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tv   Bloomberg Markets Asia  Bloomberg  May 27, 2018 9:00pm-12:00am EDT

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rishaad: little bit more positive about the north korea summit. now it could be back on. president trump saying his meeting with kim jong-un should go ahead and the two sides are talking directly. speaking of a second moving -- meeting, all involved saying they are preparing for singapore on the 12 of june. in hong kong, i'm rishaad salamat. haidi: i'm haidi lun. also coming up, cross lines in washington. the phone maker is facing growing opposition in congress. this is bloomberg markets asia. ♪
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rishaad: the euro taking a bit of a breather after its recent tumbling. is it better not to have a government that money being proposed? is it just that? is the euro on the up? oil, huge fall since friday, 6% plus we are talking about. some of the oil majors in this part of the world, as well. particularly with the added recounts in the u.s., we have a question of whether we are looking at peak oil. $100 a barrel at the moment. will they come along they? it's on again -- will they, won't they? it's on again, this summit
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between president trump and kim jong-un. let's take a look at the monday morning session with sophie. sophie: this is how the monday morning session is kicking off. the nikkei 225 is wanting to slight losses after gaining most of the morning. and a mixed .7% picture for markets coming online. the sti resuming losses after picking up on friday. despite first quarter gdp showing the growth picture has decelerated for taiwan. the data came in on friday. energy companies are dragging the most, checking the most, now below $76 a barrel, but goldman sickened to its always look. the guessing game continues for the korean summit. the korean won is hovering around 1073, rising for a session and a weaker dollar and other emerging currencies.
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companiesnd, sensitive to the north are leading regional gains. they are soaring. someday engineering gaining 23%, jumping to a 2012 high. if you take a look at the other side of the spectrum, with korean defense stocks sliding. the biggest decline or so far up nearly 5%. japanese refiners are under pressure as japan decides if it will cut iran and puts by august. -- inputs by august. if the markets changed anything, they would abolish it. let's find out with first word news. paul: italy remains without a government after would be prime minister recep i can't take failed with his choice of a eurosceptic as finance minister.
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he withdrew, saying he had done his best to form an administration. they rejected his choice of a veteran economist who has called for italy to leave the eu and has criticized germany's dominance of europe. china's island province is taking steps to combat speculation on real estate and the campaign may go nationwide. they want lengthy residency, adding the flipping of property, and demanding down payments of 70%. restrictions were announced by president xi as part of their plan to boost the islands economy. international airlines are given more time to adjust references to taiwan, which china insists is part of the mainland. kaelin and what comes up our two that made changes. others that applied for a extension are united continental. all 34 carriers are asked to modify will do so.
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opec and its allies are concluding the oil market achieved rebalancing target last month as output restrictions hit their goal of eliminating global glut. sources say the excess plunged in april for less than the five-year average. the cartel, russia, and other producers meet in vienna next month. global news 24 hours a day on air and at tic-toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. rishaad: it was a top story last week. the north korean summit could be back on. president trump confirming the meeting will happen, saying you team is in pyongyang to make arrangements. stephen engle's with me having a look at this. is this clarity? is this more confusion? or is this more confusion with clarity? stephen: both, yes, all of the
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above. that will be the pattern for the next 15 days until june 12 comes around. we don't know if it will be in singapore. it seems it is back on. let's see the tweet from donald trump. you have to read between the lines and parse through his verbiage. sometimes challenging. he says there is an advanced team in north korea, making arrangements for the summit. rishaad: does he referenced the previous cancellation? stephen: no reference to last week that he did cancel it, but what is interesting is this line. seems like a throw away. but it is not necessarily. he believes north korea has brilliant potential and will one day be a financial and economic reaction. the last line is the interesting one. he says it will happen. is it the summit or is it the economic boom that he's alluding to? a lot of people are referring to it will happen as the summit
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will happen. there are 15 days to go. i think we will gyrate back and forth for the next two weeks. ever shrouded in mystery and uncertainty there, not least of which coming from the president's tweet. the summit may be back on. is singapore still going to be, where it happens? the last time we heard from donald trump, which was friday, he said yes, it is very likely to be singapore and it likely to be june 12. that was three days ago. it might be changing right now as the advanced team is in north korea. an the white house said advance team will be going to singapore and case that happens. this is what donald trump actually had to say. president trump: a lot of people are working on it. it's moving along very nicely. we're looking at june 12 in singapore. that hasn't changed.
