Skip to main content

tv   Bloomberg Markets Asia  Bloomberg  March 25, 2018 9:00pm-12:00am EDT

9:00 pm
rishaad: asian-pacific stocks falling for a six-day omicron seven, japan facing its worst month in 2017. trade tensions unsettling investors. china set to have the weapons to hit back. apple and boeing are seen as possible targets. and oil marking a milestone with a new futures market in shanghai. we assess the challenge to wti and brent. in hong kong, i'm rishaad salamat. haidi: in sydney, i'm haidi lun. the new pboc governor pledges further reforms. he says the economy can withstand external threats. this is bloomberg "markets:
9:01 pm
rishaad: futures in shanghai, going to look at the pricing to see how that is going, prices omicron rmb and dollars as well. it is a selloff again. we are talking trade and tensions. haidi: the oil futures debut in china, probably the only milestone omicron a positive sense that we will be talking about today as the rest of the markets are significantly risk off. last week ending by close to 6%, the biggest decline in close to two years. looking at u.s. futures, we are flattening out a little bit, so maybe this is the worst of it. let's get to sophie with a look at the damage so far. 30 minutes from the open in china and hong kong. watching the oil futures trading
9:02 pm
in shanghai for the first time today. 20 five years it has taken policymakers to get that going in china. we will be talking about that the next couple of hours. in the meantime, trading in singapore, taiwan, and malaysia coming online. sophie: even as the yen is losing just a little bit of ground but still ticking below the 105 handle. japanese stocks are headed for the worst month since 2016. you have electronics makers weighing the most in tokyo amid trade concerns. chipmakers are losing ground in tokyo and seoul. we watch for chipmakers to follow suit. about onesliding third of 1%. the latest detail from taiwan indicating industrial output fell near 2%. --singapore, the sdi down the sti down 1/10 of 1%.
9:03 pm
copper they'll grow had announced a joint venture with in december, this. gaining ground in the wake of the reports. it is continuing this monday after goebel -- global stocks cap their worst week on global trade woes. some companies are expected to benefit, noting that u.s. importers turn to the likes of malaysia, taiwan, and others to make it more expensive to source food from china. countries like singapore and taiwan could benefit more as they do have a trade agreement with united states. people warning of more volatility but also indicating this could be a great chance to buy great companies at good prices. tencent has lost 10% the last three trading days, but credit suisse has maintained its outperforming writing. saying conditions are looking favorable heading into the second quarter.
9:04 pm
not soothing investor nerves very much today. rishaad: sophie kamaruddin there. it is more of what we have been reporting on. the global oil market getting a bit of a wake-up ahead of the launch of china's own oil futures on the shanghai international energy exchange. china is the world's largest energy consumer, offering contracts that foreigners can buy or sell. it is a first for chinese commodities. does this mean china will get a bigger say in pricing? let's get the market bloombergns with markets' live macro strategist. what is the timing? why is china doing this and do think it is going to be popular? >> this is a massive win for china, but very much long-term. we can't expect the implications to feed through the market short-term. i am not talking about weeks, i am saying months or even the first year. over the years ahead, this is a
9:05 pm
big win. it helps financial markets, helps validate the yuan as an up-and-coming rival currency. indirectly, it will help support the chinese bond market. it really can enhance the whole financial system in china. it is a big win. they have taken a long time to get there because they wanted to rate for the right moment. they have now got that. big news, even if it is very long-term. haidi: as of march 21, we have seen almost 20 overseas brokers registering on the shanghai exchange to play in this market. are we expecting to see foreign involvement to any great deal of significant given that we do know chinese commodities can be pretty speculative with some government intervention as well? of the thingsne that's interesting about these contractors, they are open for foreigners to trade. i think realistically we are likely to see mainly domestic interest for the foreseeable future.
9:06 pm
over time, foreign interest might start coming more and more. of course, there will be arbitrage opportunities and no one will want to pass those by. foreign investment will be there, small, growing slowly. at the moment, it might be dominated by the short-term local market in terms of speculation. haidi: does it pose a threat to the dollar? mark: not in the short-term at all. as i will stress, it is more of a short-term irrelevant story. longer-term yes. longer-term, china is going to become the world's largest economy. it is still the fastest-growing. it has already become the main trade partner of most countries. it is the main commodity player overall. longer-term, this enhances the argument that the yuan should become the world reserve currency. for that argument, we are talking a multiyear basis. it is not going to challenge the dollar in a serious way for years to come. --is an important stress
9:07 pm
important step, but i stress a really long-term process. haidi: a milestone, but a long way to go. thank you so much for that, mark. you can follow more on this story and the days trading action and commentary from the likes of mark on our markets live drug -- markets live blog. you can get a market run down in just one click. there is live commentary and analysis from expert editors. let's get to first word news with ramy inocencio in new york. ramy: thank you. first up, prime minister shinzo abe has apologized for cronyism that opposition lawmakers could say could hit his chances of changing japan's constitution. public anger over revelations that finance ministry officials altered papers related to a land sale linked to his wife sent his poll numbers plummeting. he told the annual convention that such a thing would not happen again. u.s. treasury secretary steve mnuchin says washington and seoul have reached an agreement
9:08 pm
on revising their six-year-old trade deal. you said they now have an understanding on reducing imports of korean steel and expect to sign the deal soon. thea's trade surplus with u.s. was about $18 billion last year, down from $23 billion in 2016. cars accounted for more than 70%. mnuchin also says he is optimistic for a deal with china that would forestall the imposition of tariffs ordered by president trump. he told foxnews the two sides are engaged in productive conversation and he is hopeful of an agreement. lastly, the president announced measures against china worth at least $50 billion as punishment for alleged intellectual property theft. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ramy inocencio and this is bloomberg. haidi: ramy, thank you. u.s.-china trade tensions were
9:09 pm
top of the agenda at a gathering of business leaders, policy makers, and academics in beijing . we are covering the chinese development forum, which wraps up later today. what interesting times. what is the mood there? : certainly interesting times for these western executives to be in china. this is a forum where they get to meet policymakers and to try to get a feel for the direction of travel and how china's lawmakers are making their decisions on a whole range of issues. of course, the trade tensions are dominating the discussions, as you said. it is very much of the view that we have been getting from executives and academics that we are speaking to, that there is a growing sense of concern about the trajectory of the u.s.-china ties, but also a need for the corporates here to understand the implications of the tariffs being imposed by the trump
9:10 pm
administration, exactly what sectors and products they are going to target so they can better position themselves for the potential acceleration in response from china. that's something else people have been commenting on, the fact the response from china has been relatively measured and strategic. though there are warnings from the people i have been speaking to that have access to the years of chinese policymakers that -- those measures could be stepped up if trump continues to pressure beijing. one person we spoke to, economist from yale university. >> china has responded very modestly, given the potential weapons it has at its disposal in terms of countervailing tariffs. a possible shift in purchases of u.s. treasuries. there is plenty more to come if the u.s. chooses to stay with this reckless policy. tom: i also spoke to a nobel
9:11 pm
laureate. he said he thought if a trade war did come about that china would ultimately be victorious because of the amount of tools it has at its disposal. spoke to the ceo of he said he does not think the market implications are going to be dramatically significant in the short-term, but he says longer-term if these tensions do exacerbate, it would be very "disturbing." there is also a fundamental mismatch between the western , whorate, u.s. corporates agree with the trump administration on the need to tackle tech transfer and market access but who fundamentally disagree with the protest the trump administration is taking. rishaad: we also heard from the new pboc governor. he has a message for business leaders. what was it? tom: the pboc governor talking
9:12 pm
yesterday, saying there would be further measures rolled out to open up the markets. he said also they would be stepping out there measures to make the yuan a more convertible currency, though we were not given time frames or specifics on those measures. he has also talked about monetary policy remaining neutral and prudent and was asked whether the chinese economy was able to weather the storm if the external environment deteriorates. take a listen. ] if anyslated external risks are in china, i think the current baking system and controls in place leave china well-placed to mitigate those risks. tom: we also heard over the weekend reports from the new york times that the head of the merged banking and insurance regulator has taken on a powerful role at the pboc, party secretary.
9:13 pm
this man is seen as a reformer. very aggressive tackling shadow banking in china's conglomerates. rishaad: thanks for that, tom mackenzie, our china correspondent in beijing. we will have more on trade conditions -- tensions and will assess the possible market impact. plus, find out what investors need to know about the debut of these chinese oil futures, trading for the first time in shanghai this morning. john browning joins us later in the show. this is bloomberg. ♪
9:14 pm
9:15 pm
haidi: this is "bloomberg markets: asia," i am haidi line in sydney. rishaad: i'm rishaad salamat in
9:16 pm
hong kong. concerns of global growth may be hurt by potential trade war. our next guest thinks 2018 could be a watershed moment when we see china challenge u.s. hegemony. starting off. this would really ultimately go down to the narrative that donald trump effectively sees, like steve bannon, a window in order to curtail china and stop china from becoming the number one world power. >> absolutely. that hit the nail right on the head. 2018 is about u.s. and china and nothing else. it is exciting from a markets point of view because reality is going to be reflected across markets, unlike 2017, the goldilocks scenario, which was not reflecting anything but an extension of qe. rishaad: one happens next? >> from a political point of
9:17 pm
view, it is brilliant. trump has found the next topic to push them towards the 2020 elections for himself as an individual. for america and china, it is only the beginning of who is going to have hegemonic power going forward. we are seeing that reflected in markets. volatility is good when it is reflecting what is actually happening in politics and the economy. haidi: no doubt it makes our jobs more interesting. 2018 has proven to be really interesting. as an investor, how do you position yourself given there are so many unknowns? one saying, let's not get ahead of ourselves and make this trade -- and take this trade tussle to seriously. and others saying we need to be a bit more cautious. >> that's a really good question. why it is important is what we are seeing since 2014 is hyper convergence, markets and asset classes are coming together.
