tv Bloomberg Markets Asia Bloomberg April 19, 2018 9:00pm-11:00pm EDT
♪ pacific markets dipping with tech shares under earnings. wall street falling. commodity strong despite trade tensions, but the oil rally stalls. spotlight, taiwan semiconductor's tepid forecast. some say the smartphone boom is coming to an end. in hong kong, i am rishaad salamat, and this is "bloomberg markets: asia." ♪ rishaad: what do we have at the
moment? asian stocks under pressure. taiwan semiconductor says it could have a short fall of $1 billion, affecting tech stops around the globe and apple in the u.s.. minuteso the open 30 from the start of the last trading day of the week right here in hong kong. let's bring in sophie kamaruddin. markets, andequity kl stocks, marginally higher, extending gains on thursday. thesed metal was among biggest gainers. supportinglows equity gains ahead of the elections on may 9. elsewhere, pressure. sliding after attempting to 3600.above
shareholder goldilocks digging in against the noble group structuring plan, calling for fresh talks with creditors. taiex.an, the see tmnc, off. tokyo electron saw 4.5% earlier. thursday, morgan stanley is inclined to sell chip stocks into any strength, but jeffries sees no reason to be overly at pessimistic.
jeffries is expecting a rebound in tsmc orders. haidi: thank you for that. let's get to first word news now. >> thanks. downp -- amptanding ceo is standing down, apologizing for conduct and failures. it admitted to lying overcharging customers for services they did not receive. analysts say the entire board will have to step down and amp may face class-action lawsuits. the austrian government is increasing criminal penalties with legislation to be passed this year. the measures include prison terms up to 10 years, the banning of the licensing powers of the securities and investment commission would be increased.
the announcement comes as the row commission investigates the banking industry. issues are completely separate from any question about the stability and strength of the banking and financial system. that is rock solid. australia's banking and financial system is one of the strongest in the world. bank of england governor mark carney says the u.k. should prepare for rate rises over the next few years, but hinted the widely-expected hike next month is not a done deal. as policy makers will make their decision knowing there are more chances to act later in the year. mark carney acknowledged soft economic data. here in asia, south korean president moon says the north has dropped a major sticking point to a summit with united states. longer kim jong-un is no
making the withdrawal of troops from the peninsula a precondition for ending his nuclear weapons program. the u.s. has 30,000 personnel and south korea. moon and tim meet next week ahead of a potential summit with president trump in may or june. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. haidi: thanks for that. inflation tensions gripping the market has rising oil and metal prices have been driving bond markets. yields,u.s. treasury breaching 2.9% for the first time since february. the dollar gaining as yields are falling. the index above its moving average. let's get to our forex reporter in singapore. david, if we look at this as a broader metals inflation question driven by micro fundamentals, does that mean it
will not be sustained? ralliednk metals have related to sanctions. if sanctions stay in place, metals may maintain these levels. , therms of inflation budget deficit in the u.s. will increase to 120 and dollars -- $1 trillion by 2020. i think the inflation trend seems to be moving upwards. we are seeing that in the tips data at the auctions. strategist saying the dollar is behaving like a currency that wants to go higher , so do we expect this to be the strengtha period of for the dollar? >> if the yield curve can , there are expectations
of fed rate hikes. if the 10 year can move higher and steepen, the dollar can get stronger. if the 10 year yield decides not to move higher, the auction becomes key. if there is risk off because of trade wars and money is sent into the 10 year, reducing yields, the dollar may weaken, andhe dollar is key reaction will depend on how to perform's over the next week. rishaad: the trend is your friend. trend so fart is a and events next week could reaffirm fed? >> the trade in the 10 year yield has been choppy. it rallied earlier this year, then went sideways. weekgdp, i think the next would be to focus on the ecb and how hawkish it sounds.
certainly the five-year and seven-year auctions in the u.s., if those are well received and then itare happy, should flatten. if they are not well received and the market is happy for rates to go up because of the budget deficit and rise in inflation, then we could see the 10 year moving towards 3% and the curve steepen as a result. rishaad: nice one, david. let's get more on this from sean taylor for dws. what do you make of this? was flat.curve it is steepening again. that must be good news for the economy looking ahead. >> i think we will continue to steepen. i don't think we will run away. i think it's coming back to reflect and metals, a pickup in inflation and growth is steady. the key will be the earnings
season, and that has been mixed. but -- itt has come a has come a but expectations were running so high that anything apart from a blowout number would hit the stock. >> you could say everything was done well is flat, and anything being done badly is punished. environments the were in. the last few months have been a risk off environment. the market is pretty conservative. rishaad: looking at the dollar right now, has sentiment changed in your view? 1.15 target ona dollar-euro, which we think will come back. rishaad: what time frame? >> to march 2019. we think the dollar has weakened too much and we think we will
come back. last year, it didn't work. this year, it is coming back because a lot of people are short the dollar come in so positioning is in favor of a dollar rally. haidi: a lot of the big moves this week have centered around this metals rally, the aluminum sanctions story, aluminum you having some gains on expectation of aid for the government or china. you do see this correlation rise in this chart. the microbe story for metals could feed into the broader macro story and the correlation between inflation and commodities rising. if we take it in that context, that this may be a short-lived push when it comes to commodities, is it too early to talk about a pickup in price pressures? >> i think it is structurally,
because this is just supply and demand driven due to events, but demand is decent. as the year goes on, we should slowly have a pickup. a lot at the sanctions and trade issues are making it more volatile to read. if you look at what is happening in the market, one area everyone is overweight is technology, and underweight has been cyclical metals and mining areas. naturally we will see shifting. haidi: have you changed your approach when it comes to energy assets? >> at the beginning of the year, our guidance and what we did in our portfolios was to take money out of technology and put it into the older economy, which included energy. but also a bias towards financials, particularly in emerging markets.