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and it's moving along pretty well. so we'll see what happens. stephen: we'll see what happens whether the two advanced parties or three if you include south korea, if you know the deliverables or optics will be on that potential do 12 summit. -- june 12 summit. haidi: the twists and turns. stephen engle and hong kong. let's head to the other major issue, trade. president trump copper mice to allow cte to stay in business. marco rubio has been critical of the deal. he says the potential to block the cte and others from operating would have widespread support. >> i believe it will have a super majority. most numbers of congress understand the threat china poses and there's a growing commitment and congress to do something about what china is trying to do to the united
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states and this is a good place to start. haidi: jodi schneider is in hong kong the latest. what more do we know in terms of how much medical pressure is coming down on this issue? di: there seems to be a lot of political pressure in congress. i'm not sure where marco rubio is getting the super majority numbers. that would mean more than 60% of votes in the senate. but there is a lot of widespread support for coming down on cte and other telecommunications company after president trump said the u.s. wanted to allow it to stay in business after it went ahead with a $1.3 billion fine. a lot of members of congress reacted negatively, saying they did not think that was the way to go in terms of zte or the violations of copyright
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and intellectual property by china. rishaad: coming about this legislation, which is pending in congress. what is this all about? jodi: it's part of a defense bill that would prohibit telecommunications companies like cte from gaining access to any kinds of u.s. intelligence and any kind of u.s. defense possibilities potential. there are other pieces pending but marco rubio was talking about legislation coming up and legislation that would specifically prohibit cte and other telecommunications companies from doing this in the u.s. that's something that hasn't come up yet. what's interesting is that he's talking about this in a midterm election year. we are coming from a memorial day recess in june. very unlikely they get much done in the next few months.
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they will go home and campaign. even though there is sentiment, how much they will be able to move legislation is a real question. rishaad: thank you very much indeed for that. jodi schneider, senior international editor. china's biggest names vying for the biggest ipo in three years. haidi: a look at manufacturing on the mainland with arianna financials. this is bloomberg. ♪
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rishaad: the chinese industrial complex are witnessing since october. let's have a look at all this. industrial profits growing 21.9% from the year ago that's compared with the 3.1 increase in march and 60% in january and february combined. boosted byse being
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factory output. we have total profits of april just over $90 billion. haidi: an output rebounding inflation, improved margins, particularly when you look at the sector breakdowns. steel, chemical, auto contracting the most to this phenomenal comeback for industrial profits in china. let's get some more on this. does this potentially change the picture when it comes to what point in the growth cycle and where it could potentially lengthen it so this last that goes on for a little bit longer? actually the data we have just seen is over the last couple of years and i think that we will continue to see in the next few years, as well. that is one that points to a little bit of cautious optimism around the chinese economic
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story and in particular, the ability and willingness of china's authorities to derive a transition from low-quality industrial led growth to hire quality consumer led growth. we're talking to one of our guests earlier about the strange kind of narrative where in this sense of a volatile environment with trade tensions and coming under pressure, china is almost a bit of a haven because of the willingness of authorities to open up, but also at the same time not lose control over the market area is that a reasonable way to look at chinese markets? reasonableink it's but too early to get complacent around this story. when you look at what is happening in this recent data, it highlights when you look deeper the difficulties and challenges that they authorities
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are going to have in managing that transition. we saw steel and automotive are the very sectors that were trying to transition away from, with the ones that were driving this data and that is something they will have to cope with in the next five years. i would say yes, there is a positive story there, but we can't get complacent. we have to look at what is driving that growth and transition. rishaad: and does that informed the way you invest? isaac: it does really. just taking a look at the way the competition of the chinese economy is still largely driven by industrials, the consumer led sector the more sustainable sector that china is trying to focus on is a small part of the overall economy and equally a small part of the index. if you're thinking about how to invest in china, you need to be more discriminating about what you invest in. you can't take the broad market data. rishaad: this goes to your
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philosophy of active versus passive fund managing and its active by a long stretch. isaac: we would say that is absolutely right. you need to take that active position. you need to be thinking about that market output. you need to be dynamic of it -- dynamic. rishaad: how does that include msci inclusion? isaac: it's likely to move into china markets. then there's a chance the rising tide will solve -- stop sh ips. that doesn't mean you want to anchor yourself to that approach. the appropriate way to play china is to think of it as a separate asset class i look at fund managers who can deliver outlooks to a different investment process to the cycle. haidi: i want to drop a quick chat to talk about this chart.