9:18 pm
the s&p 500 in the u.s. market, 65% of the gains from year to date were in four names, amazon, nvidia, microsoft. and why that's important is it is time to see some volatility and differentiation. that's good for investors because they can have a reflection on where they think markets are going and affect their markets -- their portfolios accordingly. haidi: you look first at the chinese rationale. in a reasonably measured way, which we have seen, or they can go nuclear, tap into their holdings in the u.s. treasury, do something alongside the currency. what's most likely in your view? >> china has been playing this game for 30 years. what's happening at the moment is obviously it is making headlines, but china has been playing the same game. they play the chinese game go, a strategic game. that's what we saw with the chinese government bonds performing better than
9:19 pm
treasuries in the u.s. as of the first quarter of 2018. that is a very interesting fact that has implications for all markets, particularly the relationship with america and china. rishaad: there is the nuclear option, as they put it. they could start selling treasury bills. but they don't want to see their own reserves being decimated -- more than decimated because that only means reduced by tens. >> what china really does not want his europe, australia, canada, and the developed democratic world -- japan as well -- taking on china directly. they would never move to that option so quickly because that brought its the battle for china -- and that broadens the battle for china, not in their interest. rishaad: where is japan in all this? we did have them not being exempted from this deal, which was broadly expected. everyone thought abe and trump
9:20 pm
were golf buddies. >> that goes to the analogy we used a few minutes ago, china is playing go and america is throwing darts at the board. japan should have been excluded from that logic, but the trump administration does not really believe in logic. what it does mean is japan is playing an interesting role for investors to watch. japan is the middle ground of volatility between emerging markets -- in this case, china -- and developed markets, the u.s. haidi: you say there is no compelling reason why the yen should be higher. i'm not so sure about that, because you can either look at it as being the greatest beneficiary of volatility of geopolitical tensions or being the greatest victim if you are talking about abenomics. what is your call on how much this currency is going to strengthen before we see intervention? >> to put that comment into context, since 2015 there has
9:21 pm
been what is called the shanghai agreement, similar to the accords in 1997 where central banks trying to keep volatility out of currency markets. what that comment is referring to is japan and europe has been very unhappy with what mnuchin etc. have been commenting on in recent times at davos etc. to flash back to the plaza accord of 1997, the second that broke, we saw the stock market crash. the dow jones move by 27% on the monday after the treasury secretary at the time was disgruntled with the bundesbank in germany. that is the parallel with regards to the japanese yen. rishaad: does not seem like we are going to get anything like the plaza accord now. what about you? how do you then manage your money? it is not the time to be a passive investor? >> no.
9:22 pm
we are in the longest human expansion in history. we are seeing convergence and hyper convergence. , the peoplen to believe there is more upside in markets? if not, we believe we are coming into a downturn or possibly a recessionary stage. where'd you move your money? it is that simple. rishaad: where do you move the money? >> in that scenario, you move to cash if you believe we are moving to recessionary times. it is very early to make that call. rishaad: you are not positive on equities. >> not in the current might, but things change. rishaad: always a pleasure, sterling larkin. be discussingo more on these trade tensions between the u.s. and china. later, we are speaking to pauline long. we comef bath 11:00, from sydney with the center for independent that he is director tom swift said. this is bloomberg. ♪
9:23 pm
9:24 pm
9:25 pm
haidi: counting down to the open in hong kong and mainland china. rish was saying quite a bit of damage already. how is the open looking? rishaad: mixed. we have got the tokyo market at the moment, firmly in the red. futures indicating perhaps a rise. we are in wait and see mode. we will see how it pans out with the imap function on the bloomberg terminal. there we have it. most sectors seem to be down at the moment. while energy is up, we are seeing movement to the upside for oil prices. telecoms. what about i.t.? that had a torrid time last week. it is flat right now. that is an industry group led by what happens with tencent. most of these subgroups,
9:26 pm
industry groups, are on the way down currently. we do have some positive movement from energy at least. haidi: rish, when we saw you last week, the biggest drop in just over two years. asia is looking anymore resilient? rishaad: it is kind of a bit like waiting -- like wading through treacle. here is a look at what has been happening, 6463 on the bloomberg terminal. we have been trying to get lift off. we got failure to launch. as we go through this year, we keep erasing the gains. we did that last year. index for the region fell below the gain line, also in february. also we had that march 8 as well. that's really what we have. it is a case of just trying to muddle through. we are going to be talking about that, talking about energy and well -- as well.
9:27 pm
it has taken a quarter of a century, but china has got its own oil futures trade. they are going to have a look at what that means for the pricing of crude. having a look at that and more next. this is bloomberg. ♪ mom you called?
9:28 pm
oh hi sweetie, i just want to show you something. xfinity mobile: find my phone. [ phone rings ] look at you. this tech stuff is easy. [ whirring sound ] you want a cookie? it's a drone! i know. find your phone easily with the xfinity voice remote. one more way comcast is working to fit into your life, not the other way around.
9:29 pm
9:29 a.m. right here in the heart of hong kong. we are counting down to the start of trading here and in shanghai and shenzhen. a lot to digest as ever. trade considerations at the fore once more. the key to a mixed start for the day from hang seng, had a selloff. stretching perhaps into monday. for the time being, we could have a recovery. seeing tokyo bearing the brunt of these and australia also declining. tokyo is currently nursing the worst wounds. confirmed by a global growth protectionism and what to do.
9:30 pm
stabilization, moving to the upside on the futures contracts. that could be something which may act as a panacea for some market participants. let's take a look at what is happening as we get to the start of a new trading week. it is sophie kamaruddin. sophie: the tumbled continues -- the tumult continues for china mainland markets, the component losing one point. the hang seng lower by .4% after a three-day drop. this has china says it will defend itself in a trade war. local media reporting research is being conducted on u.s. imports that may be subject to tariffs such as airplanes and computer chips. trade deal maya be a source of short-term volatility.
9:31 pm
this selloff, high-quality cyclical things could have a good reentry point. the chinese index down .7% as internet shares halt trading. earlier this month, the company denied reports they may have to file for bankruptcy. we will be waiting for the update from the she internet. let's take a look at the hans saying. we do have tencent among the laggards this morning, extending losses for a fourth straight day. credit suisse has maintained its outperforming rating given its solid execution across business models. also want to highlight what is happening for other stocks on the radar. shen why energy after profits rose to a five-year high. let's check in on some other movers, particularly the leaders. we do have sinopec gaining ground after offering a record dividend as its refining segments helped fuel in your 10% increase in annual profit. wiki an eye on casino players
9:32 pm
after goldman reiterated its buy rating on galaxy and wynn shares. it is strengthening its foothold in macau. rockets -- markets are preparing for volatile earnings from chinese banks. some banks due to report today. wh group also on the lineup. that stock sliding about 2% so far this morning. let's check in on some other movers. after itsjumping results topped estimates, but k wg property falling after its earnings report. check out high-tech surging nearly 10% as trading volume jumped. it processes soybeans and mixed pharmaceuticals and is also in the real estate game. haidi: thank you for that. as we spoke about earlier, china has launched futures trading on the international energy exchange. let's talk about the implications with john browning,
9:33 pm
one of the few brokers approved for offshore trading on these new contracts. one of 19 foreign brokers involved from the outset. give me an idea of the kind of risk-benefit analysis you do going into this knowing this is a market that is highly speculative and prone to government intervention. >> i don't think speculation comes into it. this market is going to be the benchmark for southeast asia, for china. because it is in renminbi, appropriate for the local market. plus, the foreigners are allowed dollars as the major part of their collateral. it is a real game changer for this market and this environment. haidi: just looking at a note from david english, looking at the discount. it is about a 1.5% discount from the global benchmark in terms of
9:34 pm
trading at $59 per barrel at the moment. in terms of the pricing momentum that you are expecting, how long do you think it will take before it actually manages to materialize as what china wanted , which is greater pricing power out of oil being sold into asia? >> that's a difficult question, but i would think two to three years. i would imagine 30% of the exchange will be foreign participation within two to three years. at that point, it will be an international benchmark. rishaad: what type of grade are we talking about here? we have light crude, the heavier stuff. what is this contract exactly? >> this contract is very similar to what used in dubai.
9:35 pm
that is the basis of which china purchases its crude at the moment, as far as i'm aware. the physicalcates basis. but the location basis is going to be obviously in china and the warehouses that the exchange approves. of course, it is in renminbi. don't forget that foreign investors can use dollars as their collateral to get involved to trade on the exchange. rishaad: how does it work? because you can do some settlement in dollars if you are a foreigner, and if you are chinese you can settle only in rmb. tell us about that, because it is quite technical. >> it is technical. what can happen is a foreign
9:36 pm
company can have a bank account both in dollars and renminbi. the collateral- can be held in u.s. dollars. the variation margin would be in renminbi. so there is a foreign currency trade to be done on the profit or loss, but essentially the collateral involved can stay u.s. dollars. this enables foreign participants, foreign producers, foreign merchants to offer renminbi pricing to get involved in their renminbi market, renminbi trading. , the italian exchange is going to long-term iron ore contracts, possibly
9:37 pm
before the end of the second quarter. expect shanghai and shenzhen to the offer contracts. changing point in the way this market can trade, that commodities can trade in china with foreign participation. it is going to become the norm. rishaad: it is going to take a long while before we can talk about the federal yuan rather than the petrodollar. there is going to be a lot of headwinds. lots of opportunities, but a lot of risks, aren't there? >> oh yeah. the media speaks about the petro yuan. personally i think that can happen, but not overnight. there are a long series of steps to be taken, and of course the dollar has a dominance. that is not lightly -- not
9:38 pm
likely to be moved very quickly. but the door is opening, and it is opening in other commodities as well. the significance of this move is not just oil, it is what it means for the entire commodity trading world in china and southeast asia. certainly an important milestone step. john browning, bands financial managing director. let's get you caught up today with first word news. ramy? actress whorn performs as stormy daniels has told 60 minutes she had sex with donald trump in 2006, recanting a statement issued in january that denied the affair. stephanie clifford says she took money to sign the denial because she believed trump's lawyer would "make her life hell in many ways."
9:39 pm
clifford also says she was physically threatened in 2011. >> i was in a parking lot going to a fitness class with my infant daughter, facing backwards in the backseat, diaper bag. getting all the stuff out. a guy walked up to me and said to me, leave trump alone, forget the story. then he looked at my daughter and said, that's a beautiful girl, it would be a shame if something happened to her mom. ramy: u.k. brexit secretary says besides are inching closer to a deal that would prevent a hard border. he tells the bbc that communications are good but declined to go into detail. this week marks the 12 month cap down to the split and the eu wants a deal agreed to buy october to allow lawmakers on both sides time to debate and ratified. davis says he is optimistic things are coming together. ,> the real likely outcome overwhelmingly likely, is option a.
