really talk to you without mentioning some of the other things we're looking out for there. not least action from the entral bank, the pboc.
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>> yeah. that's right. just in about 35 minutes from now, in the room to the left of me, the pboc governor, he's been in the job for 15 years. and change. he started in 2002. the longest serving chinese central bank governor, he'll be giving his press conference, probably in all likelihood yet his last press conference being a new central bank chief will be announced later. i believe next week here at the national people's congress. and again, he's overseen dramatic change in the chinese economy and oftentimes as well over those 15 years, he's been at logger heads with maybe some of the ideological sentiment in china. because he is a reformer. he has loosened control on interest rates, he of course has internationalized or spear headed the internationalization of the recommend and b. he's been a pivotal individual in the chinese financial world for the last decade and a half.
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>> could be a swan song. thank you so much for that. we'll be revisiting him during the course of bloomberg markets. prices also the focus in china. inflation data for january as well. ♪ mom, dad, can we talk?
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that's a good one. seems a bit long, but okay... set a memorable wifi password with xfinity my account. one more way comcast is working to fit into your life, not the other way around. ♪ ♪ across victoria harbour. 9:29 in hong kong. shanghai composite to start this last trading day of the week. donald trump announcing progress those areong-un, making the headlines and eclipsing the news about trade tariffs. we looking to the head of the bank of japan's policy meeting. inuably, a wind down
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quantitative easing program. pboc, could be hearing from the central bank governor. it could be his last news theerence and then in u.s., the all-important jobs report. market is about to open. we have these trump trade fears waning. stern comments from china. commentators saying the u.s. trade measures will be firmly opposed,. . wilbur ross announcing more pressure on chinese-forged steel cities. chalco in the spotlight given the aluminum layer is one of the top in china.
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rishaad: cpi up 2.9%. this is a stronger read than the economists. they reduced the factory gate prices. 3.7% there. weaker than expected. consumer prices rising 1.2% month on month. ellen, what is your take on this? one hand, a big miss, inflation more purulent. -- virulent. a surpriseation is on the upside but remember this is the lunar new year time. if we look at the average of february, february
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being at 2.9, the average at 2.2 and that is well above the december level which was at 1.8 percent. it does show a lot of inflation pressure coming through. rishaad: the pboc will be talking in just a short while. is there anything to worry about? >> not too much. they recognize that this is a one-shot because of the lunar new year distortion. they will watch out for inflation in food prices. rishaad: this is the data we have. let's talk about the trade numbers we had yesterday. it did not go down well at the white house, given the limited 121billion surplus the -- billion dollars surplus china
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had with the united states. >> usually the first half, particularly jan. and feb. is a time when distortion is significant. from month to month, you can have big swings and end up with significant surpluses. this is something they need to work on and the administration is calling for some action. rishaad: the administration in the middle of this national people's congress and making pledges about the economy. the general message coming out of that? market is 6.5%. they feel comfortable in china about this group facility. when they do not mention growth facility, that means it is stable and they are happy about
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it. there is a growing complacency with policymakers about growth. growth has been stable. the risk of this year to watch o ut for is inflation and policy over timing. rishaad: china attempting to thisoff this --- pull of amazing fiscal feat which is taxes and the deficit and boost spending. details,ou go into the we found the public spending budget will be scrapped. there are no more increases in gdp that you would see in budget
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manyits but there are so different books the government is running at the same time. when everything is included, it shows the budget deficit was not being reduced as much as the headline suggests. rishaad: you've got all these different deficit as well. local financing vehicles so mething we were highlighting today. how do you address that? >> the local government's financing vehicle problems are being addressed by different methodologies. rishaad: what is the danger of being defaulted? >> there may be one day that the central government is no longer seen as the last resort to bail
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them out. while the government is saying, in the future you take care of your on finance and we do not want to back you up anymore and this is not the paid out system like we used to, but that's not seem like a major threat to the financial market yet. rishaad: let's ends as we sta rted. highersumer prices way than estimates. a lot of this is down to the lunar new year holiday. essentially what you were talking about earlier. >> we think it will probably go back to around the still having the two handle but somewhere around 2.2 or 2.5. the base effect is it is still low enough to where it is not
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going below 2 percent. areation on food prices going up. instant noodles, liquor, beverages, everywhere. rishaad: what impact would be and aluminumeel have only ppi side? >> the prices in these categories are not necessarily going to go up immediately because of the import tariffs being imposed on the u.s. side. for china, there may be more supply available for domestic consumption and there is going to be a pressure downward instead of upward. rishaad: thank you so much. the economic data that cross the bloomberg data, consumer prices
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for the month of february coming in strong at 2.9%. looking at a figure of 2.2% and some decent numbers that were supposed to be 3.8% and coming in slightly lower. just by a fraction of 3.7 percent there. factory gate prices coming up --we may be seeing less cpi in the future. let's look at all this and how inflation numbers are on the markets. sophie: 10 year yield for chinese paper on the retreat, edging 3.8% level. this focus on domestic inflation, this cpi is forecast to rise on resilient demand and recovering food crisis. when you look at stocks on the
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in hong kong, you have cpi data jumped. industrials and textiles leading gains. utilities is the only decline or when it comes to segments on the hang seng. it is rising for a second straight day. chinese autos in the spotlight after president donald trump took the bait and attacked china ofportan -- imports geely auto. lens technology -- other stock movers and hong kong. this company on the
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you have wheelock on the rise. and china resources rising. the company seems to be an talks for heineken. -- in talks for heineken. rishaad: history in the making for washington dc and pyongyang. ♪ >> white house says president trump will accept an invitation to meet with kim jong-un, the first ever meeting between a north korean leader and a sitting u.s. president. south korea says the north has pledged to suspend further nuclear and missile tests ahead of the talk. the exact time and place for the
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meeting has yet to be determined. the white how said it is looking for two denuclearization. pacificpecific rim -- rim country is assigned an agreement which the president holdout of last year. title been given the cpttp. president trump has made good on his pledge to impose tariffs on steel and aluminum imports. he signed the order at a meeting with workers from u.s. metal companies. they take effect in 15 days. >> today i am defending america's national security by placing tariffs on foreign imports of steel and aluminum.
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we'll have a 25% tariffs on foreign steel and it can percent percent-- and a 10 tariff on aluminum. >> the u.k. officials say they do not expect to reach a deal with brexit this year. any delay will prolong the uncertainty for businesses already desperate to know what rules of it will face on brexit day. global news 24 hours a day powered by more than 2700 journalists and analysts from over 24000 --from eve countries. rishaad: we talk about the increasing rise of protectionism in agriculture. this is bloomberg. ♪
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♪ ♪ ♪ here with bloomberg salam., i am rishaad japanese regulators cracking down on cryptocurrency after coincheck was told to revamp its structure tighten money laundering procedures and cement a report by the 21st of march. two stations have been ordered to halt operations for months. cryptos trading down. >> we have confirmed the safety of our system. we got an order from the agency to improve our structure. rishaad: the falsified date
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steel is mostly over after the bonds fell to lows after the announcement to prevent more data falsification. followed byattern toshiba and olympus who saw an increase after the shock of scandal wore off. have plunged some 2009.nce myer relisted in co richard numbers quitting to be replaced by gary cancel. hansel. and the japanese cosmetics giant generating 25% of sales on line.