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we had a little bit of respect for em currencies and local currency bonds last week with the pullback in the 10 year yield despite the dollar sort of remaining strong. i think we are on track for a seventh week of gains. looking ahead to payrolls, where do you strength story ends? for if we get a strong number, does that give impotence to the fed to pick up the pace and are we in an environment where gm's will see sustained pressure with dollar strength here to stay for a while? isaac: i think you hit the nail on the head, that i guess the risks around the emerging markets were driven by treasury yields pushing higher and breaking through 3%. they are also driven by oil prices that have had a sustained rally recently. the u.s. dollar is the third part of the trinity that has been driving weakness in emerging markets. i think payrolls this week will be important and i think they are likely to give the green
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light for a hike in the fed funds rate next month. but looking through that, just up your interest rate differential in my midterm, i would say the outlook for the u.s. dollar's weakness and there are three key reasons for that. the first is the u.s. is still in oil importer so the higher prices at the moment mean it will be widening the trade deficit. the second reason is the u.s. is going well above potential at the moment, and that's been sparked along by tax cuts. and i expect that will start sucking in imports from the west of the world. that will account for the current trade deficit. finally the u.s. dollar is overvalued moderately to modestly, and that makes foreign producers of goods more competitive relative to u.s. producers. so there's a further reason to expect the current account to widen. all of those suggest the trend
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for the u.s. dollar is weaker over the next few years. that leaves me fairly optimistic on emerging markets, and i see the recent weakness is a bit of an opportunity. haidi: there's a lot of talk about whether a trade war will be beneficial for the u.s. dollar or create weakness in the longer term. how do you navigate as an investor around things of geopolitical headlines, trade headlines? do you just try to stay past the noise and put it aside for now until we know something? yeah, i do see a lot of the headlines tended to just be quite noisy and you do need to look through them. at the same time, i don't think you can be complacent. if we go back to the last couple of years, there have been geopolitical stories like the trump election, like >> it, -- like brexit, that caught investors offsides.
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emerging markets are important. we can't lose sight there could be a snapping point for longer-term trends. i don't think we could be with sort of around in the current market environment with every headline that comes up. rishaad: it gets boring talking about them as if they are all the same. some are graded differently. preferences, some some of which you are supportive of others dismissive of. is thathe other issue they are a collection of idiosyncratic risks we love together because it's convenient. if you think about countries like turkey or argentina, i will go into detail, but they have idiosyncratic risks driving them and it must stand apart from the rest of the e.m.'s. given the city in asia and hong kong, i tried to break markets out into asia and not asia e.m.'s the difference between the two is the leverage or
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exposure to the oil price. not asia emerging markets are particular exporters of oil. rishaad: much deeper than that, surely. isaac: that goes to how you access emerging markets alpha or beta. from a broad perspective, my thesis at the moment is that emerging markets will do well if the oil price rebounds or stays around where it is. i would have a preference to not asian emerging over asia. it is goes the other way, i think asia will do better and i think oil prices will go a bit higher. so i have a slight preference to non. rishaad: a huge fall for them in recent days. thank you so much for all that. bloomberg users can interact with the chart we have been using. just go to g tv . you can look at the charts and look at the keynotes as we support future reference, as
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well. this is bloomberg. ♪
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haidi: let's check on the list is as flash headlines. they made a bid to acquire an $5.25tment fund, offering cash for the last traded price. i was directors say they recommend holders to accept the offer because it offers significant value and certainty. shares were up 1.8% compared to the .5% to climb for the broader. qualcomm is reported to be meeting regulators in china this week in a bid to win clearance for its $44 billion pursuit of xp. reuters says qualcomm will talk to beijing before the u.s. congress secretary wilbur ross arrives next week. qualcomm says it is cautiously
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optimistic they will gain approval. we are counting down to the open of markets in hong kong. rish taking a look at how it is acting up. rishaad: we are shaping up here in hong kong with the pre-auction period showing a gain of .5%, futures also rising .3%. looking at some of these energy this reformcause of taking place in china. gas, gateurces, prices, how much gas is sold for in the various cities of china, we are looking at how they are going to be unified, as it were. that could be the main beneficiary. it could be around 50% thereabouts. -- 15% thereabouts. not so much as their margins get squeezed.