9:40 pm
option a is we get a free trade agreement, a customs agreement. all of those will make the northern ireland issue much easier. ramy: in technology, facebook has taken out ads in the u.s. and u.k. to apologize publicly for not doing more to prevent the mishandling of user data by cambridge analytica. mark zuckerberg has been called to explain what he is doing to improve safety. facebook has fallen more than 13% since the scandal broke. the social media companies are under increasing pressure to ensure user confidentiality. tim cook has saluted china's growing tech prowess as a trade war looms with the u.s. he told a business forum in beijing that china's 2 million strong app developer community earns more revenue and downloads than any other single nation. cook said "china no longer bills things, it dreams things as well. "
9:41 pm
he listed companies that would be most honorable to a trade war. apple was on that list. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am ramy inocencio. this is bloomberg. rish? rishaad: sinopec is going to be paying a record dividend for its fuels and chemicals. a near-term increase in your profits. our correspondent is with me now. they have been reaping the benefits of being a downstream player. that has been in their favor. >> i think so because they are still the world's biggest refiner so they have profitability in their downstream refining. for this year, they have really generated a lot of flow from their retail businesses, so they feel like that could be the right time for them to reward the shareholders. still keep in mind, the chinese government is their biggest
9:42 pm
shareholder, holding more than 70%. a lot of that cash payout will be going to cinemax state owned parent -- will be going to send it back's state owned parent, cinemax -- sinopec state group. they have high cost operations, so higher oil prices can gradually help them narrow the losses from those sectors. the interesting thing is the higher oil price does not change their refining market. the refining market rolls from around eight dollars a barrel to $10 a barrel because china is operating their fuel quality across the country. pricelly the higher oil -- that could be quite a surprise for shareholders. rishaad: you just mentioned cleaner fuel, the government trying to move away from coal. how does that play into sinopec's strategy?
9:43 pm
this is a different kettle of fish. aibing: for sinopec, it is still the same thing. you need to produce more natural gas to replace coal. for sinopec, they have this shale gas space. that is the biggest in china. they produce around two thirds of china's shale gas. for this year, they put more than 40% of their into upstream production and the majority will be going to the shale gas. i think that is a big leap to their earnings going forward. can use thisopec opportunity to put in more natural gas pipelines. you need to send against a major cities so they can give more money to build pipeline gas. and they can use the opportunity to build more receiving facilities across the coastal china regions. so the whole gas thing can
9:44 pm
really play out in the long-term very well for sinopec, even though it is mostly a refiner. haidi: what about the demand side of the story for china? sinopec is the biggest refiner in the world and obviously they are the biggest in china. and going forward, they will be one of the major beneficiaries for china's economic roles. we know last year china's economy rose 6.9%. they are expected to stay in this range for maybe five to 10 years to come. china's consumption last year to growth was very bad as well. 6.6%. it was the first time in the past two years their pollution actually began to grow again. i think that is a big sign for the few market -- for the fuel market consumers.
9:45 pm
people talk about the manufacturing sector. ok, the economy, higher taxes. that sector may get ahead. -- may get a hit. but china consumes more diesel. we also need to look at the car market, because last year that was widely considered a down year for china's car sales, but they still were number one, almost 30 million new cars sold in china last year. there may be a tiny parcel of that. of those are the gas and diesel -- those are nice news for sinopec as the biggest refiner. haidi: thank you so much, i being go on sinopec. coming up, the fed indicating more rate hikes, but how much could a potential trade war impact those plans? this is bloomberg. ♪
9:46 pm
9:47 pm
9:48 pm
rishaad: we are back with bloomberg markets in hong kong. i'm rishaad salamat. haidi: and i am haidi lun in sydney. the federal reserve hiked its key rate last week, signaling more to come this year as fiscal stimulus helps fuel more growth and more inflation. but could a full-blown trade war change policymakers' minds? kathleen hays is here to share what minneapolis president neel kashkari told her on friday. kathleen: one thing has struck me from federal reserve officials is that when asked about -- first it was tariffs on steel and aluminum -- and they sort of downplayed it. a small part of the u.s. economy, not a big deal. but as the fed hiked the rate, it has been more on my mind. what would happen if this trade dispute turns into a full on trade war? neel kashkari make clear that it
9:49 pm
has been on the fed's mind. >> if there was a full-fledged trade war between the u.s. and china, it would have a dramatically negative on the u.s. and global economy. we could not shrug it off. we would have to look at what it means for the outlook on inflation and growth. kathleen: interesting that kashkari also said he understands the trump administration's pressure on china to change their ways on trade. the u.s. has been talking to china for 20 years and china usually does what china wants to do. he did say when i asked him that the question of a trade war and the impact of the outlook on policy was discussed at last week's meeting. he does say there is quite a risk to the trump strategy right now. that is we got a full-blown shockwar and it is a big to confidence, business confidence, consumer confidence. he says these are very important to the economy and that could hit stocks and bonds, hit bond yields, raise the cost of financing.
9:50 pm
that could slow down the economy. the president of the atlanta fed also spoke on friday. he referred the question of tariffs, the reaction of trading partners as a counterbalancing downside risk for the fed to be watching. he said the trade dispute has more innings to run. he thinks we might be seeing more negotiating going on. he is also reflecting the view, let's wait to see what really happens. we have got a lot of trade salvos being fired back and forth. it is also possible that some agreement will come out of this and we will avert something that everybody says could be an issue. kashkarikathleen, actually was an outlier against every one of the fed's rate hikes last year. was there a change of heart last week? kathleen: he surprised me. when i asked if you dissented in december, were you supporting? he is not a voter, but did you
9:51 pm
support or oppose the rate hike last week? he said in fact he was looking at the question of continuity on fed policy. that is one of the main reasons he did support the hike. let's listen. >> i would have raised rates because we had told the markets we are going to. for continuity, i think it is important. if i look at our dual mandate objectives and the data, i don't think the data supports rate increases at this point in terms of achieving our dual mandate objectives. kathleen: i had to ask him, did you change your dot? he said, i can't talk about my specific dot, but i did move some of my expectations for rate hikes a bit sooner. but he said that was a lot because of tax cuts, the stimulus there. he also said he is watching wages closely. he does not see signs of overheating. wage growth remains modest. what i also got from what
9:52 pm
raphael bostic said, the atlanta fed president, he said three rate hikes in 2018, but could go for four were two. , said hisn, dallas base gain is three, but that could be amended. we came out of the meeting thinking the fed has been fairly hawkish because they raised their rate hike forecast for 2018 and 2020. when you listen to these three, i get the sense they are not that far apart. they are waiting to make sure their view on rate hikes is validated. for now, both kaplan and bostick supporting just three hikes, not four. -- iurse, neel kashkari don't think he is going to support any more rate hikes unless he sees wages and inflation up towards the 2% target. nice one, kathleen, bloomberg economics and policy editor. want to talk to about a future. interactive television on the bloomberg terminal. you can find it at tv .
9:53 pm
you can watch live and have a look at interviews. you can also dive into some of the data we talk about and bloomberg functions we use. check it out, tv . this is bloomberg. ♪
9:54 pm
9:55 pm
haidi: this is "bloomberg markets: asia," i am haidi lun in sydney. rishaad: i'm rishaad salamat in hong kong. business flash headlines, gun maker remington filing for chapter 11 bankruptcy protection in delaware. he says they have liability of as much as $.5 billion. creditors are said to want a quick sale after the bankruptcy process. a deal had already been conducted with lenders that would cut the deck by about $700 million and inject $145 million new capital into the company. haidi: office equipment maker a four-yearecast
9:56 pm
loss of $1.6 billion after taking impairment charges. the company previously projected it would break even with an expected profit of $96 million. ricoh has struggled for years to grow revenue. they reported their planning to cut more than 3000 jobs in japan in the next year. rishaad: a consortium led by tpg is said to be nearing an agreement for control of fortis health care, india's second-biggest private health care chain. the investor group includes moneyball health and a deal with combined businesses. indian authorities are investigating fortis after the tycoon singh brothers took more than $76 million out of the company without board approval. up, over the next hour we are going to continue to watch these markets as asian stocks tumble, taking their lead from wall street. lots more to discuss when it comes to trade tensions between china and the u.s..
9:57 pm
pauline loong will be joining us in a little over 10 minutes. do we need to take a step back, she says, and look at whether these threats will materialize into action? this is bloomberg. ♪ ♪
9:58 pm
9:59 pm
asian-pacific stocks falling for a six-day and seven. japan facing its worst bump since 2015. yen is at 17 month highs. these trade tensions are sucking and investors. china is said to have investors back. apple is said to be a target. this is the crew training and equivalents thereof $69 and $.25 per barrel. in hong kong, i'm rishaad salamat. in sydney, i am haidi lun. another --ding for selling another ridesharing
10:00 pm
market. this is bloomberg markets. ♪ we are back to february lows when it comes to these markets. suddenly having a difficult time of it. we had this breaking news on over. stakeeeds to take a 27.5% in its grad and southeast. the numbers ceo will join the board of gravity. this was this great consolidation push between over and grab. then simply import given that softbank is a major backer of both of these ride-hailing companies. this steak is taking and irreverent brand.
10:01 pm
they are taking over to southeast asia and delivery tesla. this is a result of the combined entities. this is what is going on. we have been expecting this news, we headed from sources closer to the former. thate getting confirmation we are exploring this and much more detail. but have a look at the market action. continuing after they left out 2018's gains and in japan, equities are on track for the worst month since 2016 while the yen holds love one of five. the cabinet approval ratings shanghai, the in benchmark has lost nearly 2%, banks are among the biggest drags. this is among the names to report today, even shed what energy is living about 3% despite recording the best property in five years. over in singapore, most stocks are losing ground but the best performer,
10:02 pm
rising over 1% on the back of news that uber has sold it southeast asian business to rival grab. the signed a deal with it over. i'm it is losses we are seeing across the region, korean stocks are an outlier. they're finding some resilience in korea. back so must ground but look at the commodities space, switching out the check based on metals after a five-week slump amid the dark clouds gather for the global economies. they have fallen to a juvenile and shanghai. even futures are not escaping the trade worries. something to a 2016 love. they are trying to agree on shipping restrictions beyond march. that is also disappointing investors. they had lost over 30% in the past 12 months. i wanted what is happening with oil, prices extending gains after saudi arabia intercepted missiles fired from yemen.