certainly energy was one of those areas. the oil price is higher than we forecast. trade tensions, the price would be around $60. anything above that is good for emerging markets. it is an area where people are underweight. we saw that selloff reignite with the chipmakers and today, tech in the u.s. that how low dubai he wishes need to fall for tech names to become compelling again in an impairment where everyone is shifting from growth into value? >> there is difference within tech. the internet names have de-break it and growth is pretty good. de-rated and growth is pretty good. the problem with tsm is that it is the canary in the coal mine
and affects the output chain, so that's an area where it is not about they wish and's, but momentum and earnings, and that will be negative over the next six months. i would wait for a turned rather than wait for an evaluation. haidi: plenty more to talk about. still ahead, d w an sean taylor staying with us. we will assess the mood in washington, the imf spring meeting underway there. rishaad: we will have a look at the chip industry outlook after taiwan semiconductor's weak guidance. this is bloomberg. ♪ mberg. ♪
of the damage to growth will be. open trade is good for the global economy. >> nobody will benefit, because openingbelieve in trade , trade will benefit everybody. >> modeling has been done and the actual impact on growth is not very substantial when you measure in terms of gdp. what is more important is something difficult to measure in the short-term, and that has to do with the erosion of confidence. global finance chiefs at the imf spring meeting in washington warning about the impact of trade tensions.
let's get back to sean taylor at dws in hong kong. aboute talking earlier these high expectations for earnings season and a lot of discussion about trade tensions, particularly when it comes to the lack of confidence and the ability for business leaders to make investment decisions in this environment. tend to agree with the view of the imf that it will be minimal impact on gdp, but a huge impact on sentiment. changes the whole sentiment outlook for the market , because good news is taken as news is taken badly in the equity market and risk assets. i don't see that involve changing until we get clarity. also don't know how quickly we will get clarity on this given expectations on
rounds back and forth. in the meantime, what are you looking at that is essentially sheltered from trade issues? need is towhat we wait for earnings season. in one way this year we have been fundamentally positive on credit and equities and are not changing that view. where the fundamentals continue to perform the way we think it will, the market will adjust and we want have that disconnect. if earnings aren't as strong, then we will have this disconnect. portfolios we try to hedge on trade. it is harder because we don't know where it is coming from. the asian story is still good. south korea is the one area that will be affected the most. areas like domestic china and domestic india won't be
affected, so that is an interesting story. , on i said about confidence the policy side, south africa, we have seen more investor confidence in the market and have begun to see more investment. that is positive. it is really very isolated instances. we just want to focus on selectivity. rishaad: you were mentioning there has been a de-rating of stocks, and we've seen that from the january highs. tell us about this. >> the way we measure the re-rating is earnings plus dividend minus or plus currency depending on our forecast, then where the market has gone. haveyear, global equities de-rated versus earnings. emerging markets had a three rating last year driven by china, but the market that has
been de-break it is japan and europe, where fundamentally the earnings have been good, but the stock market has been down. rishaad: tell me about japan. pe 16 or thereabouts. that is probably pretty good actually. it is fairly pricey, you could argue, but the point is and people are not getting this come the amount of political turmoil in the country. how is that not being reflected, or is it reflected? >> i think it is being reflected in the pe rating. local investor sentiment is negative on the market. that will continue as more foreign investors realize that. one thinger of years, we have been certain on is the political stability in japan. now that is being questioned, and that question will hit the equity risk premium. as you look at russia, we are over rate -- overweight.
we took profits. the fundamentals are looking good, but we can put a pe rating on it because of the uncertainty so it's better to take money out the table and wait for a better opportunity. rishaad: japan does not have that problem. going to what you said, is there gone?put, or is that >> i think it is going. if you look at what has happened on earnings, earnings continue to do well despite a stronger yen, so a very positive sign. the economy going through into the stock market is positive, partly because of reforms putting pressure on the return equity of companies, but the market is beginning to price in political risk. we may have that continue for the next six months with the
party election in september, so that is something to be careful of. we are overweight japan, the regional asia versus japan. markete japanese equity normally resilient when markets are volatile, and this year it is down more than most markets, so the sentiment is a real sign that something is changing. rishaad: having a look at japan year to date, we are down 2.8% or thereabouts. down and s&p up. >> emerging markets are up. rishaad: thank you so much. have a great weekend. dws, cio for the asia-pacific. you can interact with the charts go you can in gtv
haidi: this is "bloomberg markets: asia." i am haidi lun in sydney. pro-the noble shareholder they shouldays renegotiate its restructuring plan with creditors. it says it and other investors are prepared to offer additional working capital as the group struggles with $3 billion of debt. the wall street journal says wells fargo could agreed to a fine of $1 billion to settle claims related to its risk management. they includeys failure to prevent improper charges to customers.
we are counting down to the open of markets in hong kong. rish is taking a look at the open. rishaad: shaping down at the moment. ,he auction coming to an end .2% down, futures lower. , awfulhinese chipmakers fallout from tsmc affecting global tech stocks. look at the performance in recent days with chinese chipmakers. the band has benefited these chipmakers. all of those outperforming the hang seng. they have done well on the basis that beijing will support these companies should there be a trade war. we are looking at that.
rishaad: there we go. kong, nine:n hong 20 9 a.m. as we count you down to the last trading day of the week. looking like a negative start, treasury yields to the upside. that is giving some people in impetus to get back in. technology taking a hit around the world. disappointing forecasts from taiwan semiconductor, which according to some signals the handset boom being over with. barrel,l above $68 a
trade in focus with talk we could see the u.s. enact emergency legislation. the treasury department considering using a law to curb chinese investments and since of technologies. sterling going down. the open is upon us. sophie: the mood on mainland markets, the shanghai composite lower why .4%, and the small caps gauge on the caixin also up. curves being mauled by the u.s. regarding chinese investment into the space. sengng kong, the hang lower by .3%. you have aac technology losing ground, down 2.7%. sunny optical under pressure. these are apple suppliers. apple fell overnight, being
dragged lower by chipmakers. byd electronics also losing ground after soaring on thursday. one companyghlight sliding after its chairman resigned due to personal reasons. sinks, let's check chinese chipmakers. asm pacific technology are among the major rivals in china. among tsmc'sare clients, so keeping an eye on the space given the disruptions we are seeing. checking the broader mood, i want to show you what is going on on a weekly basis given the drop in tsmc. a weekly dropfor of 1.5%, and stocks in china and hong kong heading for a decline.