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sinopec and china resources they're not seen as a winner. 1.2%. the downside. there may have it. discussing that. the open is next. ♪
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on a hots victory peak hong kong. despite a declining dollar, the after the me back decided he would not acede to the populist. result, we have no government in italy, providing
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relief for some of those affects. traders are looking at in europe. oil massive pummelling taking place. down about 7%. saying they sadly could be seeing an increase in production in the latter part of the year. oil $75 a barrel. or off?ummit on we don't know yet. looking like it could be on for singapore. china energy stocks looking for the trading to be affected by holiday. in the u.s., of course, memorial day. at the openg a look markets, the china economics team sees rising a tory profits, to be only temporary relief when it comes to corporate ability to repay debt. let's check out hong kong. stocks resuming gains, with tech financials leading the
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advance. i also want to highlight samsonite. they have been suspended from trading this morning. check on chinese gas players. we do have petrochina gaining three at .5%. is as the government raises prices. like petrochina stand big.ceive those stocks are sliding this morning. a look that gele could raise his information in the second half of the year. geely product pricing will not affected by china's tariff cuts on imported cars. geely is wider view, stock up over 85% over the past heidi. haidi: thank you for that. let's get you caught up to date. allen in sydney. >> president trump seems to have confirmed the historic summit is back on g-un tweeting that the u.s. team is
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n north korea to make arrangements. his comments came after kim met south korea leader for the econd time in a movement they held talks on the north korean sign of the demarcation line at panmunjom and to push ahead with commitments. rubio says a potential bill to ban zte and other chinese u.s. m companies from the would have widespread support in congress. e says most lawmakers understand the threat posed by china and its growing commitment to do something about it. rubio was responding to president trump's proposal to let zte remain in business after a $1.3 billion fine. says japan must be patient over a territorial dispute dating back to world war ii. speaking after meet the prime minister, the president said a solution to the islands or the northern territories, as january calls them, would go on. troops have seized the islands at theened of the war
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and the dispute has kept russia japan from signing a formal peace receipty. >> do you believe it's important to be patient in looking for a solution that would meet the strategic interests of both japan. and it must also be one expected by people of our two countries. rishaad: qatar is banning products from the four countries add diplomatic blockade just days before the first anniversary of the stand-off. ministry is restricting the import or sale of goods from saudi arabia, the uae, egypt and bahrain ahead of june 5. atar has managed to absorb the shock of the embargo and its expanded last year faster than its neighbors. more than ered by 2,700 journalists and analysts, i'm paul allen, this is bloomberg. time onlyor the third
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ince 2016, on track for a monthly pain that outpaces -- can find this online library. perennial-like. we saw that rebound in may tarting out at a time when emerging markets all over the world have been selling off. on this, more investment management chairperson, she's with me now. here? going on >> in hong kong? or the world? what we just talked about. the stocks are doing well at a markets have ging been under pressure. the market is digesting so many news. noises around ch so we have to t find our top down solution. we're now in hong kong, right?
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rishaad: correct. so i'm focusing on the growth concept at this moment. defensive growth. heard of this from me in the past, in many years. rishaad: no. why haven't i? is very why this year complicated. history of e in the tighteningyou have a environment. saw flows still very much a concern and controlled. we saw -- coming to hong kong to s.ek ipo we saw hong kong dollar still a fluctuate. and we saw -- dollar the hong kong itself with regard to the peg. >> exactly. to his is something we have be very selective, extremely
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selective, i should say. why i go for defensive growth. cycle, thee economic late cycle of an economic long so if you cover three years as cycles, and this three-year year of a cycle, so we have to go for defensive growth. defensive growth. >> okay. that's a very good question. rishaad: the obvious one, isn't it? >> i love house care so much. had a years, i dedicated to d china. there are three to 500 companies. the they are doing extremely well. autos --we switch out [inaudible] we were doing so well last year, we stay and are waiting healthcare. choice.y number one
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number two, i love banks. we were talking about this, i had -- usual banks.the you didn't like the big four particularly, did you? i said, i picked up one big one and one smaller one. bigger one did extremely well this year. china post bank. inperformed all of the banks china. we can talk about that. a small bank. china merchants also doing well. so i pick up one big one and one one and this year, banks ontinue to improve year over year, and the post bank has the i t solid balance sheet, guess. so i like that. it's still okay is pretty times pb good. it's already outperforming.