10:03 pm
concern over the conflict with the worlds largest exporter. that is back about $70. this is 66 bucks per barrel. this after capping the best weekly one since july. heidi? -- haidi? let's get you the best of the first word news with yvonne man in hong kong. yvonne: opposition lawmakers said this could at the changes of -- changing japan -- they alter papers relating to event followed to shinzo abe's wife. his poll numbers are plummeting. he told them of his ruling that such a thing would not happen again. that they areys edging closer to a deal that would prevent a hard bargain. he told the bbc that the indications are good although he
10:04 pm
declined to go into detail. this week marks a 12 month countdown to the split. the eu wants a deal agreement by october to allow lawmakers on both sides time to debate and ratify it. he says he is optimistic things are coming together. >> the real likely outcome, overwhelming right now is option a. option a is we get a free trade agreement, we get a customs agreement, all of those make the northern ireland issue much easier. >> steve mnuchin says he is optimistic of a deal with china impositionstall the ordered by trump. they are engaged in pop -- productive conversations. last week the president announced measures that was worth at least $50 million as a punishment for alleged intellectual property theft. steve mnuchin says washington and seoul have reached an
10:05 pm
outline agreement on revising their six euro trade deals known as course. he says that now have an understanding and suspected to sign a deal soon. was down fromplus 323 billion in 2016. cars counted more than percent of that. ,ocal news 24 hours a day powered by over 2700 journalists and analysts in over 120 countries. i am yvonne man. trade tensions are on top of the agenda. our correspondent tom mackenzie is covering the china development firm which wraps up later today. plenty for attendees to talk about. tom: that is right, there have been big names attending. we saw the ceo of dimon, tim cook has been here talking.
10:06 pm
also, the ceo of google. the view here is that yes, we could be heading toward very dangerous territory. thatonsensus seems to be the chance of a dialogue resolving this is higher than that of a drastic move into a trade war, certainly that is the hope. there is also a demand for clarity from the trump administration as to their strategy and what these 50 million or $60 billion in tariffs will mean in practice. for form is an opportunity the sport executives to sit down with chinese policymakers and to try to get a step on their response. many here have considered this to be measured given what we have seen from the trump administration. this into stephen roach, the economist at yale university. responded very
10:07 pm
modestly given the potential weapons it has at his disposal. in terms of countervailing tariffs. also, it's possible shipped in purchases of u.s. treasuries. come if plenty more to the u.s. chooses to stay with this reckless policy. messagee, the clear from executives seems to be this, yes, there needs to be further pressure on china to open up as markets and that yes, they are concerned with tech chancellor's. ceos are very excited about the opportunities here in china, their volume about the need for higher quality iron ore so they expect that if these trade tensions are pushed to one side than the opportunities here in china are presumably give 2018. that is a big if at this stage.
10:08 pm
reminders of his message to the business community. the pboc governor coming out for his part -- first public's beat -- public speech. he said there would be further moves to open up the markets. he said the sectors that remain closed off our sectors that don't do very well. he also said that on monetary policy he would remain prudent and mutual and he did under my concerns about leverage not just in the corporate sector and the sme's but also what he described as surging leverage in the household sector. take a listen to what he had to say. highrst, the risk of the leverage ratio is still a challenge at the macro level. these you go to a high levels of leverage ratio in the corporate sector and also persistently .igh ratios in sme's implicit dent in the local
10:09 pm
government and the surging leverage in the household sector are a cause for concern. >> the other news that came out over the weekend regarding the central bank was the appointment of the party secretary, a power position within the central bank according to reports he was a led the banking regulator on this aggressive push against shadow banking and against some of those highly inquisitive conglomerates like anbang. he is the head of the newly merged banking and a source and now he has this very powerful post atop the pboc as the party secretary. both of these men will be reporting to the vice premier in charge of economic and financial affairs. those are the three big beasts to watch when it comes to china's culture and financial stocks. rishaad: tom mackenzie there. we will have more on trade tensions during the course of the show and have a look at
10:10 pm
asian analytics. we will look at the market of occasions there. >> we will get more on over being grabbed and southeast asia. this is breaking news at the top of the hour. over is selling it southeast asian assets. including over each to grab her. attrition overf again for over and access provision. perhaps a victory for softbank, clearly the backers of both over and that ride-hailing space. we will talk about the indications for competition for ride-hailing across this region. as is bloomberg. -- this is bloomberg. ♪
10:11 pm
10:12 pm
♪ towarda has been moving the message be driven demand. it has been part of the agenda for china for a long time.
10:13 pm
this will accelerate the pace. china will have the resources to the tools with which to defend the aggressive action. >> at this point in time, we don't see financial markets theg overly impacted by project -- protectionism waves. i think of it keeps going on, this could be very disturbing. rishaad: they were talking about the potential fallout of a trade war. says thisuest relationship threatens to push this to the brink.
10:14 pm
it is not time to hyperventilate about all this, we need to take a step back. >> that is right. >> the narrative can just grow on its own. suddenly it has become the end of the world and everybody is throwing tariffs at each other. right now, china seems to be the only one being rather levelheaded. -- we are nots looking for a fight, we are looking for business. we are looking for markets. so what can we do to keep the americans buying from us? walloping the other side is not necessarily the best thing to do. right now you notice the response has been $3 billion carriers to the americans 60 billion. that is playing it cool. are we not making a mistake about thinking that it
10:15 pm
is about unfair trade deficits when it is about america or donald trump and his base thinking that we need to make sure that we remain the superpower and maintain american hegemony and this is one way of getting it? >> that is probably so. i would venture to second-guess what the trump administration really intends to do. from china's point of view, the tariffs are targeted at various industries that china is starting to be good at. also, they're asking if this could be a kind of pressure on towardo cooperate more the north korean problems? of other things going on behind the scenes. instead of second-guessing, you take a look at what is already happening. , theave these tariffs
10:16 pm
chinese side, even in the rhetoric and the response, they say we can withstand a trade war. they said nothing about walloping you with this, that and the other. cool response, was not hyperventilate yet. haidi: what about the chinese side? what about xi jinping? he clearly just consolidated. be the most powerful chinese leader in half a century. does he not engage or does he get pushed to the point where he has to engage because he is also plaintiff's home base? remember, the chinese leadership, their version of winning is that we minimize the damage to export markets, minimize the damage to the american markets closing on us.
10:17 pm
their idea of winning is not let's get the americans going home crying. in that sense, every move that they make i think is going to be predicated on if this is going to get the trump administration to cool down or is it going to a mine is bigger than yours kind of response. reaction beingol considered in china. >> that is just the way that many strategists have said -- it is a way of starting the conversation or resetting the trade relationship. these tariffs don't ask a matter. it can create a different dynamic, that is with the trump administration wants. >> i think it is more than just resetting the dialogue. i think the trump administration really wants to narrow the trade somethey want to see
10:18 pm
results at the end of it. i think if i remember correctly, trump twittered that he wants the chinese to narrow the trade gap by 100 billion. they do want to see something happening. it is not just let's negotiate and then at the end of the year, nothing much happens. i think this is a very serious move. >> is the outcome of trade tariffs -- if they are not renegotiated, they have to go into effect in 60 days, is the outcome that predictable? you talk about the globalized modern supply chain. that makes it not quite so clear cut. ofyes, in this day and age globalized supply chains. country tariffs, country tariffs aiming at one country are nonsensical.
10:19 pm
it has gone through every country in measurable to get a produced. at some stage, if you really start pushing the tariffs, other countries are going to say hey, we are affected as well. that is putting a break on insanity. that is if you look at it as a trade matter. if it is driven by ideology and politics, that takes on a whole new guys. there is a point at which china could use it so-called nuclear option with devices selling of its use about of treasuries, u.s. treasuries, that would be initially assured destruction, right? >> it is the nuclear option. that still firmly believe china is not out for mutual destruction. why are they going to do it? it is not a playground game of
10:20 pm
test something, china doesn't going for that. don't forget, every action has a cost. the cost to china of the nuclear option is to start where they would decimate the value, can you imagine dumping a chilean dollars onto the market? china is going to say what can we do to maximize the benefit and minimize the damage? just to make the americans feel awful is not the end game. true, how does it play out for you? >> i think what will happen is that china will try very much to persuade the trump administration that they can by buying trade gap more from america instead of america buying less from the chinese. this way they can open of the financial markets, that that
10:21 pm
will make the banking lobby very happy in the united states. this is intellectual property rights. we're going to be nice, they used to do that in the past. trump administration will say if you're going to open up, give me the list, committed dates. it is going to be a bit tougher than that and i think china will try to go that route. meanwhile, i would not be surprised if things in china are saying that if we do do some trade tariffs, which ones would hurt sun country the most? -- i left i believe is going to feel the pain a bit. delicateoing to be a
10:22 pm
death of death rather than a nuclear war. the big what is question being asked by your clients? >> this is people asking if this to play golf is? i think it is still early days. veryutlook is still clouded. the reason is that the trump administration is quite unpredictable and the way that it communicates its strategies. financial markets are all about perception. whatever the trump administration actually does, if it is communicated in such a way that somebody is going to drop a bomb on somebody, markets will collapse area i think it is too
10:23 pm
early. my advice has been not to sell but to just hold and see what happens in the coming few weeks. >> thank you so much for that. that was the asian analytic up talking all things trade essentially. same maybe we should take a step back, take a deep breath and see what materializes. we do have another big interview coming up on bloomberg. the managing director herself joining bloomberg surveillance for an exclusive interview at about six clark p.m. hong kong time. if you're watching from here in sydney, that is not :00 p.m.. 20 more to come, this is bloomberg. ♪
10:24 pm
10:25 pm
♪ a quick check of the latest business flash headlines.
10:26 pm
the world's biggest refiner will pay record high dividend. this climbed to $8.1 billion, a listinghat is the most as hong kong eight years ago. impairments,in mostly in upstream operations were it is shifting focus toward natural gas. question is biggest coal miners reporting its highest profit in 2012, that is robust demand and this is overcapacity and it didn't help prices. billion and about three going a year ago. this was a jump back in january. china attacked overcapacity by climbing -- closing down some minds and also restricting some imports there as well. have forecasted a when you lots of $4.6 billion after taking impairment charges. covenant revisit rejected it
10:27 pm
would break even and analysts expected profit of about $96 million. they have struggled for years to grow revenue, it is plan to cut more than 3000 jobs in japan over the next year. this is bloomberg, plenty more to come. ♪ mom, dad, can we talk?