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shiseido has announced a new business plan. >> we cannot say there is one way to bring value to the consumers. there are many ways. we need to find new ways to connect with the consumers. the next challenge is how do we combine off-line and online. one person uses both. moving to energy and markets. the aramco ipo is a cornerstone of salman's plan for saudi arabia. talks about the ipo and future of the supply cuts. >> markets a change on a dime as
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they say. it is premature for me to say exactly what will happen in 2019. >> would you be open in the market -- >> i will say with certainty that we will continue. but things can change an explicitly --unexpectedly. we will determine what we need to do in 2019. i know is all of the participants have worked hard. what we achieved is partial. our job is not done yet but there has been some concern from seen in 2015ave and 2016. we are starting to break. the services industry, our financial -- what we want to do is preserve what we have achieved.
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what we have achieved of a framework j --has been a framework for an industry that is too valuable to leave to the volatility. an2019, there will be evolution but we will not just part away. >> if the market called for it, the members would be open? >> we will do what we need to do to preserve the market stability. >> any discussions of phasing ou t the currency? trading 60 to 70. some think the market has rebalanced. >> i do not think the market has rebalanced. --quality globally
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and shaky. -- is shaky. we have to see what the market does but we are certainly well on our way to a balanced market and that is what i refer to as the success of the 24 countries. to a new course, will have allow supply to catch up with demand that continues into growth. >> are there any discussions of curbing them now are not yet? >> curbing? >> phasing out the curb. >> when it is time to list, we will list gradually -- life we -- when it is time to lift, we lift gradually. ofhave to be conscience
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lower demand. we cannot lift all of the curbs and flood the market when the market may be demanding less. we have to be conscious of gradual reintroduction of supply. was talking to our very own emily gordon. donald trump agrees to talk to him jump in. this is bloomberg. ♪
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♪ getting more reaction to our top story at the moment. donald trump and kim jong-un to meet in what would be a historic encounter. no sitting american president
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has met with a north korean leader. look at the reaction in tokyo and get to our bureau chief. what is the noise coming out at the finance ministry or the foreign ministry and the prime minister's office? correspondent: abe himself was quick to give a response to this. as far as we can tell, he spoke to trump before the announcement and was briefed on it. he has always taken a close line to the u.s. in all the steps and changes in the north korean situation. he continues to do so today. the north korean envoy continues to praise trump and says is that -- the south korean envoy continues to praise trump and
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says that the pressure that he applied is -- the international community says north korea should not be rewarded for agreeing to talks and trump said that sanctions will not be lifted until the nuclear station occurs. denuclearization occurs. much out ofhear them. we are hoping for a fairly quiet day. we've had enough of an eventful day in the last 24 hours but i do not think this will move the needle, especially once we saw the reaction to the news. i would not expect to hear anything from the boj about the
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subject. rishaad: they must be pleased with the gdp figures we had yesterday. correspondent: yes, it was quite a surprise. the initial rate out of -- read rhetorically --is notoriously unreliable here in japan. they are in talks to perform that. the numbers were good. all eyes will be on the next data, which to my knowledge should be out in may. rishaad: thank you for joining and we have a look at a deal taking place in thailand with one of the country's biggest banks. a tie up with a swiss financial
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institution and then we talk about foreign policy. this is bloomberg. ♪
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♪ making, history in the president trump to meet kim jong-un, unprecedented talks expected by may. is this the art of the deal? the pboc preparing to speak, it could be a swansong appearance. boj data suggesting stimulus is working. i am rishaad salamat in hong kong. this is "bloomberg markets: asia." ♪
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rishaad: our top story, historic meeting between president trump and kim jong-un, expected to happen by may. no sitting american president has met a north korean leader, although jimmy carter did meet the leader of north korea in 1994. >> president trump appreciated it and said he would meet kim jong-un by may to achieve permanent de-nuclearization. the republic of korea, u.s., japan, and partners around the world remain fully and resolutely committed to the complete de-nuclearization of the korean peninsula. along with president trump, we are optimistic about continuing a diplomatic process to test the possibility of a peaceful resolution.
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the market reaction has been overwhelmingly positive. most positive in tokyo. let's have a look at seoul, korea, gains there. i lesa bit less than japan. sophie: we have seen the kospi gaining ground after the announcement. we are not seeing the same gains as in tokyo. , one analyst saying it could rise 30% if kim gives up his nukes. while markets are assessing whether the olive branches for real, back above that handle .mid concerns over tariffs analysts are skeptical north korea will follow through given his track record. checking other korean assets, korean debt sliding, the five
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year yield jumping 11 basis points. falling therisk most since november, set for a fifth straight day of declines. markets,k at equity japanese shares leading the rise. safe haven demand falter to the yen falling with a cold. treasuries slipping a touch. in australia, shares on the rise. in hong kong, industrial and consumer stocks among the best-performing sectors helping the hang seng rise for a second straight day. consumer companies finding support from the stronger than forecast cpi reading out of china. the hong kong dollar at a 30 year low, entering dangerous territory that might prompt
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intervention. have koreans, we do construction players leading the charge, the index rising 4%. perhaps on that's that better ties would generate business for korean and japanese builders as construction stocks lead gains. muchad: thank you very indeed for that. china's central bank in focus, at the a news conference national people's congress in beijing. we are there following the biggest political event of the year for the country. steve, a lot of talk about the central bank governor and whether this could be essentially his swan song. >> that's right. he is well past mandatory retirement age, 70 years old, the longest-serving central bank governor in china. 2002 when china
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was the number six economy. reformsverseen a lot of , including the internationalization of the renminbi and the loosening of interest rates. he has been a reformer in various. there will be a change likely march 19. various names are being handed about, but today he is giving what is likely his last press conference. february inflation, cpi inflation was well above .orecasts at 2.9% we have not seen this kind of inflation for three years now. what ramifications on policy will that have? there is always a caveat with february data. cpicials have said march inflation will be lower because
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of the lunar new year distortions in february. the main marching orders for all is to contains financial risk. that will be the mantra for 2019. that it is seen important news conference. >> it is. rishaad: also, the economic backdrop you just alluded to. >> yeah, that's right. all those reporters have gone into the room and the press conference has started. no headlines on the bloomberg terminal just yet. as far as the names of the people who could replace him, let's go through them. the first is at the top of many
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lists. a banker by trade, a former executive at china development bank and agricultural bank of china. also said to be shortlisted. he may be picked instead to be the pboc party secretary. we have to wait as well. he is a former stock market regulator and former pboc deputy governor and currently the banking regulator. candidate,t another xi jinping's most trusted senior economic adviser. what we are hearing is that he might be slated to replace the head of the financial stability and development committee. the other name we have to mention his the deputy governor of the pboc. me, we have a different environment should
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there be a new governor to work within after term limits were removed for the president, or will be moved for the president npc. at that in pc -- how does that change the narrative? it will be and the hands of 1-2 men. >> one of the things that zhou has come up against our ideological differences. the pboc is not independent of the communist party. it carries out the marching orders of the party and the government. on more than a few occasions, zhou has battled the ideological differences. and wanted tormer push for the internationalization of the renminbi and the reform of the interest rate mechanisms in china. there have in more strident
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ideological voices that have beosed him, so it will interesting to see who is chosen as the next pboc governor. will it be the strong arm, the right-hand man of xi jinping? or will it be another potential reformer? the choices for critical. rishaad: steve, thank you so much. our chief north asia correspondent. ,iving further into markets mark cudmore joins us from singapore. story, -- market, the big what is happening between kim jong-un and president trump? how is that on being digested? >> markets are taking it well. this is potentially a significant step towards peace on the korean peninsula. it is important to emphasize this is just one announcement.