one finalist says it is not over with yet after of first quarter print and the underwhelming reaction, so the large cap gauge for china off this week. the shanghai composite has lost 12% since hitting a two-year high in january, the steepest drop in the world. the question is will the national team step in to defend that. you for that. let's get first word news in hong kong. thanks. the world bank echoing positive comments from the imf saying the global economy is showing solid momentum. aowth should continue for couple of years, although there may be a downturn on the horizon. china willys continue to be a partner and driver, and the challenge is to boost lending to low and middle
income nations to ensure the benefits are felt by all. to ensurellenge is strong growth will translate into inclusive growth so the benefits of global economic integration are enjoyed by all members of society. >> bloomberg is being told president trump has been informed that he is not the target of any part of special counsel robert mueller's investigation. deputy attorney general rosenstein told the president he is not involved in the inquiry into his longtime lawyer. notpresident says now is the time to remove rosenstein or mueller. no collusion.een they won't find any collusion. it does not exist. as far as the two general and you told me about, they have been saying i am going to get rid of them for the last three months. four months, five months. they are still here. has of president not named castro for the first time since the 1959 revolution.
raul castro has stepped down in favor of his deputy, addressing the national assembly. the new leader pledged to defend cuban communism, while reforming the economy and making government more accountable. he says he is willing to talk to america, but would not bow to demands for change. statue that girl became a symbol of female can do will be removed from her spot facing the charging bull to the new york stock exchange. she became a tourist magnet last the symbolfronting of american financial resilience in the wake of the stock market crash. calls designed to attention to the low number of women in corporate america. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. hong kong's interbank rate hit a 2008 high after
monetary rorty's intervention to support the currency. that is a lot of money they spend to maintain this peg. tell us about it. >> right now we have had way too much hong kong dollar liquidity. hong kong reserves remain ample. the problem is interest rates continue to widen, showing hong kong rates lower and u.s. rates higher. rishaad: why is that happening? >> as we know externally, u.s. rates are moving higher, but for hong kong you have short growth and continued inflows, so you continue to have ample liquidity in the system. that has not changed over the past few years. what we have seen is rather than moving higher alongside u.s. rates, hong kong rates are moving lower. that is why we have widening
interest rate differentials, more people looking at this as a nice carry trade, and therefore pushes up the dollar. rishaad: has the hong kong monetary authority done enough? >> this is a link exchange rate system. it depends on the global situation. if we see more equity outflows, they may have to do more, but they have done close to $51 billion. that is a lot. if you look at the monetary base in hong kong reserves, there are still a lot of reserves they can go through. to 100ank moves closer million dollars, rates become more sensitive and start moving higher. that narrows the interest rate gap and we move back to equilibrium. haidi: i suppose the question is how far do we have to go?
you mentioned they have ample fx reserves. where does the pressure come in? >> i think the pressure will come from the external environment. what is clear now is this is an interest rate move. it is not an equity outflow move yet. as long as the global environment remains supportive, then this interest rate channel will self correct over time, but the concern is if this is a lot , then and we see outflows i think that may cause a bit more pressure than expected, but i don't think we are there yet. haidi: we have seen a strong week by recent comparisons when it comes to the u.s. dollar it almost feels like a currency that has impetus to go higher. is that the expectation you have, that the dollar has weakened to much? -- too much? >> our core view is we still
expect the dollar to go lower. the u.s. yield curve has steepened, but our medium-term view does not change. we expect the rate curve to flatten. rates can go higher, but the curve will flatten. strong in then u.s. and the tax bill has boosted growth, but what is not so great is that it worsens the u.s. fiscal deficit. where you have twin deficits, that will continue to weigh on the u.s. dollar. rishaad: it has been like that for a while. it is the reserve currency, is it not? they can print as many dollars as they wish. is still thee u.s. reserve currency, but there are global forces looking at the internationalization of the renminbi. the renminbi is not there yet, but over time other currencies will step up.
we are still more in a single currency reserve environment, but we believe we could move towards a multipolar reserve. rishaad: that will depend on the renminbi and where it goes. i was talking about this last night with somebody. they were saying it is maybe 10 years away before the gates open up and the currency being internationalized and free-floating. >> i think what is interesting is if you look at the rhetoric from authorities and the new central bank governor is that they intend to open up. that is very important. they have the new leadership in place for the next five years, or even longer than that, but as long as they maintain that aspiration, china growth continues to do well and we don't see anything fall off a cliff, i think they will do it. rishaad: gradually we see hong kong getting more chinized. is there a state in your view
where we have an renminbi peg. >> i think it makes sense. why was the hong kong dollar pegged to the u.s. dollar? it was looking at where the economy is closely tied to. it started off with the u.s., now gradually, seemingly moving closer to china. think studies still show a u.s. dollar peg makes sense. our economy is still more synchronized to that of the u.s.. is an open economy, so it access a conduit still come a does it not come and that's why the dollar peg is important? >> absolutely. over time when we find the economy is more synchronized to the chinese economy, and the renminbi has to become freely convertible, and that is when we start seeing more discussions over whether this is time to change the tag.