10:28 pm
sure. what's up, son? i can't be your it guy anymore. what? you guys have xfinity. you can do this. what's a good wifi password, mom? you still have to visit us. i will. no. make that the password: "you_stillóhave_toóvisit_us." 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. retail. under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store
10:29 pm
near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. yvonne: 11:29 in tokyo. i am yvonne man. the key ally of xi jinping is said to be party secretary at the people's bank of china. the new york times said ministries and state owned companies have such a person to communicate official policy report on performance. the incoming pboc governor will ease of the financial sector and introduce currency reform. toalso pledged to meet defuse risk. risk to threaten china, i think the current banking system in sure it and securities markets and the controls in place leave china
10:30 pm
well-placed to mitigate those risks. yvonne: president trump is expected to take aggressive action against russia later on monday. of diplomatssion following the nerve attack on the former spy in the u.k. this will provoke action from moscow but align the u.s. with european allies. several countries will announce their own expulsions of russian diplomat in concert with the u.s.. leader hascatalonian been arrested. the living -- the man has been living in olson's the declaration of independence -- the man has been living in exile. he has been traveling around europe to press the case for catalog independence. independence. apologizing for not doing more to prevent the mishandling of cambridge analytica, mark
10:31 pm
zuckerberg has been called to congress to say what he is doing to improve safety. facebook has fallen 13% since the scandal first broke. social media companies are under increasing pressure to ensure user confidentiality. and saluting china's growing tech prowess, this man told the business forum in beijing that 2 million strong app developers now earn more revenue and downloads more than any others issue -- other nation. tim cook said they no longer build but dream. state media listed companies were the most vulnerable to a trade war. apple was on that list. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am yvonne man. this is bloomberg. rishaad: looking at a down day lose of theans the day. let's look at what is driving things. trade about to drop off, seeing
10:32 pm
last week big falls. >> we do have asian stocks fighting for a second day. as you noted, we are off the lows of the session here. they are seeing losses in japan. lower.kei 225 with .4% we have the showdown between the u.s. and china hurting the shanghai benchmark. the metals complex under pressure, but you have gold on the rise. take a look at what else. chinese earnings in focus. shares helping list the energy sector. now under pressure with health care the only bright spot so far in the region. tech shares being led lower by macrone after the disappointing third-quarter's sales cast. look at the movers in the tech space. i want to highlight ricoh over in japan. you have that stock sliding 5%
10:33 pm
so far today after cutting its full-year forecast to losses on impairment charges. chinese outsourcing, outsourcers are the biggest on the discretionary segment. you have the gear maker you jen 7%.ting the count nike among their clients. also this company under pressure for the worst today drop january 2013 amid concerns over their exposure to u.s. tariffs. and on the corporate front we have uber selling at southeast business to grab a big win for malaysian company pam. softbank is the biggest shareholder in both companies. in singapore stocks are mostly under pressure. haidi: thank you so much for that. let's talk oil. the global market has a shakeup. oil futures on the shanghai international energy exchange, the largest oil consumers offering contracts foreigners can buy and sell. 25 years in the making,
10:34 pm
so big milestone. look at the implications. our gadfly columnist joining us. -- a will they will not stick with petrol but will go with their yuan. david: it was the biggest importer of crude oil last year. they care about stable prices, price discovery and the functioning global oil market. that does not necessarily feed to the same thing as this year look at the bid ask spreads. they give you an idea of liquidity. brent, wti, their spreads are about two basis points on the pride. but demand crude, which is similar to what we will see trading out of shanghai, at about 35 basis points, much less liquid. what's less transparent and harder for traders to position themselves -- much less
10:35 pm
transparent. you should want the most liquid contract of anyone leading the market. not a different one. haidi: we will talk about motivations. you don't think that china has the clout to disrupt this? david: it is comparing it to metal where china has a decisive front in the metals market, consumes 50% of most metals. china is a smaller player in the oil market. only 30% of consumption, the e.u. consumes more than china. i think it is relevant also looking at the different trading volumes and different market. if you look at shanghai metals, about 30% to 50% of trading volumes happened in the middle of the night and shanghai. it is london traders trading the shanghai contracts. lme contracts% of are in the asian trading hours, so essentially in metals, it is the open capital market in the
10:36 pm
atlantic leaving the market versus the rising capital markets. rishaad: that is just it. that may negate the fact that you can as a foreigner trade that. the question is how popular where these -- will these be outside of china? david: i think if you talk to oil traders in this region. region, they are not very interested in this contract at all. i think the reason is very simplistic. china has a close capital. there is offshore yuan, and you can't easily translate your trades from you on into dollars -- yuan into dollars. there is a system for international traders in shanghai to do this but it is complicated compared to the simple forex operations elsewhere. until that happens, you are not really going to have a proper yuan benchmark for oil.
10:37 pm
and china has an ambition for the yuan to be a globally traded currency. it is still only about 4% of forex transactions, and that is going to be globally traded only if you open the capital account. you cannot have the chicken of a crucial global currency without the egg. beijing does not want to open a capital account. until they do that, we might see this crucial benchmark. brings me to another question, why are they doing it? are they just creating the irrigation cows -- canals before they open the sluice gates? david: it away. the best sign is it is actually different from what we have seen with wti and brent. this is a medium sour grade, more soft. it is denser. that is similar to what most of the conception of oil is, what refiners actually by his medium sour.
10:38 pm
there is a point to that, but it is about this being a product of national importance and pride. if you listen to trump talking about what he wants out of the dollar, he would say doing more exports. we want a strong dollar, which is not what you want if you want more exports from america. there is a lot of rhetoric people think about currencies and the behavior of their currencies in the global market. in a way it is a chinese version of the same. i think china has much more to benefit, even if it sounds less trifle. rishaad: they are in sydney. let's move to another top story, surrounding uber as it retreats to another major ride-hailing market. the southeast asian business could grab. our reporter joins us. this seems to be the same kind of strategy uber pursued in china and russia.
10:39 pm
what are they doing? what will they achieve? reporter: that is right. for uber, the deal looks into major truck -- major retreat from international markets. they have retreated from china 20 in returnthe for a stake in gd. they took a 7% stake in didi, and in russia last year they also sold its business to yandex. this is another international market they are retreating from. so for uber, this will be, this will help the company endeavor to heal last year. they are targeting the company to become more profitable and pulling out of the regional like southeast asia will become, achieve their goals. so uber has bird a lot of cash. was $4ar's loan, it
10:40 pm
billion. haidi: i mean, does this kind of essentially mean in southeast asia, the market is all grabs? yoolim: yes. dominant player in southeast asia. they are in 191 cities from vietnam to the philippines. their app has been downloaded 68 million -- sorry, 86 million times in the region, so they are dominant player. it doesn't really mean that they will be the dominant player because in indonesia, they have a serious composer -- serious competitor like oh jack. they have an ambition to go outside indonesia and see. last year the ceo gave us an
10:41 pm
interview. he explained he wants to take his payment business go pay as well as their delivery business into other cities in southeast asia. expect a petition between kojak and grab to intensify. when a sound -- sold out to didi in china, many people said it was good timing because they were going to get edged out of the market. is this similar, can't stand the heat, get out of the kitchen? are they doing this as a defensive measure? did they see the writing on the wall? i don't know. didi, iin the case of they after the deal was struck, i think they maintained the two brands, so you know for consumers it is not such a great deal with one dominant player, in then other competitors
10:42 pm
local -- local competitors came into the picture. it will be the similar case in southeast asia but clearly i think it has a lot of implications for investors such as softbank because softbank has been a major shareholder in ride-hailing industry in asia. they have become a major shareholder in grab, the one in india, and dd. so yes. [speaking simultaneously] thank you. southeast asia tech reporter you limply joining us -- yoolim lee. we will have a look at what is going on market wise with these stocks which are on the way down albeit that we do have a bit of a recovery taking place very we are discussing what is going on behind all that because we have trade tensions on the horizon,
10:43 pm
playing out. concerns how that will dominate to news or be detrimental growth. china leg on its chip challenge to exporters like japan, south korea and taiwan. that is a look at what we have. this is bloomberg. ♪
10:44 pm
10:45 pm
♪ rishaad: getting close to stephen roach, beijing has a lot of ammunition, roach telling bloomberg that what his on $3 billion of u.s. imports suggests more counter punches. is committed think to a fairly serious policy blunder motivated by politics, not economics. and we have trade deficits with 102 countries.
10:46 pm
so we have singled out one has the scapegoat to fix that, which the president believes is afflicting the middle class. it is not going to work because the chinese people will just go to some other producer, and that will end up taxing the people he is trying to protect. there is not a great appreciation of economic policy analysis and the trump administration. given the changes they are make an in there -- making in the advisory tenet is bad to worse. -- in the advisory team, it is going bad to worse. alix: do you expect more market volatility? sharp down have two day like we have seen, it is normal to see the markets try to stabilize and father way back as they did for the early february selloff you know a month ago.