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it may ultimately be a negotiating ploy, but it must the taken as a positive now, providing a tailwind to global equities. , thoseave a headwind tariffs signed in by trump last night, even with some exemptions , but a worry for asia. korea isive news from dominating, but it will be quiet with little moves up and down in both directions based on those two opposing forces. rishaad: nervousness about tariffs being eclipsed by that news, and this could also be strange if we get a reading on that employment report in the u.s. later today. , everyone is focused on the wage inflation number given that was one of the big catalysts for the selloff in february, the high inflation print. everyone is focused whether this
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is another confirmation u.s. inflation is filing taking off. fact the inflation data out of china that may be more relevant. china cpi rose the fastest pace in more than four years. feeds threwtimately two chinese wage inflation. that is still one of the largest factories for goods all over the world come as so that feeds through to global inflation. it might have been the china data that is much more relevant to the global inflation story. rishaad: the boj should be coming out with its policy decision in the next couple of hours. >> the boj is likely to be an anticlimax. i think the boj will emphasize they do not plan to abandon their easing policies anytime soon. they have been consistent on that narrative. especially now that the yen has strengthened so much, it is more
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important they don't give signs of preemptive tightening. the outcome will be to support the story that dollar is trading well, helped by the fact the ecb was interpreted as dovish today,ay, the boj dovish and that will help the broad dollar rally, which is helped by trade tariffs. the u.s. dollar is finally having quite a strong week. rishaad: mark cudmore there in singapore. if you want to follow more on this story and the rest of the trading day on our markets live blog go to the bloomberg at mliv .ook still to come, protectionism and the risks to the global economy. that is later on in the show. our next guest joins us on their deal. this is bloomberg. ♪
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rishaad: you are back with "bloomberg markets: asia". we are talking about siam commercial bank. they have agreed to manage the wealth of rich clients in thailand, the second-largest lender, 60% stake in the venture. let's discuss it with the chief strategy officer arak sutivong. tell us how this joint venture will work. >> thank you for having me on the program. it is a partnership with the julius, a joint venture to provide wealth management services for high net worth individuals. it is the first of its kind in thailand.
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what we know is there are a significant high number of high net worth individuals in with assets,000, around $300 billion. the problem is banks are not able to serve them well. we are more deposit taking and provide services. it is because of a lack of capabilities and access to global investment. with this partnership we will bring the best of both worlds. andus will bring expertise things that thai people are not exposed to yet. will bringcial bank the local side to this joint venture. pie,ad: what about that all those the ins of dollars. what percentage of that will do you want to grab? what are you seeing in revenues?
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what are you projecting five years from now? >> right, right, first of all, wealth management -- investable assets in thailand are large, but local banks managed to capture a small amount. collectively local banks are less than 50%. the rest of the money is going offshore. we believe in 3-5 years with this partnership that we can double assets under management for the group. the revenue for wealth management for siam is small compared to the rest, probably less than 5%. in thise successful venture, we should grow to 10% to 50% in 3-5 years. reports andre are local press you are planning a partnership with the u.s. tech company. is there any truth to that? does itm, and how
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change the goalposts for your digital strategy? >> yes, i would not be able to comment on the exact nature of the transaction or the deal, but we are exploring partnership with a lot of digital companies, large technology companies, as you mentioned. disruption digital and the transformation under way right now, we see areas where if we frankly partner with others because says a local bank we accept the limitations we will not be able to develop technology on the cutting edge, so a few areas we see, one is around data has a business, one area we are focusing on. we can actually do many things based on that, such as digital lending and other things. over the past few years we have been taking a number of trips to the u.s. and china to talk to these tech giants. hopefully sometime this year we
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will be able to say more about that. of course this will have an impact on your head count in your bricks and mortar side of the business. how aggressively will you be cutting that headcount after 2020? what will you do to make up for this steep fall in the number of branches? fact, there is a context to that. ,e believe in the new paradigm the new way of doing banking, i don't think physical footprint will be all that important in terms of the relationship with the client. we are building digital coverage through mobile banking as we continue to migrate customers to mobile banking, where it is much cheaper and better to serve the customer. we are trying to do is reduce the physical footprint we have.
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we have 1200 branches or so. in three years, we expect to reduce it to 400. that is a significant drop. the intention is not to deprive customers of service. in fact, we believe the traditional branches will serve its function, but a lot of the transactions will apply on digital where we can apply data as i mentioned. wecan also redefine the way cover the customers. when we reduce traditional branches, we increase wealth management services and all those things, so in a way traditional branches will go down, but we believe the engagement with customers will come up. thearallel, the size of workforce will also come down significantly. yes, sorry? we have tom afraid go to a break. thank you so much for joining us
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today and telling us about your plans. arak sutivong there from siam commercial bank. pboc,eadlines out of the the governor talking about the country perhaps not in bold enough, saying china could be more bald on opening up saying china should be accelerating reform in market access, also cross-border flows being stable, china's monetary policy and saying china's real rates are stable. the governor saying china should seek new opening up measures and going on i suppose to the top line at the moment, saying the country can be more bald on opening itself up and should accelerate reforms to market access. there we go. you can also turn to your bloomberg for all this, tliv
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. commentary and analysis from bloomberg's expert editors on subjects such as this. coming up, president trump's tariff on appliance makers here in asia. details are on the way. ♪
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rishaad: we are going to get and presidents trump's actions on steel and the couldn him and how this affect appliance makers and in turn the consumer. our analyst is with us now. backs taken a bit of a burner given the news out of the white house. aluminum andf the steel tariffs, the immediate impact on chinese appliance
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makers will be relatively low. one a company acquired the ge appliances business in the u.s., about 30% of earnings come from that business, and they will be impacted to the extent that higher prices are implemented for their costs, their sourcing costs. 70% of costs is raw materials. is ifk the bigger issue you are a chinese company with a u.s. subsidiary, there is a risk of increasing political risks. that is the bigger issue. there may be more things down the track with all this trade talk and tensions that could negatively impact u.s. operations. rishaad: if these terrorists are imposed on chinese exports, we have to look at this from a stock perspective and asked which appliance manufacturers are like to be hit the hardest.