is notow at this time the best to create this type of volatility for this type of discussion. thing rightortant now is the peg is safe and sound and the exchange rate system is in place him and everything is working as expected. thank you so much for that. standard chartered asia fx strategist. some lines crossing the bloomberg, response from zte on this band from the u.s. commerce department for american companies to do business with this telecoms partner in china. the ban will severely jeopardize the company, her team partners, include those u.s. companies, and also saying the u.s. bureau of industry and security, which is part of the commerce department ruling, is very unfair and is determined to protect its own interests. just getting that through.
rishaad: we are back. this is "bloomberg markets: asia." i am rishaad salamat in hong kong. haidi: i am haidi lun in sydney. one of the biggest movers, taiwan semiconductors. course for its biggest intraday decline since the middle of 2013, off by 6%. the plunge coming after the chipmaker forecast sales for the current quarter at $1 billion less than what analysts were expecting. we have the story in taipei.
what has been responsible for this down cast forecast we are getting? >> right. the market is jittery because chips for iphones. according to supplier data, apple accounts for 21%. conference,earnings tsmc chief executive said the inpany is seeing soft demand the high-end smart phone segment. he did not say it was apple, but most analysts see continuing weak demand for apple's high-end smart phones is hurting tsmc's results and forecasts. haidi: we have been talking about how it has been a week not
quite super cycle for the iphone x. is that a growing indication that the smartphone boom is over? week, imf said the smart phone shipments have peaked because last year was a decline for the first time. seeing right now we are some soft results in the suppliers data in asia. also, reported a soft forced quarter results. see think we continue to how it will be in the second half of this year. looking at what is happening, are there other
indicators from early earnings reports that should be perhapsng us, and confirming what tsmc has been seeing? week, tsmcthis softier asml reported results. i think we are still waiting for more suppliers to release results and see what will happen. rishaad: great. good stuff. thank you for joining us. economy,the japanese core inflation for march weaker than the previous one, prices rising less than 1% than a year ago. brian flour is in tokyo. the this reflect of thinking of the central bank there with the policy board meeting, i think, next week. yes, rish, the slowdown in
core cpi is the first time the pace of growth has slowed in more than a year and a half since july 2016, so that will weigh on the boj when it meets next week. solid,erlying trend is but we saw prices for fresh food weigh on inflation, as well as the strong yen mitigating the impact of costs and energy prices specifically, so i think the boj will be looking at that going for to see if those pressures will be sustained. shinzo abe coming back from his meeting with donald trump. what is the perception in tokyo and how well he did, and has he been able to get around the scandals? short while ago suggested people are not gauging how low his stature has fallen in japan. abe went overseas hoping to
get a victory he could bring back and distract the citizens from what is going on domestically, and he really did not get it. the visit was ok, good photo ops, nice comments, but he did not get anything on trade or an exemption on imports of steel and aluminum. he did not really get anything else, nothing on tpp, so he is coming back and we will be looking at the surveys that come out this weekend. we have seen a downward trend, last127% approval rating sunday. last% approval rating sunday. if we see more of those, his situation will be dicey. the administration said the finance minister is resolute in sticking with his position and will not resign, so for now they
will fight it out. haidi: right, but beyond the scandals, brian, is there a sense that inflation will wage growth specifically, will take longer to materialize? is there a chance that the perception of abenomics will change? >> there is an interesting dichotomy. on the one hand, record numbers of foreign visitors to japan always exceeding forecasts, and these visitors per capita are spending more than before, so that is a nice +. on the other side, japanese households remain cautious about spending money. on cute stores like e prices on 200 products this month. , a leading convenient store, will cut prices on detergent, shampoo, and other household goods tomorrow. there is a sense that japanese
consumers are holding back in hunkering down, but there is a little bright factor from all , hetourism, so for abe needs to appeal to the citizens. wage hikes, we have seen a little bit. tiny pockets of wage hike increases, but it has not been sustained across the board and has not been a huge pace of increase. had a financewe minister aircraft resign and that the scandal. does that address some of the malcontent that has been building? >> it definitely solves one of the problems. he stepped down amid allegations of sexual harassment which he denied, and that was a big problem getting front-page attention. he stepped down. the finance ministry is at the center of a number of scandals.
it was also involved in the sale of public land. the documents were part of that sale has been an ongoing problem that has not been entirely resolved, so some of it, i think his best bet is to try to ride this out and hope the public forgets by the time the party has its next leadership election in september, and whether he can do that or not remains to be seen. haidi: brian, thank you so much for that, the state of play in tokyo. brian fowler. one feature on the bloomberg we would like to bring to attention is our interactive function at tv . you can watch us live and catch up on previous interviews and do a deep dive into securities or bloomberg functions we talk about. you can also become part of the conversation by sending us messages during our shows. this is for bloomberg subscribers only. this is bloomberg. ♪ ♪
haidi: this is "bloomberg markets: asia." i am haidi lun in sydney. rishaad: in hong kong, i am rishaad salamat. ma increasingack investment in thailand, including a smart digital how to facilitate trade between thailand, china, laos, myanmar, and vietnam. it is expected to come on stream next year and will serve as a research and development center for alibaba. jack ma saying the company has an interest in enabling its partners to succeed. >> people worry about alibaba come to thailand. are we going to occupy thailand, take away the jobs? we are not interested in that. onare interested in focusing enabling entrepreneurs and partners in thailand, making
sure our partners, our entrepreneurs in thailand, are successful. haidi: the board of gm's south korea unit planning a friday meeting to discuss filing for bankruptcy. the automaker has yet to strike a deal with the local union or receive approval for its restructuring proposal. deadline. a friday the decision to cut its losses would be an line with the strategy to quit markets that are not adding to the bottom line. let's tell you what we have coming up. trade tensions front and center for investor sentiment, weighing on these markets. having a look at where we go next with one investment strategist joining us to have a look at how far this will go. later, what is going on with nintendo's $30 billion stock