10:47 pm
i don't know what is going to happen actually. but i do think the dynamics the u.s. and china are worrisome. very has responded potentialgiven the weapons it has at its disposal in terms of countervailing iniffs and possible shift purchases of u.s. treasuries. so there is plenty more to come if the u.s. chooses to stay with this reckless policy. tom: do you think that shift out of u.s. treasuries is something being considered, if not now at some point has the potential? china would be tougher, and the u.s. economy would be hit. stephen: it is probably china's last attempt, so i would not themt it to be something
10:48 pm
to deploy. i would not put it past them though to talk about that. there has been some sort of whispering on the chinese side that they know this is an option that they have, should they be pushed. that is the point. if we keep pushing china, and clearly threatened to do damage economy, to their outlook, the chinese will view this as an active economic war and respond in kind. judiciousgain being and measured and the early responses, but the more they get pushed, i think the more we can increasingly stronger response. tom: a question on how this may impact the fed. does this change your calculus -- on the fed and at which
10:49 pm
speed it tightens? stephen: i am really confident that the fed does a lot of contingency planning for a variety of different possibilities but a trade war is probably not high on their list. i think they are hard at work crafting how a trade war might impact them and clearly tariffs are more inflationary. if you are a central bank that holdinged on you know the line on price stability, that would combat together with the winding on the budget deficits. that pushes the bias more toward tightening and accommodation. ,aidi: that was stephen roach the former nonexecutive chairman for morgan stanley, talking to tom mackenzie. the china development forum wraps up today. also trade tensions on another front as china pushes to develop
10:50 pm
high-value manufacturing in direct competition with many of its neighbors. the bloomberg japan economy reporter has news from tokyo. this seem like from china? -- what is likely to be the biggest challenge from china? reporter: a lot of this will happen in high-end manufacturing. if china develops semiconductor production capability, that is going to give a greater capacity in producing solar cells, robotics will be a big one, high-end machine tools. these will all be affected by china's rise up the value chain basically. and china is very, it is a very advanced at developing artificial intelligence, so that will put them ahead in the race on autonomous driving, autonomous vehicles and driving systems. rishaad: what kind of opportunities then -- there must
10:51 pm
be many that come along with path's growth along this towards higher and goods. connor: yeah, sure. if china develops manufacturing capabilities and produces more advanced products, that ideally means higher living standards for chinese citizens. they have greater disposable income. that has been feeding a tourism boom in japan and elsewhere around northern asia. political difficulties in korea cut it off there a bit, but the tourism sector is spending greatly and they are seeing higher chinese consumption of goods like cosmetics and other consumer goods that japanese companies and. companies can take advantage of. rishaad: thank you very much for that. our bloomberg japan economy reporter. let's look at the markets,
10:52 pm
having a look at what is already happening at the moment. this is bloomberg. ♪
10:53 pm
♪ back with bloomberg markets. i am rishaad salamat it in hong kong. haidi: i am haidi lun. gun maker remington has filed for chapter 11 bankruptcy, saying it has liabilities of as
10:54 pm
much as half $1 billion. creditors of the cerberus company wanted a quick sale after the bankruptcy process is complete. they had already been negotiated ofh lenders or cut demand $100 billion and inject $125 million of new capital into the company. rishaad: a consortium led by jp leading -- india's second-largest private hospital chain. i have been told investor groups include money pile of health. input -- authorities are investigating fortis after the sing brothers took more than $26 million out with out -- without board approval. haidi: the green light to go ahead with plans to enter the u.s. car market. the company intended to the -- attended the national car marker
10:55 pm
-- maker association meeting. the president said hundreds of viewers expressed interest in working with them. rishaad: a battle between humans and john -- giant robots, universal's pacific rim uprising taking $115 million. this comes from comscore. it includes $65 million in china, $20 million in the u.s., managed to knock black panther from five weeks in the top spot. the marvel movie has become the top grossing of all time. the market continues for the next hour. david with me now with a look at what we have coming up. david: we are hearing still from the south koreans. the will be debriefing what has been coming through. along with the things we are discussing, cars, automakers were very much in focus. south koreans are saying no
10:56 pm
repositioning of u.s. car carriers will is -- was discussed or will be forthcoming . we have achieve equity strategist for dialogue capital markets. he is not worried about the trade issue. in this is also the view from tom switzer of the centers for international studies. he will be coming on. rishaad: we will because -- we will be talking about this in shanghai. china i should mention you guys have been talking about the oil contract, but it is the missiles contract on the commodities seen seeing the most pressure. ♪ mom you called?
10:57 pm
10:58 pm
oh hi sweetie, i just want to show you something. xfinity mobile: find my phone. [ phone rings ] look at you. this tech stuff is easy. [ whirring sound ] you want a cookie? it's a drone! i know. find your phone easily with the xfinity voice remote. one more way comcast is working to fit into your life, not the other way around.
10:59 pm
david: almost 11:00 in hong kong, 2:00 in sydney. welcome to bloomberg markets, asia. ♪ david: markets in the asia-pacific down again. japan is heading for its worst in -- since 2016, the yen touching a 17 month high. shanghai, trading at .he equivalent of $69.25 and cooper retreating from yet another major ride-hailing
11:00 pm
market selling its agency operation, grab. to exactly the best start the trading week but i should mention overall we are about 1% clear of the low we hit seven weeks back. we are coming well off the session low, so we are heading into the european open in a few hours fairly distant -- decent. the ftse futures also well up. lows of the day, getting bits and pieces of pockets of green across the asia-pacific. korea steelmakers, talking about the true story in a moment. just trade story in a moment. several things you want to follow, dollar-yen back to 105. that gives you a sense of feigning risk off aversion. we are getting a lot of oil related currencies. have a look at the ringgit and the canadian dollar, also seeing
11:01 pm
strength in what is the dollar down story. it is fairly more pronounced as far as that is concerned. 65.62 in west texas. the substantial changes metals. you put all of these things together we are back to about 50% going back to may of last year. we follow a lot of these on the chinese prodigy exchanges, and that is the story. let's get over to deborah. treasury secretary stephen mnuchin says he is optimistic of a deal with china that would forestall the imposition of tariffs ordered by president trump. he said the two sides are engaged in productive conversation and is hopeful on agreement. last week the president announced measures against china worth $50 billion as punishment for alleged intellectual property theft. president trump is expected to take a mostly aggressive action
11:02 pm
against russia monday with later expulsion of diplomats following the news gas -- the nerve gas attacks on a former spy in the u.k. this will bring similar action from moscow but aligns the u.s. with european allies. doeral e.u. countries will their own and expulsions of russian diplomats in concert with the u.s. shinzo abe apologizing for the cronyism that opposition lawmakers say could hit his try to change japan's pacifist constitution. they altered papers relating to a land sale linked to abe's wife and his poll numbers went plummeting. he said that such a thing would not happen again. and uber has agreed to sell its southeast asian operations to grab the drawing from yet another-- to grab, growing company.
11:03 pm
this includes food delivery service uber eats. the u.s. ride hailer will pick up a 27.5% stake, and their ceo will join the board of singapore-based grab. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. mao.debra this is bloomberg. david: now the global oil markets gets the second today with the launch of china's oil futures on the shanghai international energy exchange. the world's largest consumer is offering a yan denominated -- yuan denominated contract. what does it mean? china gets a bigger say when it comes to global pricing? let's bring in our energy reporter joining us out of seoul. the question is why? reporter: china just launched its very first uterus contract
11:04 pm
today to mainly gain more power over pricing and challenge the brands that are based on u.s. dollars. china would benefit from having a benchmark that would reflect local refineries, but more importantly yuan denominated contracts for its own currency in global trade which is a key long-term goal for china. david: is there early sense they will be popular among investors? reporter: it is hard to predict at this point, but as a last week, 19 foreign workers had registered to trade the contract. we have to note that allowing foreign investors to trade the contracts is a first for china's commodity markets. so more participation, china will look at individual institutions. inilar futures were
11:05 pm
singapore and japan, but they into obscurity because of low liquidity. keep investors players, making sure they have enough to trade this is important for china going forward because it can clearly allow them to compete against other benchmarks. david: lots of things to consider here. at 431.2 that is about 69, 69.25 thereabouts. how will this challenge dollar dominance with energy trading? reporter: most analysts say at this point it is going to be to challengea dominance of the dollar in the near future. they said that there is a general reluctance among
11:06 pm
overseas traders to trade this because paying for oil in dollars is an interest practice, and -- in trench -- entrenched practice because they are used to it. it will be difficult to change to chinese-based futures. as i mentioned earlier with the further shift towards yuan and regulatory risk, where the chinese government can intervene, that will always keep traders interested for the foreseeable future. david:david: thank you so much. our reporter joining us live to talk about this first day of school for the new contract in china. the country is said to of appointed a key ally -- have appointed a key ally to the pboc. governor ispointed in a role that is similar to what he had across the world.
11:07 pm
let's bring in our economy editor to tell us what this means. let's get started with what the chief actually does. reporter: this would be like if donald trump appointed someone to sit on the board of the federal reserve, senior to joe powell -- jeff powell to make sure nothing was going on and the white house didn't approve of. that is primarily the function .f the primary keep all the institutions going in the right direction, everyone rolling in the same direction. , the: the broader theme faster pace of reform. does he refill -- derail that? reporter: not really because the three main economic policy officials that have now been put into place, that will be the one you mentioned, the vice premier, then we have the one who looks
11:08 pm
like he is going to be leading strategic direction both in financial regulation and the pboc, and the other guy. if they are all going in the same direction, it strengthens the de-risking effort in china's financial system. david: in terms of the upcoming policy measures we should keep an eye on more broadly i guess, what would they be? reporter: if you are looking at the pboc from an external perspective, that really one of the things apart from rates, which is tracking the fed to a certain extent, but there is domestic inflation pressure you need to keep an eye on. then the next thing is the capital account, and all the officials tell us china is moving towards a more open capital account. it is behind capital control for quite some time now. not a good time to do that because the yuan is relatively
11:09 pm
strong, reserves stable, economy stable. if they are going to make reforms, it could be this year. we could see china's economy being more connected to the rest of the world. david: you got to imagine if it is under this team we are looking at now, we will see hopefully a new renminbi soon. jeff black. coming up, lots of things to talk about, trade-offs possibly. ceoill hear from the ubs sergio ermotti. asiaxt, paul, the chief pacific equity strategist joins us. potential impact on the region. this is bloomberg. ♪
11:10 pm
11:11 pm
♪ >> china has responded very potentialiven the
11:12 pm
weapons it has at its disposal in terms of countervailing shifts and its possible in purchases in u.s. treasury's. so there is plenty more to come if the u.s. chooses to stay with this reckless policy. been moving towards domestically driven demand. it has been part of the agenda for china for a long time. this will accelerate that pace. and china has the resources and the tools with which to withstand the kind of aggressive action. >> [indiscernible] we could have an issue and
11:13 pm
impact on global gdp, and that is something we are watching carefully. >> what i have heard from many sources is the u.s. was not in a mood to talk. and i have heard they are still not in a mood to talk, so i am not sure where these negotiations are going on. but i have heard nothing that there is communication going on. ♪ david: so you just heard some of the comments from a lot of the guests this morning on trade between, exemptions united states and china. so our next guest says china's best response is fairly measured. in all -- puaaul kitney. we are not there yet, a trade war. what would tell you we are there, or are we far from that? .aul: we are far away
11:14 pm
what we have seen so far are skirmishes more than warfare. only look at a trade war, we are seeing like smith colleague during the 1920's. there was widespread lard tariffs of all industries, many countries involved. then we get to a global trade war. the second one is bilateral trade between the united states and china, again across model industries, large tariffs. third, it is a unilateral trade harris -- terrorists -- trade tariff in position. we are seeing response. it is very measured in china as opposed to $60 billion of tariffs from the united states. $3 billion is very easy, and it is good reason for this. china has more to lose from a trade war than the united states. there are simulations done by
11:15 pm
academia. we have done some as well. the order of magnitude for china engaging in a trade war even if it is bilateral and not a global trade war is much harder than the united states. david: in terms of the countries that may lose out or specific sectors with the equities they are looking out for from what has been announced so far, has what has been announced been big enough to show up across sectors? paul: i don't think trade cycles will be affected at all because we are seeing minimal. as for is the asia-pacific region is concerned, when we look at the trade ratio, this is importsof exports and to gdp. singapore, vietnam, all of them have trade ratio over china, india 40%. so if there is a generic trade war, either bilateral or global, but so far it has been so selective and so many
11:16 pm
exemptions. the economic consequences are much less than the market implications near-term which are driven [indiscernible] david: that is what is happening? i would just looking at trade and blaming things on that when is not the root cause? trading range around equities, seeing them across the region? paul: absolutely. we have seen over 2017 and abnormal time of global volatility which from february this year we have start to seen normalize. yield wasal bond rising, now people have turned to trade friction. at whatep back and look is happening, we see normal volatility which will go on a few weeks. david: does that change how we hedge? you have the fix up from last from last year. are you going to squeeze into
11:17 pm
the yen? paul: that is a great question. there was a fantastic opportunity to hedge yourself using optionality last year, and we were recommending a investors to do that. it is as high as it is, safe havens will be premium. gold will come back into its own. ironically since we have seen a collapse in cryptocurrency pricing. david: tell us where this is going probably. paul: maybe. given that we have seen that, almost for the, u.s. dollar but against either geopolitical risk or against existential risk like the potential for a trade war which is low volatility. probably start coming back as a hedging vehicle. paul: what does it tell you that so far what we have seen the past week or so has been limited to equity markets?