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exports, again, a lot of these manufacturers are focused on their domestic is this in china, but the ones hit the hardest will be madea. of of that, 20% or 30% exports are sold in north america. the impact is not massive, but it will have an impact. rishaad: there is potential further scrutiny on china's acquisitions in the united states am something new, is it? >> absolutely not. these manufacturers had low ambitions and have been making acquisitions over the last couple of years and have acquired the ge appliances business in the u.s.. madea also acquired a robotics business, both business is subject to regulatory scrutiny, but with ongoing ambitions to ,row their businesses globally
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further scrutiny will probably negatively impact that. rishaad: let's have a look at shares of appliance makers now. if we can bring those up and take a look at what has been going on there. tell us a little bit about this. >> so the home appliance makers, it has an interesting -- rishaad: they have been pretty sanguine through this tough trade talk. >> absolutely. applianceears, the makers have traded at a discount to their peers, but since the fourth quarter last year there has been a disconnect and they have been trading at a premium. i think a lot of the market is focusing on their domestic , butngs, which is strong there is a risk of increasing trade tensions, a risk that could turn. rishaad: thank you very much indeed. our bloomberg intelligence
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analysts. first cut may the not always be the deepest. looking at tensions between the united states and china, talking whether they run deeper than just trade. ♪
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rishaad: 9:30. that is manhattan. ,dvances for the dow and s&p but futures flat. today, the big story, donald trump meeting with kim jong-un before may. let's take a look at the asian reaction. it has not then muted. japan, this is where we are seeing most of the action. sophie: we are seeing that exuberance waning. we did get gains of 2% on the
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nikkei 225. those have since eased, closing out .9% higher. the line in blue is the benchmark. the dollar-yen making a break towards 107, but has come off slightly. the yen still bound for a weekly loss as we wait on the boj decision and u.s. jobs report. does remain concern of trade retaliation given u.s. tariffs, japanese officials saying the measures are extremely regrettable. automobile stocks losing ground in tokyo has input costs set to rise. players falling along with most regional peers. bluescope steel dropping even as has thesaid the company possibly of tariff exemptions. korea's top steelmaker could
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benefit from the court of international trade will need to revise anti-subsidy duties on south korean steel. the government is to start talks to reduce or except tariffs. kobe steel also feeling pressure as it goes through a leadership transition. they will name the machinery business that is president. stocks mostly lower. after the moderation in chinese february,tivity in that could serve as a double blow to materials companies along with tariffs. thecan see the dps for china materials index in blue has been ticking up higher, but chinese ppi, the line in white, now on the decline. rishaad: thank you so much. history made potentially between pyongyang and washington, d.c., first word headlines. thanks.
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the white house says president trump will accept an invitation to meet kim jong-un in the first ever meeting between the north korean leader and a sitting u.s. president. south korea said the north has pledged to suspend further missile tests ahead of the talks. the time and place is yet to be determined. the white house says it looks forward to the de-nuclearization of the korean peninsula. sources in london say u.k. officials don't expect to reach a brexit deal this year, but january is a more realistic deadline for an accord with brussels. the chief eu negotiator has long said he wants the agreement on by october so he can go to two parliaments. any delay would prolong uncertainty for businesses desperate to know what rules they will face on brexit day. dropped its long-running pledged to ramp up bond buying if required, saying the improvement for the outlook for the analysis.res
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jumped on the news, but gave up those gains later. thehat we did is remove explicit reference to the likelihood of an increase in the pace ofher kisses -- purchases in the near future. we should not forget that we have kept the other reference to such a possibility. tesla boss elon musk has joined the lobby by tweet generation, asking president trump if he thinks u.s. and china should play by the same rules on cars. loving for fair play to build a factory in china, saying china has a 25% import duty on cars, 10 times
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the u.s. slaps on vehicles made in china. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i am paul allen. this is bloomberg. getting back to our top story, president trump agreeing to meet kim jong-un in what would he an unprecedented head-to-head as snow american a northt never met with korean leader. let's get to seoul, korea, and our next guest. great to see you. what is your opinion when you have heard all the reactions and what has been said? >> what i would say, donald trump's policy so far has worked. all last year they have been exposed to an interesting mixture of real or fake bellicosity, blackmail, pressure from the white house. many people including myself were skeptical, but it worked.
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, presidentlicy anmp's policy, introducing exceptionally harsh sanctions which are likely to create economic crisis in north korea in half a year or one year. pretty much everybody including north korea is afraid of a possible american attack, so north koreans decided to slow down. which wasization, mentioned, is not possible. it is a dream and will remain a dream as long as the kim family is in charge of pyongyang, let a freeze or partial reduction is achievable. i am not sure for how long it will last, but it seems as long as president trump is in the white house it is pretty certain morenorth koreans will be
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cautious than before. rishaad: he is running out of money. the sanctions are biting. isn't this the old system where he gets reported for bad behavior, in essence, and then on top of that he gets money and goes back to his old tricks? >> he will probably not go to time,d tricks this because money is not the main issue now. byy are yet to be hit sanctions. it is a question of later this year, maybe next year, because sanctions are not working immediately. the growing concentration of u.s. military power and signs that americans are seriously considering a possible military strike against north korea, against maybe some political or military centers, or missile development centers, and this is not what north korea wants. nobody wants to be shot at, and
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north korea is not the exception. they are afraid more of the american missiles and aircraft carriers than economic sanctions , and they want first security. is why they will probably try to get some concessions, probably sanctions, and keep the it prevents ag is possible military operation. rishaad: what part has beijing played in this? >> beijing his equally terrified because beijing is not happy nuclearrth korea's program, but it has been careful about implementing harsh sanctions because people in beijing are afraid that harsh sanctions would provoke an economic crisis, then political crisis, in north korea, and beijing does not want to deal with a civil war with
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with astyle situation -- libya-style situation in a nuclear country. now they are afraid even more than a possible regime collapse in north korea, that is a u.s. attack which could easily escalate into a massive war in east asia, maybe with the use of weapons of mass destruction, so from the chinese point of view preventing an american attack is more important, so china decided to talk about sanctions, and the new sanctions introduced in december are essentially an embargo. north korea is essentially for bid and to engage with all kinds of profitable international trade. all their items like minerals, textiles, seafood, everything is now banned.
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it is largely because china has decided to join the sanction and follow the rules. just because they help by economic pressure they will prevent escalation and development of the conflict into a worn your the chinese border. rishaad: a very quick question, is this meeting should it happen something which will change the game? ,> for a few years probably yes until the end of president trump's term, probably yes. in the long run, probably not because the fundamentals have not changed and the north korean government the lease at the end of the day for their security that they have to remain nuclear. rishaad: thank you so much as ever for your time. joining us from seoul, korea. wrists toonism and the global economy. geoffrey garrett
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about the dangers that could come from a trade war. this is bloomberg. ♪
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china's central bank chief has been talking at the national people's congress in beijing. tom mackenzie has been following china's biggest political event of the year. a lot about ring set of about china not moving fast enough in opening up. yes, likely to be his last presser, the governor of the pboc having held that post 15 years has been asked about the , thet opening up, the yuan debt question, and regulation of the financial system. more tochina could do open up market access to foreign investors.