rishaad: asian-pacific markets herring losses -- paring losses. spotlight,uch in the especially the taiwan semi's tepid forecast. the boom is very much coming to an end. from his remains far 2% target. in hong kong, i am rishaad salamat. >> and i am haidi lun here in sydney. chinaoming up, the u.s. trade that could take a turn for the worst. the trump administration
considers -- this is bloomberg markets: asia. ♪ haidi: these trade tensions, never far from top of mind. the u.s. may be considering emergency measures to take against china. at the same time we are seeing this inflation story flesh out, including macro elements of the u.s. sanctions on russia, driving aluminum prices higher. oil prices pretty robust to going into that meeting of opec and related oil ministers. if this is aonder short-term bump when it comes to inflation expectations, or whether they're -- this is the start of something that picks up along the way. rishaad: absolutely, something
bond dealers are looking at, getting away from the flattening of the yield curve and getting bonds down and yields to the upside. let's look at how the whole trading day is shaping up and how your money is doing. assetre is pain across classes, but declines in equity spaces are easing. led higher by consumer firms. the drag is coming through in the materials and tech segments. the tech woes as tsmc announces weak forecast. the currency space under pressure as the dollar tracks and uptick in treasury yields. check out stocks in manila, the world's worst stock market seeing life after tumbling to a one year low. investors coming back after $30 million was wiped out from manila stocks in recent weeks. the dollar-yen set for a fourth
weekly drop, holding below the 108 level. political woes, beckett put it at odds. politics and moderate -- moderating. to aupee of falling two-year low after they held a key rate unchanged thursday. domestic inflation under control. it to check on stock movers in the region. the damagee most of is, you have tech and chip-related stocks after tsmc's announcement. the imf said it had reached its peak. samsung earlier lost 2%. and an apple supplier falling to an august low in hong kong. da under pressure.
talks continue with shire after the entry and exit of a rival bid. that is falling after phillip morris reported weak sales in japan with unit sales of a device lower than forecast. 30%.stock down haidi: let's get you to first word news. yvonne man in hong kong. >> chinese telecom maker zte made a first response to being banned from u.s. tech, it is on -- it is unfair and will jeopardize the company. they also say the seven-year ban will not only endanger their very survival, but hurt its partners, including companies in america. saysustralian government the creeping criminal penalties, with legislation to be passed this year.
the measures include prison itms of up to 10 years, would also be increased. the royal commission investigates the banking industry. are completely separate from any question about the stability and strength of the australian banking and financial system. that is rock solid. australia's banking and financial system is one of the strongest in the world. england the mark carney says they should prepare wildlye rises, but the -- widely expected hike next month may not happen. there are more chances to act later in the year. he also recognized they would consider things the name wider context. lance armstrong reached an
agreement with of the u.s. and a whistleblower lawsuit that could have topped millions of dollars. a court case regarding a former teammate and performance-enhancing drugs. seeking a settlement of $5 million after he admitted doping. global news 24 hours a day, on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am yvonne man. this is bloomberg. ♪ rishaad: chinese tech company zte said it will jeopardize the company's future. curb an emergency law to chinese investments in sensitive tech. jodi schneider is with me now. what will such a move accomplish? what do they hope to accomplish? >> this is part of president trump's move to punish china for what the administration views as
abusive intellectual property rights. the 1977 law essentially would allow the president to have emergency powers given to declare a national emergency, which would allow him to seize and bar chinese firms from having transactions in the u.s. this would be another way to deliver on his promise of on what is seen as a violation on u.s. property rights. at the same time, it would allow him to do this without having to go to congress. rishaad: what could be some of the fallout of such a plan? jodi: we could see further retaliation from china, which has vowed to retaliate in terms of $50 billion in tariffs to the u.s., if the president goes
through with the $150 billion in tariffs. there could be further back and forth. what is happening in the u.s. since trump took office is a ,ecline in chinese investment in u.s. companies and generally, which could hurt evaluations of u.s. companies and some of their investment plans. it certainly could further deepen that if this were to occur. this is a plan they are looking at. sometimes they are scaled back, but the treasury department is seriously considering this move. haidi: did we know how imminent any decision would be? until may 21 to make decisions on this. the treasury department is looking at what technology sectors would be affected. semiconductors, almost certainly. also perhaps 5g technology.
they are seriously looking into this. mid-may is the deadline by which to make a decision. haidi: thank you so much, jodi schneider in hong kong. our next guest is a long time china watcher and believes the chances of a trade war are low. he joins us now from singapore. why so sanguine? >> let's start with the context. remember donald trump has been talking about doing a lot of trade related things as a candidate and has not done of most -- done most of those. he talked about pulling out of nafta, canceling the south korea trade agreement. he is renegotiating that. that is the context. before long president trump will realize a trade war with china will be bad for his personal interest, primarily political.
it raises the risk of the republicans losing the house of representatives, which would be followed by impeachment hearings. haidi: your background, interesting, almost straddles the gap between economic analysis as well as diplomacy and policy. do you think this is an ideological war? strong- >> there is a possibility of that. of a tradesibility war is based on the fact trump's advisors look and ideological way at china. the same view the reagan administration had about japan in the 1980's. they talk about worried -- economics,out the but were worried about the technological rise and wanted to disrupt that.
i think lighthizer, who worked in the reagan administration on trade issues, believed it was something that disrupted japan's rise and the u.s. does not have to worry about japan anymore. a trade war isk something to disrupt china's rise. trump will say that is a great plan, but if it will hearings,impeachment he will not go that route. rishaad: peter navarro seems to be advising trump on trade. he has written many books that seem to be anti-china, "death by china" is one of them. that, many people do say there are legitimate concerns that donald trump and co have come a but a trade war is not the best way of going about it.