11:18 pm
we have had no bulletin spreads. does that tell you it is people taking money off the table with equities? paul: it says this is a single asset class correction in the ongoing market. if we look at the 10% plus predictions in the u.s. since 2010, there was 2011, the end of 2016, 20%. in each of those cases we saw blowout in credit spreads whether it be spreads in china or whether they be corporate credit spreads in the u.s. or elsewhere. pressure point we see are actually not in equities. they are fairly clearly reasonable but there are bubbles like characteristics in some credit markets like european high-yield. that is why i say when we look at the correction in equities here, to take temperature and to try to interpret what is going on to see whether there is something more sinister than just correction in equities which we see from time to time,
11:19 pm
not 2017, it is the conclusion is there is no evidence of contention. paul: it is shery: a no-brainer what you are so -- david: it is a no-brainer what you are saying. i want to bring up a chart, 6499. you can see it on my left. it shows you the yield and the tea curve. we are getting closer to each other. at 2% or 2.7%ough for this argument to become subjective? is david:el like that -- they have never been this close. paul: i think we are in uncharted territory in any case because we have gone through zero interest rate policy in the united states, qualitative easing elsewhere. these relationships between relative values, which is what you have given it, a relative
11:20 pm
value example between two competing asset classes, equities and bonds. they are coming in and starting to show a sort of compelling relationship. whether the cross each other or not i think is beside the point. the point is there is value in equities. paul: what is your view of the dollar -- david: what is your view of the dollar? we are getting slightly more on ie side of it is perhaps guess beneficial to start getting on the other side of the weak dollar trade. paul: the weak dollar has put a lot of people by surprise. if we look at the beginning of policy normalization, the zero interest rate finished in december 2015. since that point, the dollar has been in sync with the fed. if we look at the relationship between the dollar and the suggestion with the dollar and the yield curve gradient, it pretty much moved hand in hand
11:21 pm
in hand until months ago. what we are seeing that is a divergence between the dollar and the fed. this has got a lot of people by surprise. i think it has got to do with two things. one is the deficit financed tax cuts are going to imply a larger volume of u.s. treasury debt coming onto the market. the large players have started to fall back. we are talking about china and japan. is this a tit-for-tat trade protectionism, no. is it a future, absolutely. i think it has also got to do with relative hawkishness on the part of the ecb and the bank of japan. both the ecb and the bank of japan have highlighted their exit strategy from qe over the past two weeks. that has been part of the reason for the weakness in the dollar. the other side of the coin is we have started to see the fed's hike rates again, and they will
11:22 pm
hike another three times over the next 12 months. that will be supportive of the u.s. dollar, not the -- not tremendously. mentionedrything you liborally led partly to on the way up, hibor in hong kong. is there anything in the equities space you would start avoiding having what is his rising? -- given what is rising? paul: at the margin it could be potentially the real estate sector at risk. having said that, the macro potential roles have been -- by the local monetary authority have really taken a lot of the risk out. the loans and value ratio 50%, extremely conservative. i don't see much too rich -- to much risk. i don't see it as much potential
11:23 pm
risk. david: but as a stretch for now. thank you so much, paul kitney at die what capital markets for asia. if you are a bloomberg subscriber, check out all of this interviews we have had. enjoy the conversations, messages to our team and guests. this is bloomberg. ♪
11:24 pm
11:25 pm
♪ get you a quick check of the business flash headlines. remington has filed for capital 11 bankruptcy protection in delaware saying it has liabilities of as much as half $1 billion. the creditors of the service -- the the loan company what the process complete. a deal have been associated and they will cut debt by $700 million and check $145 million across the country back into the
11:26 pm
company. guangzhou auto being given the green light to press ahead to enter the u.s. car market. the company attended the national auto dealers association at the weekend meeting. some of the 16,000 new car outlets represents in the u.s. the president said the dealers expressed interest in working with guangzhou auto. a consortium led by tpg is set to be nearing an agreement for the sale of fortis health care, the second-largest private health care chain. this includes metal call health and would include the two businesses into this. fortis is looking into this thing brothers who took $26 million out of the company without board approval. now we are heading into that lunch break on the chinese session. it is fairly bad. with there 13% down
11:27 pm
news on the shanghai composite. not a lot of things to consider in that market. the party secretary now heading the pboc. coming up next more, this is bloomberg. ♪
11:28 pm
11:29 pm
kong,11:29 in hong stephen mnuchin says washington and seoul are revising their trade deal known as chorus. they have an understanding on reducing imports of korean steel and are expected to sign the deal soon. korea's trade surplus with the u.s. was about $18 billion last year, down from $23 billion in 2016. cars are accounted for 23% of that. stormy daniels told 60 minutes she had sex with donald trump in
11:30 pm
2006, recanting a statement issued under her name in january that denied the affair. stephanie clifford says she took money to sign the denial because she believed trump's lawyer michael: would "make her life hell" in many ways. clifford says she was visibly threatened in 2011. >> i was in a parking lot going to a fitness class with my taking the seat and the diaper bag, getting up a to walked up to me and said me, leave trump alone. forget the story. he looked at my daughter and said, what a beautiful girl. it would be a shame if something happened to her mom. >> china's growing tech prowess. a trade war looms with the u.s. he said china's app developer community earns more revenue in downloads than any other single nation. tim cook says china no longer
11:31 pm
simply builds things, it dreams things. listed companies that would be vulnerable to a trade war. apple was on the list. protesters angry at the arrest of separatist former catalonian clashed with police in barcelona. he has been living in exile in brussels since last year. he was arrested in germany, and may be sent back to spain to face trial. he has been traveling around europe to press the case for catalan independence. -- qantas is reducing to 17 hours a trip that once took more than 12 days. the first nonstop direct flight between perth and london landed at heathrow sunday morning after a 14.5 thousand kilometer trip. they can fill the plane with top-tier business passengers. route, in 1947,
11:32 pm
took four days and seven stops to get here. today, we came on the fastest way of getting from australia to the u.k., the u.k. to australia. >> global news 24 hours per day powered by more than 2700 journalists and analysts, this is bloomberg. 17, 18 hours of anything, even in business class, is a stretch. let's get you an update of your markets. china going into the last break not on solid footing. >> not solid footing across the region. asian stocks have losses but declines of eased. u.s. futures had a less painful start to the week. chinese shares extended losses, bonds sliding. this indicates alarm over trade tensions. this morning, we heard from the
11:33 pm
south korean trade minister saying u.s. trade risk will continue during trump's struck ay after seoul deal about exemptions. the trade minister noted the u.s. is most interested in korean cars. fell, thear company biggest drop in the cost be. . in thee kospi commodities, base metals extending losses. rebar and industrial metals in shanghai, oil coming under pressure after capping the best week since july on friday. it is below $66 per barrel. overr inching higher, down 2%. i want to bring up our hashtag to show you how a copper slide is coming as gold gains.