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in terms of death, he said that credit growth continues, but is on a stable footing. will bechina's growth less reliant on money supply going forward. we saw the announcement by the chinese premier that money supply would remain roughly in line with 2017. in terms of the debt question come there is the expectation that will hit 320% debt to gdp by 2022. that makes china one of the most indebted countries in the world by that point. he also talked about the yuan. there is interest whether the pboc will take steps to liberalize the currency having put in place those capital controls. he said the major steps to globalize the currency have already been taken and it will be a long process for market participants to start using the any, tamping down
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expectations of significant moves. he has seen it become a reserve currency in the imf basket of reserve currencies. he talked about leverage, market access, and bloomberg has been reporting there are moves underway to merge the regulators , banking regulators and insurance regulator. he said the pboc was going to have a more important role in financial regulation and oversight and they would not be stepping back on their oversight of financial risks in the system. rishaad: indeed, and looking at the headlines, reform in process, more of that, a bigger role also in the new financial regulatory system and boost coordination amongst financial regulators, talking about fx reserves remaining stable. regulation,bit on
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at a bit about the quality of growth. actually the way china's economic growth path is progressing. that is interesting. saying a focus on quality growth was the new normal for china. this was stressed at the party congress by president xi in october and was mentioned by the premier when he addressed the national people's congress, but the governor now underlining the focus on quality growth. 6.5%ave that target set at , losing that line on possibly higher, so that is important as they try to deleverage and focus on quality growth and crack down on pollution and tackling poverty issues here as well. we will bring you the latest as these lines come from the central bank governor. trade spats between the united states and china are nothing new, but the current
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tension is turning into a turf secures the juicy spoils of the global economy? it was going to be the big story, that it has been overshadowed by an offensive in foreign affairs. trump followed through on that tariff pledge. is there any wiggle room for allies? what is the response from beijing? theirjing is sticking to line they don't want a trade war. they can retaliate if need be. rishaad: we just have news coming out of that boj meeting coming to an end. the policy rate is being held. 8-1 to keepting policy as it is. their assessment of overseas economies. the domestic housing investment side of things has been downgraded to some extent.
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this is what we have coming through, the boj with that statement. onhas kept its expectations inflation unchanged. it was underwhelming. there you go. >> i think it is pretty much as expected. we have the wage talks in japan right now. governor kuroda probably wants to wait to get over that hurdle. let's see what comes out of those talks. the boj's views on inflation going forward. -- broader economy is so key is ok. rishaad: it was quite a blowout number. is that abenomics working? >> the reappointment of governor kuroda for a second term, they are doubling down on it. there are headwinds. there is it yen trend, the global trade story, and the
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north korea story is important for japan. plenty for governor kuroda to mull over ahead of the next meeting. reaction,ctually virtually no change to the yen. they have upgraded their assessment of overseas economies. we don't know which ones they are talking about, but perhaps that feeds into this idea that things are improving and this global growth picture is intact. >> which has been so important for china, one of the world's against manufacturers and exporters. they have been riding the wave of the global synchronized upturn. boj is becoming more optimistic on a global outlook, that bodes well for japan's outlook. there are risks, currency remain strong, trade tensions have not gone away, and how the north korea story plays out is important too. rishaad: thank you very much
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indeed for that. let's head over to sydney and joined the wharton for them. let's talk with our next guest, the dean of the school. take it away. plenty of topics to talk about with the dean of wharton school. let's get right into it. thes talk about the boj, effort to get out of the deflationary spiral the japanese economy has been in. are they doing good work? credibleics looks more than much of the last 25 years in japan. stimulus matters. obviously monetary fiscal stimulus matters. japan has big regional considerations. how do economics with china interact with the political and military in china is a big deal,
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but the big story at the end of the day in japan is a broader sense of open. shrinkingpulation is because it is an aging society and japan has not and as open or attractive to migrants, so abenomics matters, but i don't think on its own it can transform the trajectory of the japanese economy. haidi: we have been talking about the three arrows and wondering when that third arrow will fire, but these policies are domestically unpopular. >> i think what prime minister abe is doing, an interesting move to play up japanese nationalism, some people would say it is a distraction from the economic issues come up but you can view it as a rallying cry to change the trajectory of the country. think about an independent japanese military. that will stimulate the economy.
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everybody knows what it does for politics with the u.s. and china, so we should view it broadly. i think the market is focused on abenomics, but there is potentially more to go on in japan. military,itical, economics is all intertwined. we have been talking about the prospects of a trade war. is that a real threat in 2018? i am naïve, but i am an optimist. first, what we see out of president trump is this flare explodes, but then it comes down up is a much smaller policy change. second, things like free trade agreements, trade balances and imbalances aren't the core of the modern global economy. it is about multinational firms, interlocking investment relationships, so it is not surprising that some of the areas coming out of the trade
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war ballooned today. i would like to see a pivot actually to a focus on investment may be between the u.s. and china, bilateral reciprocal investment. i think that is more important an the global economy and upside opportunity, not a downside risk. haidi: i should point out the president trump is wharton alumni. there have been victims of globalization. how do you view that? >> if you look at the impact on less skilled workers, technology, we tend not to blame technology for dislocation, but it has been more technology than globalization. we tendise though that to think about trade because it is easier to put a face to it, or immigration, you think about the pushback against trade and immigration. the big story has been technology.
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havehigh skilled people won. it is the responsibility of the corporate sector and public sector to create growth. it is understandable to me that a lot of people, they look back on what they think was a simpler and better age. i don't think you can turn off globalization or technology, so we need to empower people to take advantage of these two big drivers of global change. haidi: the other major news is this continued rapprochement between north korea, south korea, and the nine states this potential meeting between those two leaders. is this a turning point given that this has also hung over regional markets? the regionalg over economy for a very long time, so i have a simple bottom line on the korean peninsula, which is
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the status quo is probably the best we can do. they are probably managing the status quo, which is difficult because north korea's nuclear aspirations have increased along with their activity. what we have seen the last few months, not only the u.s., but from north korea, again, taking a little air out of the balloon to go back to the status quo position, which looks fragile, unstable. north korea, south korea, korean peninsula, nuclear north korea but i think the status quo is in everyone's interest. i certainly welcome the news from today. haidi: thank you so much for taking the time to speak to us. lots to get through this morning. as thes optimism developers we have seen so far. rishaad: thank you a lot. haidi lun there for us at the wharton forum taking place.
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trump hailingald great progress after agreeing to meet with kim jong-un. that will be front and center. david. >> were not talking about tariffs anymore, are we? rishaad: it has been the clips by what has happened. we look down the line and we have a jobs report. if we get something north of two point 8%, the expectation for wage growth, 200-5000. 05,000. had -- a former member of the policy board in japan is coming on the program in about 40 minutes. had governor kuroda,
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talking at the same time. korea, a guesth from harvard joins us. a chairman at the korea society joins us. call from our one tuest is an option to get in o korean derivatives stocks. more coming up. ♪
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almost 11:00 here in hong kong. i am david ingles. welcome to bloomberg markets: asia. ♪ david: history in the making, president trump is to meet kim jong-un for unprecedented talks expected in may. is this the art of the deal? governor the pboc perhaps holds his swan song. he says china can be more bold in terms of opening up. the boj wrapping up its meeting
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term.oda's as expected, no change anytime soon. news ise how the playing out across markets. when you look at the benchmark on the asia-pacific we are entering on a positive note, 0.4% up. higher, as much as 2% at one point. 0.9% right now. have a look at what we are seeing across the different pockets of the south korean equity market. index,tter on the kospi we are also getting north-south korean relations, companies that do business in both countries are in the industrial zone, 25% up in sydney. not an exciting day when it
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comes to the currency, but a historic day. story forush out the you. the boj out with its decision, no change their -- there. we are waiting for the press conference from governor kuroda a later. -- kuroda later. that is a quick look at your markets. paul allen has your first word news. of china'sst reading factory floor shows inflation slowing for a fourth month in february. point 75%, compared to 4.3% in january. expectations of a 3.8% rise. february readings distorted by the lunar new year. prices topped expectations, setting the fastest pace since 2013. president trump has made good on his pledge to impose tariffs on steel and aluminum imports, while exempting canada and
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mexico and leading the door open to sparing other nations on the basis of national security. he signed the order at a meeting, imposing duties at the level he promised when announcing his plan at the start of the month. they take effect in 15 days. today, i am defending america's national security by placing tariffs on foreign imports of steel and aluminum. we will have a 25% tariffs on foreign steel, a 10% tariffs on foreign aluminum. elon musk joined the lobby by tweet generation, asking president trump if he thinks the u.s. and china should play by the same rules on cars. he face struggles with officials in beijing over trying to build a tesla factory in china. a 25% duty on cars, 10 times the amount slaps on vehicles made in china.