-- concerns that donald trump but a trade war is not the best way of going about it. andy: there have been concerns for a long time china should be doing more to open their markets, protect intellectual property. a trade war is the worst way to go about that. the best way? and finish the negotiations that were begun under the obama administration, a bilateral investment treaty designed to accomplish what we were talking about, opening markets for services and protecting intellectual property better. they were pretty close to finishing that. as far as i am aware, negotiations have not resumed. rishaad: how much wiggle room is there with china, in your view? one of the reasons why i believe there is an 80%
probability we will not see a trade war is, donald trump will realize a negotiation where he can declare victory, as he has done with the korean situation, is in his best interest. the signals from xi jinping in china, he does not want a trade war. using potential tariffs on soybeans to push donald trump to the negotiating table. i believe he can make enough concessions to allow donald trump to say he is the best negotiator on the planet and the new deal with china is best for america. so much gamesmanship and each playing to their political base. china, retail sales, a blowout. you see the doubling when it comes to online retail in particular. do you think of the consumer story is immune to trade tensions, and the natural structural slowdown with china and its deleveraging campaign? i have been in asia this
week talking to our investor clients. what i have been highlighting to them, while it is important to pay attention to the prospects of trade war, do not lose sight of the economy. the chinese economy is doing well, and continues to be the world's best consumption -- consumer story. it is the fastest-growing. that is primarily where the opportunities are. primarily investing in chinese companies selling goods and services to chinese beat. the other advantage, that should be well insulated to any trade tensions. the last thing i know, the strong domestic demand story unrelated to trade is giving the opportunity to make more concessions because he has a strong economy behind him. one thing trump's advisors may
be unaware of, how much the chinese economy has changed. exports minus imports was 9% of gdp years ago, now it is only 2%. hardly any listed companies are exporters. the impact of these measures on the chinese economy will not be as significant as some in the trump administration believe. you say the other china story, the world's best consumer story. but this is not a narrative people have gotten to grips with, have they? that is not been reflected in chinese stocks. they have lagged, haven't they? andy: let me take a different look at that. in the u.s. people are unaware of basic facts of how open the chinese economy has become. few in the, very
u.s. know that gm sells more cars in china, that boeing delivers more planes in china than anywhere else. companies as diverse as apple and nike and dolby are getting 50% of their revenues from china. a passive, index-based approach to investing in chinese consumer stocks, you are having some difficulty, but if you look at small funds, performance was up 56% last year. and yet it only went from tender 12. that is a reflection of the tremendous earnings growth we have seen for chinese companies in that sector. washington's attempt to curtail chinese tech and innovation, to those inform your outlook when it comes to big chinese tech names? i am more worried about the long-term degradation of the relationship between washington and beijing than i am worried
about short-term concerns of a trade war. there is a growing negative sentiment. i think a lot of it is based on people not recognizing bringing china into the wto, into global institutions, those americans wrote the rules for, are really good. the economy is strong, hundreds of millions of the chinese taken out of poverty. it is great for american companies like the ones i mentioned. most people do not realize how much progress has been made, because they are focused on the fact there are still problems. we should not lose sight of the fact this has been a successful engagement over the past couple decades. haidi: stay with us, andy rothman from matthews asia. seemingly a turnaround in inflation sentiment this week alone. still ahead this hour, the future of nintendo, $30 billion
oilaad: we have the rise in , the outlook for inflation higher. treasury rate -- treasury yields hitting 2.9% the first time since february. the bloomberg index climbing above its 55 day moving average. andy rothman is an investment strategist from matthews asia. everyone is wanting inflation after decades when i was growing up, they tried to curb inflation, is everyone getting knickersckers -- their
in a twist for no reason? andy: we are looking at core inflation of 2%. it is coming for reasons that are quite good for investors. the chinese government the past couple years has been pursuing supply-side reform. that is why profit growth, earnings growth in china has taken off in the last year and will remain strong. that is resulting in faster wage growth and more inflation. i still think not in the next few years that would cause me to worry about it. illustrated by the metals mania we have seen this bek, how inflationary would the effects of trade tariffs implemented in a significant way? that thethe tariffs trump administration are talking about are implemented, which they have not yet, with a couple
exceptions, and the chinese follow-up, this would become disruptive and chaotic in the short-term. longer-term it will settle down. is, the inflationary impact would be greater on american consumers than chinese. the chinese have not yet put their soybean tariffs in place. soybean prices have fallen. the steeltariffs -- tariffs are in place. this is another reason why i think in the end president trump is going to decide not to go that route. rishaad: what is your biggest fear? andy: i guess my biggest fear is we in the united states lose track of the fact that bringing china into the global the geopolitical position, has been good for the chinese and the americans. we lose sight of the fact that,
while there are problems, it has been working well for everybody. ignoring that in going into a process driven by conflict will be bad for global economy. rishaad: andy, great talking to you, have a great weekend. andy rothman from matthews investment. the pulse of a declining set of equities this friday morning. this is bloomberg. ♪ this is bloomberg. ♪
credit to creditors, wiping out existing shareholders. we are at taiwan semi, looking at asian-pacific chipmakers, in light of their outlook, which fell short of estimates. about $1 billion below analyst projections. we saw a downdraft for nearly 7% for this stock. tsmc shares the previous day closed higher in taipei. [indiscernible] qualcomm has reapplied for china's approval for its acquisition of a semiconductor company. they are extending the deadline until july 25. if there is no deal by then, qualcomm will pay them a termination fee. they have been chasing them for almost 18 months.
they say it would negatively impact the chip market. the board in south korea planning a fighting meeting to discuss filing for bankruptcy. the automaker has yet to strike a deal with the local union or get approval for its structuring proposal. a decision to cut the process not adding line with to the bottom line. let's have a look at the day, market-wise. japan as we had to the lunch break, we're seeing movement to the upside as markets turn around, striking off the weak inflation we had earlier from the central statistics office. slipping in march after hitting 1% in february. it was in line with expectations, well below the 2% target bank of japan governor kuroda has put in place as he
>> i am yvonne man with the first word headlines. madese telecom company zte the first official response after being banned from u.s. tech. is unfair andling unacceptable and will severely jeopardize the company. also says the seven-year ban will not only in danger its very survival, but hurt partners, including companies in the u.s. they said they would safeguard their interest by all available means. mishap to another, a payment went wrong last month. $35 billion sent to an exchange as part of a daily derivatives dealing.