11:34 pm
see, copper had a july low at the top half of the chart. this may continue for some time. >> a trip to the doctor, sophie. copper is under pressure. the question is, do traders drown their sorrows in -- maybe it is time for chinese wine. may agree.dos we will check in on chinese winemakers. one company is adding to gains in shanghai, china's third-largest winemaker. another company resuming gains. most recently, australia. china's wine market is on track to top $21 billion, something to consider in the face of china putting u.s. -- putting tariffs on u.s. wines. great wall motor is sinking below the totals of may of last
11:35 pm
year. we heard from their chairman today, describing plans to sell cars in the united states in the, saying the growth of company will come from overseas markets. we are seeing them down 4.4% in hong kong. >> sophie, thank you. our top story.o u.s. treasury secretary steven mnuchin says he is optimistic the u.s. can reach an agreement with china that will avert the need for president trump's tariffs on $50 billion worth of goods. mnuchin says they are having "very productive conversations" with beijing. our correspondent joins us from beijing. the executive director of the center for international studies, tom, joins us from sydney. , you are at the china development forum and have spoken to a lot of policymakers and business leaders. what is the sense you are
11:36 pm
getting? what are they saying? there is a deep level of concern among executives we about thenot so much immediate impact but about the longer-term impact if the trade tensions do exacerbate. there is a view here that i think is something of a consensus. the chances of these trade tensions escalating into a full-blown trade war are on the lower side, and there is also something of a sense of relief in terms of what is seen as a moderate response from the chinese. we heard that from the likes of economists, who say china has stronger tools that they could revert to should trump and the washington administration continue to put pressure on beijing. for now, the chinese seem to be taking a moderate stance. a has to be pointed out,
11:37 pm
significant concern that washington is now a place of geopolitical risk. you have the stability in china amongst policymakers and economic plans in china, and corporate leaders can read that. they can't read what is adamant is emanating from washington, even if they agree that forced tech transfers and market access are significant issues. we spoke to a former u.s. trigger -- treasury secretary. >> i don't think the trade sanctions need to have a big impact on the global economy, but the psychological impact of the degree of friction there is right now could be quite serious for markets. it is a matter of what actually happens in terms of tariffs and the psychology. i hope the temperature will be taken far down on both sides. from theo get a sense ifes of rio tinto and ubs,
11:38 pm
you put the trade tensions to one side, the picture in china looks fairly robust. the opportunities look solid, so they are concerned he's tensions are overshadowing what they see as an opportunity that would otherwise exist. let's bring in our guest, tom joins us live out of sydney, the executive director for the center of international studies. my question for you, can i or should i should -- should i be hopeful over these negotiations? as we speak, beijing and washington are discussing trade way of to find a granting more access to the chinese market, to the extent that that is true, that is an encouraging sign. my view is not dissimilar to the former treasury secretary whoers -- larry summers, you just heard. there is a danger in overstating the impact of these tariffs. from an american perspective, longerm and steel are no
11:39 pm
as important to u.s. economic growth as they once were. they are no longer as important as the technology sectors. from china's perspective, the tariffs will only have a negligible impact, and china's response is already being made clear. it has been fairly muted, just a few tit-for-tat tariff responses. all things considered, the markets' response last thursday when they fell on the dow by more than 700 points is as bad as it will get for the foreseeable future. >> it seems donald trump is delivering on his campaign promises, right? in this case, he is appealing to his base. do you get a sense that this creates the jobs lost in the rust belt in the united states? it doesn't create the jobs it needed -- if it doesn't create the jobs, how quickly do we see barriers to trade being taken back down?
11:40 pm
the first point is, economic protectionism and economic nationalism, whether it is in the form of tariffs, quotas or subsidies, our bad public policy. they will increase the process for american consumers. they won't rebuild industries in no longerre there is a comparative advantage in certain sectors, and they are likely to spark retaliatory responses. ultimately, the goal for donald trump is to appeal to his working-class base, the white working class based in the white -- in the rust belt states of michigan, ohio, pennsylvania. those states are more likely to vote for can -- democratic candidates. trump won those states. he owes those folks. keeping toald trump, his election pledge like he did united with drew the states promote transpacific partnership a year ago and when
11:41 pm
he pulled out of the paris climate accord. this is consistent with his pledge is. but i do doubt he will raise tariffs higher than the 25% on chinese steel. >> tom, it is tom in beijing. to what extent do you think chinese corporate and china more broadly is reliant on those tech transfers from countries like the u.s. to upgrade their economy? where are we at that stage? >> we are very reliant on it. the important point to bear in mind about the chinese is, the trade policy, mercantilism is adjective, is what is causing angst in the united states and the european union. intellectual property theft, the government in beijing is using regulations to discriminate against foreign competition. classic case in point is cars. the car tariffs on china in the maybe 3%.tes are 2%,
11:42 pm
in the united states, it is between 25 percent and 30%. although china has done a lot to -- sincee markets its its inclusion in the wto two decades ago, it still hinders free movement of trade, and that politicalels this backlash against free trade in the u.s. it is not just donald trump rallying against china's policies. it is most democrats in congress, as well. there has been a shift in the center of political gravity towards a more protectionist position, and this has affected both sides on washington. primarily, chinese mercantilism is blamed. xiis there something that jinping and the chinese can offer donald trump? i am looking at the long game that can address what they want, what the americans want without losing face to their domestic base when it comes to the chinese.
11:43 pm
>> as we have heard in the last few hours, the xi jinping government and washington are trying to seek trade solutions to open up more access to chinese markets. my sense is, without knowing specifics, china will make accommodations. to the extent they do, that may play into donald trump's hands. only donald trump could force concessions from the chinese. we have been here before. in 2000 two, president bush imposed 30% steel tariffs. that cost a lot of jobs for the united states and ultimately meant the united states did a u-turn on the issue. reagan the 80's, ronald did impose quotas on car imports, primarily from japan. backtracked after that. my senses come although trump will probably force the chinese to open up their markets in some areas, i would be surprised if the trump administration pursues
11:44 pm
a prolonged trade war against china. >> time, it's tom in beijing. what is your sense of the impact on china's regional partners, the likes of south korea, japan, and taiwan? as an upgrade around semiconductors are -- and chips, with those industries, what long-term impact will that have in the region? >> in the short-term, it is important to recognize that several countries are exempt from the u.s. tariffs, notably south korea, mexico, and canada, who are part of nafta. australia, and much of the eu, they are exempt from the tariffs. also argentina and brazil. the question you raise is a good one. ultimately, the technology sector counts and at this stage, the united states is on -- not in the business of putting tariffs on technology because the u.s. has a comparative
11:45 pm
advantage in those sectors. it does not have that advantage in steel and aluminum. i look these through -- i look at these through the prism of politics. this is trump rewarding his base concertedwest, not a effort to change the technological makeup in the asia-pacific. >> thank you. we have to leave it there. that was our executive director from the center for independent theies, and coming up on show, our interview with the ceo of ups about the implications of a potential trade war for the global economy and what it means for the banking industry. this is bloomberg. ♪
11:46 pm
11:47 pm
♪ >> welcome back. we are roughly two and a half minutes into the session in india. let's check in with sophie on the numbers.
11:48 pm
mumbai, stocks are gaining ground. the sensex rising after dropping for two straight days. the rupee is stronger for a third session as the dollar is near a one-month low. with india's near record bond sales beginning in two weeks, lingering questions remain, the will by? a 10 year yield edging towards that seven .58% level, and a seven-month selloff in indian bonds kept state run banks, the biggest holders, at bay. at industrials and materials. leading gains, energy stocks. we have tech and consumer shares under pressure. consumer stocks down half a percent. we did see the sensex entering -- entering its first -- closing below the january high. stock gains have unnerved investors, so the sensex is trading at 7.3 times, the lowest
11:49 pm
since april. valuations were the highest in january and at least a decade. those losses are being called back, but that might not be enough to overcome the decline we have seen in the last few months. let's check in on stocks on the radar. jindal steel among them, that stock aiming 1.5% with plans to stay -- sell stakes in overseas businesses to reduce that by 29%. they have talked about selling as much as 30% of its oman unit. tata steel gaining ground. a $5.3 billion price tag. on the radar, news emerged about videocon, the merger was completed thursday. fortis jumping over to -- jumping over 2%. all of that taking place amidst declines across the
11:50 pm
region. 4/10 of 1% for the asia-pacific. ubs. pivot and look at the the ceo says he is worrying about trade tensions between the u.s. and china. speaking to bloomberg in beijing, ermotti says the effects on markets have been minimal but he fears it could bring serious consequences. >> they start to get concerned, for sure. for the time being, of course, modest,ers are respective of the impact. but we see the proliferation of the tensions on a bilateral escalating.tially one big group for growth, one big group for geopolitical reasons. weat this point in time, don't see financial markets
11:51 pm
being overly impacted by this protectionist wave, but i do think if it keeps going, this could be very disturbing. >> the market selloff on friday was pretty severe. why wasn't it priced in? this was flagged by the trump administration. >> at the day, it is always ethical to understand corrections that are coming. as a consequence of the announcement, or as the market develops. for the time being, we remain constructive on equities and growth, but as i said before, we have to pay attention that this doesn't escalate and create particularly if it goes beyond china and the u.s. and starts to attach more to other countries in the world. that would be problematic. >> looking ahead, how do you advise, particularly on the
11:52 pm
wealth management side? >> for the time being, we believe stocks are still the place to be, although we are, diversification is the name of for this and looking kind of diversified approach, we love. we are looking at the risk going forward. ermotti,at was sergio the ceo of ubs, speaking in beijing. china's biggest bank reports. the bank reports are coming up. profits expected to surge. we have a preview, next. this is bloomberg. ♪
11:53 pm
11:54 pm
♪ marketshis is bloomberg asia. lots of earnings to keep in mind
11:55 pm
as we head into a frustrating week. chinese banks are due out this week. things get started later this afternoon without bank -- with tag bank -- ag bank. as far as profits are concerned, icbc and the bank -- and china construction bank out with there's, and bank of china comes out thursday. ahead of those numbers, not exactly the most promising start to the week but we are looking risk-lost session in hong kong. when you look at chinese banks, you are likely going to get better margins coming through but generally, as we look to the next 12 months or so, policy might stick take the volume of loans coming out might be under pressure. you put those together and we might see higher margins in height -- and higher profits. our hashtag tracks interest margins.
11:56 pm
what is noticeable is, icbc has basically disappeared in yellow. the most profitable bank is ag bank. the yellow is icbc and the blue, and read is bank of china. there we go. when you look at the price comparison, bank of china is way below the pack. other things taking place later today, a few other names coming out with earnings. ever grant sitting back, there we go. a few of the names to expect after the lunch break and into the close. that is about it for us. dave is coming up next. are inttle while, we dubai. good morning. >> we have got a lot to get her. we will be looking at what is happening in markets. quite a bit of agility across the board -- fragility across the board. where will the trade go yuck a
11:57 pm
second round or three conciliation? simon, thejoined by author of cio, to cut through that. and treasury sales. level of fatigue within the treasury market? it will be interesting to see what simon says, because we have the global cio, his boss, saying we are in stage one of the trade wars. mnuchin's comments trade -- changed things. we have missiles coming from yemen. what is the political reaction? there on the ground in united states to put the political context of what is happening here in the region. talk about crude oil and the shanghai oil futures that have started trading. we will show an interview with the ceo, as well. >> francine is on her way to talk to a ceo. david: that is it from us here.
11:58 pm
from bloomberg markets: asia, not the best day for equity markets. , and the hang seng index on the way down. this is bloomberg. ♪
11:59 pm
12:00 am
>> the following is a paid advertisement for the worx hydro shot. the worx hydroshot, the world's first portable power cleaner that lets you clean anytime, anywhere, fueled by a battery , it is self-contained and pressurizes any water source. grab and go to clean anywhere and everywhere, leaving dirt and grime where it belongs. you can use your normal hose and boost its pressure


info Stream Only

Uploaded by TV Archive on