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-- 11 pacific rim nations signed an agreement the same day president trump signed a new tariffs on steel and aluminum. peopled america out of tpp last year. the remaining numbers pushed ahead, saying they are opposed to protectionism. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am paul allen. this is bloomberg. this: our top story friday, president trump says he made great progress after agreeing to make -- meet kim jong-un. the first ever between a north korean president and a sitting u.s. president. freeze further nuclear tests. the exact time and place for that meeting is yet to be
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determined, but the white house say it will happen before may. >> along with president trump, we are optimistic about continuing a diplomatic process to test for possibilities of a peaceful resolution. corrected, that meeting will take place at by the month of may -- take place by the month of may. john, we were speaking a few days ago. it has changed substantially. your initial reaction when you heard the news? john: one of suspended animation. ce is muchf pea better than the talk of war. but it looks like something that does not add up. for a sitting president to meet with a leader like kim jong-un
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would usually happen at the end of the denuclearization process. to happen in the beginning and in return have a verbal commitment from kim jong-un on denuclearization, that is the part we do not see. david: you are saying kim jong-un probably walks out a big winner, at least for today, because all he had to do was promised to commit something and now a u.s. president has promised to meet with him? john: that is correct. more details will come. but we are looking at results. the remains to be seen is game plan, the processes. denuclearization is a convoluted, complex process. embedded in that is a process known as verification, to do the intrusive inspections and make sure it has in fact been completed. until we see more of those details, i think it is porton --
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important to manage expectations. john: we have that experience with iran. let's say the meeting takes place by may. what are the bargaining chips and nonnegotiable's? john: for the u.s. side, moving forward to getting that verification in place. the idea of commitment in terms of not using capabilities while they still have it. for the u.s. side, getting understanding of what it will look like, the korean dynamics. these details would have to be made ahead of time. what we are lacking is a presidential envoy on the u.s. side. we do not have a team in place. that is important. do you think it is a possibility donald trump considers and might withdraw u.s. troops from the korean peninsula, if that is in fact a condition for kim jong-un, to give up his nuclear arsenal? john: this is a matter between
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the united states and south korea. it is a treaty alliance between the two countries. they have something called the command forces command, the only combined forces command the u.s. has with any other allied. to give you a sense, they are completely intertwined. it is a decision between seoul and washington, and the conditions have to be right to see any modification. david: what are the north's conditions for this talk? there was a security guarantee, or the regime gets protected. does that mean we should put off talks of unification for now? john: unification is the aspirational goal. with respect to the statement you referred to, it refers to kim jong-un, as reported by the south korean delegation. they said north korea would denuclearize if their safety
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were guaranteed. statements are encouraging, but we have to see the details, the sequencing and what process is in place. david: before that, referring to sequencing, there is the summit taking place in korea -- in april between the two koreas. what they announced this morning in the white house would have been an ideal conclusion to the april summit. john: in many requests -- respects, it puts emphasis on kim jong-un and simone jehan -- moon jae-in. it helps in terms of keeping this momentum going. we would have to see the outlines of the game plan and early signs in terms of commitment on denuclearization. weing the previous period, saw the demolition of the
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cooling tower. if there is something similar to that type of completion to this process of dissembling those sites, it would be a first step. we are waiting on details. david: we go back to the basics. the conditions for kim jong-un to give up his ace card would be quite high. in his mind, what would be nonnegotiable as far as the north is concerned? john: inspections in the past a been a stumbling block because they are intrusive. are military in nature that do not have to do with the military arsenal. are have to see which sites open to inspection. to give you a sense there are other hurdles down the path. it does not mean there is a direct, linear outcome of a denuclearized north korea.
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david: what is in it for kim jong-un? why is he now at the table? the sanctions may have started to hurt the economy. does he get paid off, money, in whatever form that may come in? john: there were monetary rewards during the sunshine policy. but this whole question of why kim jong-un is agreeing to this. there are two good series. the first is that sanctions are biting. another view is that this gives kim jong-un the ability to buy find a pretext later on to commence with final testing for the icbm and nuclear warhead design. those two theories are playing out. we won't know until time passes which one plays out. david: john, final question.
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what do you think is the question we should all be asking now? john: if you view this as a business deal, who gets what, who was paid, along those lines. it has a lot to say about the prioritization of denuclearization. how big of a priority is it for the respective parties? until we see a clear sign, we have a lot of doubts in terms of the sustainability of this momentum. david: john, appreciate it. comments from john parr, director of the korea working group at harvard kennedy school. some lines from the pboc, zhou xiaochuan, talking about the digital currency. the pboc is cooperating he says with a market in developing digital currencies. it seeks convenience and security. a bit more cautious approach is what they are saying.
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the pboc digital tender can be payment like an e- blockchain. it is still a cautious approach. but they are receptive to the idea when it comes to this. china should also be fairly cautious when it comes to know it -- it comes to notes and coins which may disappear in the future. you are looking at live pictures of that ongoing press conference at the chinese capital. coming up, korea still in focus. we have the former u.s. ambassador to north korea, thomas hubbard. and, speaking with a former boj policy board member. a decision 20 minutes back. and, discussing how all of this affects your money. this is bloomberg. ♪
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♪ >> a sitting u.s. president for the first time has offered to meet them and they have had the give nothing. they made a vague assurance to denuclearization. they issued words of that sort historically and then quickly backed away when they got assurances from the u.s. it strikes me. more of thel stake success or failure of his presidency on this deal. that north korea is one of the most intractable and dangerous problems in the world, and that trump has no experience in this field, and his erratic, to say the least, it is a very dangerous thing. americans are seriously considering a possible military strike against north korea, in
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some military or political sense. this is not what north korea wants. nobody wants to be shot at and north korea is not an exception. [indiscernible] a friday.t tariffs,north korea, news out of china. and that little matter of the jobs number coming out in the u.s. later tonight. to discuss this, david gaud wealths out of pictet management. i have to start with north korea. what does the news mean for you and how you invest around asia right now? david g.: we know a lot of global investors have been worried about asia in particular because of the situation in north korea.