error happened, it was quickly spotted, and no financial harm and sued. the world bank is echoing positive comments from the imf, saying they are showing solid momentum. both institutions a growth should continue at least two years, although there may be a downturn on the horizon. they say china will continue to be a key partner and driver. the challenge now is to ensure strong growth will translate into inclusive growth so the benefits of global economic integration are enjoyed by all members of society. is being told president trump has been informed he is not the target of any part of special counsel robert mueller's russia investigation. robbers and stained told the president he is also not involved in the inquiry into his
longtime lawyer michael cohen. it is not time to remove rosenstein or mueller. pres. trump: there has been no collusion, they will not find any collusion, it does not exist. as far as the two gentlemen you told me about, they have been saying i would get rid of them for the last 3, 4, 5 months. they are still here. >> global news 24 hours a day, on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. man.yvonne this is bloomberg. rishaad: let's have a look at market action. a turnaround story, japan going in the lunch break with 2222. >> the mood has shifted gears in tokyo. chemicals and chip-related layers looking offset.
the nikkei 225 closing out the morning session, up 0.1%. while chip-related stocks are sliding, jeffries sees no reason to be overly pessimistic on the space. it was -- results were within the guidance range. you can see how markets are moving in the rest of the region. i want to highlight stocks in manila, finding some relief after tumbling to a one year low. keep an eye on this space. follows the most in five years. the global bond the selloff is continuing as the bear market seems to be back. this will probably weigh on demand. chinese paper is looking relatively expensive following this week's rally. security says the fundamentals will be in focus.
it is dollar buying and en selling. level. is eyeing the 108 we have seen a line of resistance since mid february. 109o reckon an attempt at is possible by months and -- month's end. haidi: we are watching a.m.p. because ceo craig meller resigned after revelations of the fund manager's misconduct. widespread inquiry into misconduct. i want to bring in adam haigh, who is looking at this. how did a.m.p. get to this point and where do we go from here? >> remember a.m.p. is a household name in australia, they have been around for decades, they have done
everything from insurance to fund management. this week, the holder of the business is being put on the line. this is about whether they charge customers for services they did not even receive. that is what came out of the royal commission this week. we have seen craig meller step down today. he was already due to leave the company later this year. it sped up the speed of his resignation. people were still questioning whether the whole board needs to go and whether there needs to be of topsale clear out management at this company. clearly, issues with a misconduct and culture for many months. we get mike wilkins, he will be there for a while. they said they will do a governance review and try to ascertain exactly why they got to this stage in the first place and try to put him in place --
and try to put in place systematic steps so this does not happen again. for those that thought this would be dull, it has been quite an exciting week. rishaad: what is the broader fallout from what you have been talking about from this royal commission? moment thenk at the royal commission, the first public hearing began a few weeks ago in march. it is scheduled to go on through the rest of this year. it is a wholesale examination of australia's financial industry. it tends to focus on the big four banks a lot of the time. but companies like a.m.p. are engulfed in this level of scrutiny that will extend this year. they may get an extension. they are due to do a report in february of next year. is today taking it
another step further because this is the first we have got from a company, a ceo having to step down, a significant step. and cause for other board members at a.m.p. to have to resign. this comes on the back of news earlier on in the week that the charginglth bank were someone had actually died. and did that knowingly continue to take fees from that person for many, many years. problems,ry egregious a number of companies in australia. they are in front of these regulators now. toy are doing their utmost get the reputation of the financial industry back in kindling with what the public in australia would like to believe, and that they can have confidence again in the banking system. remember the government was relatively reluctant to get
involved in this royal commission about set. -- commission at the outset. even the government now cannot resist jumping on the bandwagon littleting the stick a at the finance industry. rishaad: thank you. to -- russiang perhaps looking to curb the hits from the u.s. buying raw materials and aluminum in the country. , will beijing help russia -- rusal sidestep? would a deal help them fight what washington is doing?
i am going to channel the russian revolution, it has been 10 days that shaped the world. the aluminum market, we have the u.s. sanctions nearly two weeks ago now. been all sorts of trouble for the company, there is aluminum piling up in russia. customers do not want to buy. they have to start -- stop trading in multiple locations. ships do not want to take material on board. --is very uncertain and uncertain times for the company. know are ines we china. therere trying to see if is an avenue the company can explore to sell to china. they would possibly do this,
might have to do this at a discount, so chinese traders would happily snap up some of this material and then perhaps a some stage it gets shipped out to the rest of the world. this is a very uncertain time. certainly nothing has been agreed. we do not know what the chinese attitude to this would be, whether it would even get to the government levels, in terms of who is going to let this happen. extraordinary had moves in the price of aluminum and related metals. where do we go from here? knows. no one this is very uncharted territory. we do not normally see this kind of big supply shock, geopolitically driven supply shock, in the metals market. rusal is the biggest producer of aluminum outside of china.
you are talking a substantial chunk of world supply that we do not really know what is going to happen to. eyeingmoment, people are aluminum, which would be extraordinary, if you were talking about that even a few weeks ago. these are short-term outlooks. beyond that, it depends what happens with the flow of material, and [indiscernible] aboute had goldman talk the price hitting 3000. there were analysts this morning on bloomberg tv talking about massive disruption still ahead. the sky is the limit in the short-term. haidi: martin, thank you so
♪ rishaad: you are back with bloomberg markets. irishaad: am rishaad salamat in hong kong. haidi: i am haidi lun in sydney. nintendo may depend on cardboard pianos. there are selling do-it-yourself kits to transform the switch console into a miniature mobile piano or robot exoskeleton. let's get more on whether that will sustain the growth of nintendo.