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it is actually positive news. the amount we draw from this the situation has been very much under the control. the situation has not been that bad. china has played a very important role in those developments. without china approval, it is difficult to imagine mr. kim jong-un would agree to such a meeting with the u.s. it seemed the situation was not that bad. this development comes at a time where there is concern about a possible trade war in particular between china and the u.s.. this is a further development which is quite positive. this should draw the conclusion that the countries are very much discussing subjects, negotiating. we are not so much in a
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confrontational mode between china and the u.s. there are ways to find solutions. it is positive from a global perspective, it is positive for asia. for south korea it is even more positive. they have been suffering from the absence of the chinese consumer, who has been traveling less to korea, buying less products in the last quarter. a lot of stocks have been penalized because of that trend. that may reverse, we may see a ban on traveling of chinese tourists to korea. they may be eased in the coming months. thatbly the right reason, is a positive development. david: from what you're saying, i can see the first play where your mentioning the overall concern over chinese tourists into korea. outother, should we price the korean discount that has
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been there because of the north korean issue? david g.: in terms of the final outcome, other people mentioned earlier, still difficult to figure out if we will find a pop -- proper settlement in terms of the north korean situation. that discount would probably still be there. koreanarly, the north issue preventing investors from allocating more money into asia, probably has been overplayed. at this stage, this should encourage people to put more money into asia. at the same time, we continue to see earnings grow across the region. we see sectors improving across the region. they consider asia a place to be investing in in 2018. david: that is part of your conviction call. let's see some of david's calls.
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you like markets like china, to a lesser extent, malaysia. you go into the philippines and india. why the divergence between those four markets? for china, the momentum is strong. in hong kong we are expecting more than 20% growth this year. we are checking numbers in the industrial space, health care where the earnings growth trend should exceed 20% this year. these are very strong numbers for the market. there is an imbalance, which is extremely interesting at this level. in malaysia, it is country improvements. the earnings momentum is building up, a 30% increase. india seems to be softening of it -- a bit.
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in the midterm, we see better opportunities in china. that is weigh on the balance we are putting it into the chinese markets right now. one of those things is a surprise from the boj. can you clarify what surprise would represent a risk? i would imagine a surprise would be for easing, which would be a good thing, no? david g.: this is something we have to keep in mind with the boj. current policy is very supportive. at some point that will have to end. difficult to unwind that kind of policy, not to scare the market or create extreme moves. , we haveo keep in mind to see how they are able to manage it and help the market anticipated. this yield curve control is still very much in place. indeed, it is working.
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inflation has been taking up in japan. earnings momentum is building nicely. so far, everything goes in the right direction. -- the yenreciation has been depreciating versus other currencies. losing anday be competitiveness, they are gaining against other countries. it seems like a perfect scenario to japan. but underneath was the gop action. there is a zero margin for error for the boj. ultimately this is where they could be, appointive risk down the road. david: david gaud, appreciate it. more lines from the pboc on bitcoin. too fast, not too cautious. china does not allow payment using virtual currencies. they do not favor products that
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may trigger speculation. as far as what the future holds, he said the cryptocurrency market should serve the real economy. 89.60 right now is the price of 60 right now is the price of bitcoin. commentary and from a lot of our experts right now. this is bloomberg. ♪
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♪ david: a quick check of your business headlines. do looking for new opportunities in e-commerce. they already generate 25% of china sales online. saying it should grow to 40%. company shares have gained after
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monday's announcement of the new three-year business plan. >> we conclude there will be of giving value to consumers. channels, new ways to connect with consumers, that is the challenge, how do we combine off-line and online? the falsified data scandal at kobe steel is largely what at least according to his hand that -- happening in the bond markets. it has happened to a five-month low. that is after tuesday's announcement of a leadership change to prevent more data falsification. recovering after the initial shock of a scandal. have a look at markets as we head into the lunch break on the chinese mainland.
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more lines coming through from the press conference. china will continue to strengthen regulations. more coming up next. this is bloomberg. ♪
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♪ is almost 12:30 in tokyo as we transition from winter into spring. bank of japan out already with its rate decision. no change, as expected. target.t the yield vote. a 8-1 we will get more context in a minute. hideill be joined by taka kiuchi in a few moments. the press conference takes place around two hours from now. in the meantime, let's get it
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over to paul allen with an update of your first word news. thanks, david. the white house says president trump will accept an invitation to meet kim jong-un, in the first meeting ever between the north korean leader and a sitting u.s. president. the north -- north korea says it will suspend nuclear missile talks. the exact time and place of the meeting has yet to be determined. the white house says it looks forward to the denuclearization of the korean peninsula. pledge, a long running saying improvements in the outlook of the euro area justifies renewed confidence. mario draghi says the change in language was unanimous. the risks remain with rising protectionism high. the euro jumped on the news. to remove the explicit reference to the likelihood of an increase in the
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purchases in the near future. we havehould not forget the other reference to such a possibility. brothers's bankruptcy, to pay for its role in the u.s. mortgage crisis. billion than that $11.5 some were seeking. -- manhattan bankruptcy lehman brothers collapsed and went bankrupt in 2008. thei arabia told bloomberg saudi aramco ipo could be delayed until next year, pushing back then important part of the plan to modernize the kingdom's economy. they are concerned it will be named later, if at all.
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saudi officials say it is on track on time for 2018, but the deadline is looking hard to meet. >> i don't believe that will happen, any deadlines. concerned, am between december 31 and january 1, there is no value lost for the kingdom. beingot see it as significant in the decision-making process. >> global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am paul allen. this is bloomberg. ♪ david: let's get back to our top stories this friday. north korea -- joining us from seoul, thomas hubbard. he was also former ambassador to the south. in thet of negotiations early 1990's on the nuclear arsenal.
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thomas, your initial reaction when you heard the news? almost the news is breathtaking. things are developing very quickly. i think it is good news we are moving in the direction of dialogue, as you mention. i have been dealing with north and south korea now for about 25 years. i have always been an advocate of dialogue, under the right circumstances. that weal impression is are at least starting under the right circumstances with the north koreans agreeing we can aim at denuclearization. they are accepting we will continue our military exercises with the south. and the north korean pledge not to engage in testing, while
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these talks are underway. that, both south korea and the united states have indicated sanctions will remain. that sounds like a very positive start. minute theieve for a talks, when we get into them, will be easy. i have spent a lot of time negotiating negotiations with of the north koreans. they are always tough, it is always complicated. but i think it is time to start and reengage. that thelly am pleased north koreans seem to be open to dialogue, and that president trump has accepted the challenge. thomas, let's talk about those negotiations. going into today, one of the
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conditions from the north was a security guarantee on the regime. that is code for pulling u.s. troops out of the peninsula. do you think president would be prepared to do that? as he approaches that meeting in may, are there things you think would be nonnegotiable on the part of the u.s.? thomas: indeed, i think that is none believe it would be wise for us to pull our troops out of the peninsula. that is not something we can expect. i do think there will be issues short of that that will come up. occasions previous said we have no hostile intent against north korea, we do not seek regime change. we can't guarantee survival of that regime.
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certainly we can't lower our guard. deterrents.aintain at this point we need to maintain pressure through the sanctions and other measures. whether the to test north koreans are prepared to give up their nuclear weapons. to achieve efforts that objective have been less than fully successful. it would be hard to get to that point. like the idea of and is starting at a high level. -- and starting at a high level. guest had an interesting observation.
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he said it was a low bar kim jong-un had to put in place to lure donald to the table. all he had to do was promised something, does not mean he would do it to read care to comment on how that affects negotiations? normally it would be the u.s. president and north korean president at the end of negotiations, not the beginning. i think the bar is fairly low. all we have seen so far is promises. i do think the purpose of talks, negotiations, is to solve the problems. if we are not talking, i don't think we will solve the problems. we have to start somewhere. what i am impressed with, we seem to be starting off with no intention of easing sanctions, with no intention of suspending military exercises, no intention
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of unrolling our deterrents. let's get going and see what we can do to achieve our objective. the north koreans will be very demanding. david: i was about to say, based on your negotiations with them in the past, do you think they will allow transparency and access to their nuclear arsenal, to appease both the u.s. and their allies? i think in the original negotiation i was involved in in 1990's, we did achieve a freeze. at that stage, the most advanced part of their nuclear program, plutonium-based program. that lasted eight years. it was verified through the international atomic agency. american and other bilateral monitors.
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we have done that once. the north koreans did cheat on that program. they began developing a nuclear program based on uranium enrichment's. -- enrichments. and reigns need to be more aims needive. -- our to be more comprehensive. during this period when we have not had talks, things have only gotten worse. let's start with of the freeze, -- let's start with the freeze, and go beyond to achieve the objective, which is complete underearization international monitoring. david: in 30 seconds or so, can they be trusted? thomas: no, i don't think they
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can be trusted. we have seen in the past to have cheated on our agreements. diplomacy has to be based on a modicum of mutual interest, not necessarily trust. ronald reagan put it pretty well when he said, trust, but verified. -- verify. he meant, we cannot trust the soviets, we have to check everything we do. we have to be ready for a hard slog. andke the idea of talks energy at the outset with high participation. comments hubbard, thank you. the chairman of the korea society, and former ambassador of the united states to south korea. another big story we are watching today, the pboc governor, zhou xiaochuan,
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speaking in beijing. the last swansong. let's bring in tom mackenzie, who is live in beijing. anything that stands out so far in the swansong? tom: it looks like zhou xiaochuan has just wrapped up the press conference. people have just left the room. he has been talking for an hour and a half. he has been asked about deleveraging, regulation, oversight, the yuan, and opening up the markets. he said china could be more bold when it comes to opening up the markets. saying in his time it has been a pleasure, it has been fortunate for him to push to see greater market access and greater opening here in china. he also said once risks are under control, we should expect further steps to open up the markets. on the yuan, he said the major
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steps to globalize the currency have already been taken, referring to the fact it is under a reserve basket under the imf system. underd once risks are control, that is when you could see further steps. essentially dampening expectations we would see radical moves in the currency in the next few months. we have been reporting here at bloomberg the potential for a tie up between the banking regulator and the insurance regulator. he said that yes, there would be greater coordination between the regulators, that the pboc would have an important role closing loopholes. also saying the pboc has been studying the system in the u.k., does not mean it will be applied here in china. and that growth is a stable, it is quality of growth they are seeking. that is also a function of where inflation goes from here.
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we have the latest inflation numbers out this morning. what can you tell us? know, it is the producers number we should be looking at in this data set. 3.7% pickup in february versus what we saw in january, 4.3%. it is important to note it comes as president trump is putting tariffs on the metals sector. it means it may make it that much more difficult to pay down debts. in terms of consumer prices, we have to bear in mind, chinese new year. a lot of people flying home, spending a lot of money on food. that is what you saw pickup in the consumer numbers for february. officials here saying we should expect a softer consumer number in march because of the chinese new year affects. -- effects. zhou xiaochuan has wrapped up
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his press conference. it is potentially likely we will get his nominee to take over announced on the 19th of march. comesto focus on when it to china's central bank here at the embassy in beijing. david: tom mackenzie, live out of beijing. we will be live in tokyo to unpack that boj decision, came out against an hour back, to not do anything with monetary policy. nomura's research institute joins us. this is bloomberg. ♪
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♪ as expected, the bank of japan staying on course after the final policy meeting of governor kuroda's first term. the currentin
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executive economist at the nomura research institute. he joins us out of tokyo to debrief us. thank you for joining us. no change of the boj. do you think it was a wise thing for them to not do anything? what do you think they will do in the future? is in line think it with market consensus. no big reaction in the market. this: if the boj starts is confusion there on what an exit means, and whether or not that means the boj can keep pursuing 2% inflation. if the boj starts the conversation of normalizing policy in the next 12 to 16 months, does that mean they are changing their policy? i think there are two types.
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one is a voucher. the first is already in progress. introduced control in september. the boj reduced the rate of purchasing as part of a normalization policy. it will take time before the boj starts to implement, because up to 2% inflation growth [indiscernible] i think an increase of short-term interest rate could from the current short-term target to the long-term target.
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i think communication with the financial markets regarding this change could start in the second half of this year. is,d: what you're saying the boj needs to regain credibility by saying, we can to reach the 2% target by the timetable, and instead take the 2% and look at it long-term, is that what you are saying? it means the boj changes the status. that could undermine the credit -- credibility of the boj. it is difficult for the boj to achieve 2% in the short-term. i think what the government achieves 2%. boj
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if the government is reappointed, decides to , but het mr. kuroda fails to achieve 2% growth, [indiscernible] it is an important target for the government. but i think the government wants the boj to keep it. boj can change 2% inflation growth without any opposition from the government. david: since we are talking about the new term coming up, we have two new deputies. one is the seen as someone who can influence the banks and become more aggressive. do you think he can? he is also the deputy governor, which means he has to support
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governor kuroda. viceide: i think the two governor candidates could be very different. one was promoted from the boj, could be reasonable. proceed with a normalization policy in the future. reflationary -- reflationist. the power of deputy governor in bank of japan is very low. it is not inflation in general. the boj law that requires the vice governor to support the governor. possiblet is
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[indiscernible] it is difficult for him to continue to oppose his policy for long-term. it was the case with the previous governor. [indiscernible] there is no chance of easing monetary policy. kuroda already accepted monetary policies initiated by the staff. i think this stance is likely to continue in the second term of
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mr. kuroda. part of theere internal conversations within the boj. 106, makes it difficult for the bank to reach the target. maybe we have to , the economic impact and political impact. impact, it is not that problematic. i do not think it will harm the japanese economy. the 100 level is critical.
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david: as you mentioned, we will be watching that level, 100. for inflation a problem, but not so much the economy. thank you so much, former boj board member and senior economist. this is bloomberg. ♪
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♪ we had been preparing after joining the wto to join the market. but unfortunately, let with the global a natural crisis. andnow we can be older, make the opening even larger. david: does that mean we are entering a different pace of opening from the chinese? it depends which part of the markets we're looking at.
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when you talk about the currency usage to seeased if the renminbi goes from trade and investment to a reserve currency, they want to be a little more bold with of that. a lot of things like the global crisis could stand in the way. another thing i wanted to mention, he ended his press conference. his comments on digital currencies. they had a step-by-step research on digital currency together with the market. the pboc will begin a pilot program. that is a wrapup of what we saw in china. u.s. jobs very much in focus. have a look at our bloomberg chart, what you want to focus on. wage inflation at 2.9%. last week, which kicked of the selloff off, about three or four weeks, max. expected.obs
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jobless rate at 4%. a quick check of korea, our big story there today. historic? we will see what happens at the meeting in may. this is bloomberg. ♪
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♪ alisa: i am alisa parenti in washington and you are watching bloomberg technology. at the white house today, flanked by industry workers, president trump officially imposed stiff tariffs on imported steel and aluminum a while excluding canada and mexico. he left the window open for exemptions for other countries on the basis of national security. duty on will levy a 25% steel and a 10% one on aluminum. the top democrat on the house intelligence committee said a subpoena for further questioning has been requested for corey lewandowski. he refused to answer questi


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