you are very bullish on gaming across the board. sets, explain the appeal. i get the appeal of super mario, i do not understand what value this adds. >> we can come to that in a minute. to highlight, nintendo has been one of our top two picks for the last four years. it is not new. every year we reassess the earnings growth, on the back of what nintendo has set up on consoles like the switch and mobile. these -- this -- company is not like any other. about ¥45.rice is we did not bill it in our forecast.
we like it, nintendo, for what they have positioned themselves for switch, which has four or five years of earnings growth. and mobile games, they are barely starting. that is why we like earnings multiples, very low. coming to level. 45, 46, stock price was the announced level. now it is below that. it is not like we are talking price and the stock price. it is a different market. less than 10% of the buyers of switch. they have sold 15 million to 18 million units. most have gone to kids the -- below the age of 18. whichs similar to lego, is where they want the family to come together. it is not for everyone. it is not for the gamers at all. it is for different segment, and
they're trying to open up a different target market. in 2006 to remember 2011, they were targeting non-gamers, families. it isnot just cardboard, designing, making things with kids and family, trying to figure that out. this is not the only reason why we like nintendo. rishaad: you also like sony. which one do you prefer? potentialhis huge with e-sports, people getting together in stadiums to watch these games. does nintendo need to go in that direction as well? the opportunity is there for both companies. for all the game companies, in fact. nintendo is generally slow in catching new trends. they charge their own path.
sony is going to be faster. you look at the u.s.-based companies like ea and activision, they are far ahead. there is revenue potential for these companies as well. to answer your first question, something i very often get, which one do i prefer, sony or o have been mye tw top picks for four years. that is difficult. for the next four to five years, nintendo's earnings the triple from where we stand today. that will be 10 times higher than last year. huge profit growth. sony has turned around, one of the best management covering japan for 15 years. this is by for the best professional management team i have seen in japan. they have multiple businesses,
not just gaming. they have music, movies. each one alone -- in of these businesses is very valuable. if you put it together, sony itself looks very attractive. alone, there is not as much growth left. is your view on the chinese gaming space, the likes of tencent? in china, the console game has not picked up, was never big in china, was never there in china. big markets, pc and mobile. belongs to tencent. they have cleverly acquired companies on the gaming space which have done well. tencent has one of the biggest portfolios when it comes to pc and mobile gaming today.
they are very well-positioned, given the platform they have. -- qq and now q2 it is we chat -- wechat. rishaad: that is all we have time for. thank you for joining us. have a fantastic weekend. from jeffries, joining us from singapore. china mobile to report robust first-quarter outlook numbers. a senior analyst is with me now with a look at what to expect. should investors be concerned about the company's slowing 4g user growth? they have 800 million subscribers, it is mental. there has to be a slowdown in 4g user growth. they're bribery -- their rivals are catching up. it is underutilized.
they have lots of reasons to catch up on user growth. having said that, we believe the pace of acceleration is improving. last year we saw a sharp deceleration in 4g growth at china mobile. this year they expect only to add 50 million, half of what they added last year, in terms of 4g users. in january and february, it is tracking better than the four-year guidance. the slowdown is quite well known. it could be not as much as feared. mentioned,yst just the data focus is more on gaming. comes up withval, big data plans at a cheap price
that could drive down china mobile. rishaad: the other thing these companies do is go to the broad -- broadband side of things. when do we get some real juice from that? anthea: i think the strategy for china mobile is to gain users, which they did well. spot,at they have this charging a bit. our assumption is, the outlook would increase. it would be more significant this year. zte is the big story, getting cut off from u.s. tech. it raises the question, necessity of china to have its own supplies when it comes to this area. will that impact the rollout of 5g in china? anthea: from my conversation
with chinese telcos, it seems the risk is small. even though they are a key supplier for them, it is not hard for them to rely more on huawei or nokia, etc.. developmenthat 5g will continue as scheduled, even though they have fewer choices in terms of suppliers. you so much, our telecom senior analyst. remember bloomberg users can interact with charts shown. analysis andey save chats for future reference. this is bloomberg. ♪ this is bloomberg. ♪
rishaad: you are back with bloomberg markets, i am rishaad salamat in hong kong. haidi: i am haidi lun in sydney. aboutke with andy rothman the discretionary sector, despite bullish views on china, has not performed well. i want to bring up this chart that shows how flat it has been. it is tracking the shanghai composite. this is one of my favorite companies to talk about, the
or maker, ate liqu one time, the biggest alcohol producer in the world. it has beat the most optimistic of analyst forecasts. in these uncertain times, it is not just moutai. we have a company with a special fund on this, the equity fund returning 61% over three years. liquor stocks accounting for 1/3 of his portfolio. there they are, this is what they are doing today. haidi, i will leave you for the time being, because we have david to talk about the next hour of bloomberg markets. you and i had quite a fiery i.ening with mouta
never had it before in my life. >> the details of that evening will remain between you and me. >> and she who will remain nameless. >> it is one of those things, moutai, you do not forget the taste. once you have too much, you almost forget completely. rishaad: don't forget to tell us what is coming up. guest in a a special few minutes. lots more coming up. ♪
♪ mark c.: i am mark crumpton in new york. and you are watching "bloomberg technology." deputy attorney general rod rosenstein reportedly told president trump that he is not a target in special counsel robert mueller's investigation. people familiar with the matter say rosenstein brought up the mueller probe to the president during a white house meeting a week ago today. they also said he is not a target of the cohen probe, either. the senate is to vote monday on the nomination of cia director mike pompeo as secretary of state. it faces opposition from the democratic party. senate republican leader mitch mcconnell says it may be tough