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why shouldn't i take a profit? this is a second area, once we talk about the defensive growth, third area, i thought about i thought a lot those giant names, which haven't really performed yet. think my so far, i top pick in tnt, still a giant area. we have to be there. rishaad: 72 hk. >> love it. it's also outperformed the rest based on what? pretty dynamic one. nd also, they have a big pipeline getting more contracts. one in particular i love, it's a 4-g outcome. overall, we have to pick up a one.sive
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all of one, so combine this, china unicom, the second quarter results should be really impressive. pick.s my top so we have healthcare. mention - i happen to that recently i found a very dynamic one. normally i don't talk about there nd medium ones but is a raising star. i love it. made a lot of money on the biotech companies across the those arkets, especially ones from the u.s. radio rye want to bring in haidi. she's chomping at the bit. curious how much the policy themes coming from investment rm your themes. i'm thinking a few days ago we had a report suggesting that basically open up,
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abandon all of its birth rate control policies, so you can kids as you want. we saw a jump in the usual milk children's education and stuff like that. does that kind of inform some of our picks in terms of what beijing does from day-to-day in changing their policy? exactly. policy driven issues has whenalways on our top mind it comes to china. everybody has been following china. she also mentioned about the those are to improve changing the consumer, and i'll follow up n this question about consumer staples.d consumer
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he chinese milk products, is the largest, but i saw it's momentum and s of it's not a defensive growth w. that.had but however, talk about consumer staples. to invest in -- [indistinguishable] >> how do i say it, momentum -- in my also had portfolio. it's performed also extremely well this year, after three consolidations. control, and also, followtion -- we have to
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pmi number, especially cycle has been paramount on our mind. mentioned -- as one of your themes but how do you invest alongside builten? focus on -- alternative energies. anything china can support, neighbors, in terms of the big issues. we can pick up quite a few ones but you follow tmt, they have many around the neighborhood. at this stage,ve i don't believe -- from the that so they follow closely in the stock market in yet, but raded shares
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more or less, in the country led mports, in airports, you know, highways, those are the ones hat i have to say compare, i just mentioned other sectors, big g to show very defensive growth nature yet. lots more to talk about, atlantis investment manager chairperson and fund manager. we'll get a few more of her but we just a moment want to talk about ipos. the nternet looking to be hoggest and biggest share offerings this year so far. this is bloomberg. far. this is bloomberg.
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haidi: this is bloomberg markets asia. i'm haidi in sydney. rishaad: we're looking at hina's biggest ipo in 2015 winning the backing of some of he country's to come item
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companies. into this -- of the country's top tech companies. who is buying into this foxconn share, tom? tom: -- are all buying into this strategic investors, 21.8 a piece roughly 13 to 14 a share and he company is the main assembler for ample, it's called foxconn industrial internet. they want to get a slice of the action. to raise $4.3 billion, hat they will plow into 5-g wireless. it highlights not just the nterest but also the clout of these companies. in particular when it comes to
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tech space ross the here in china. haidi: we're getting closer to hat could be the world's largest ipo since 2014. know so far?do we >> yeah, countdown is firmly on now. so what we're hearing is they try and get approval from the hong kong exchange on june 7. they then hope to start pricing ipo at the end of june and we may get the final listing in july. they are hoping to raise about 10 billion u.s. dollars in hong kong. that would value, they are looking at a valuation of $70 billion u.s. dollars. you touched on with your guest, ipos in hong kong have sometimes been disappointing. them coming through. some of those that have down from their initial tradeings. going to see if they can meet the expectations, a lot of
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excitement around this. largest ipo he since 2014. haidi: tom in beijing for us. get back with the investment manager chairperson fund manager to get our views, as tom just entioned, we've had an apache ride. you see liquidity getting sucked up and this inevitable coming once the shares actually start trading. is this the kind of reception that you would expect for like the foxconn, really murky upyears? >> i guess. they are in a hurry to come to the market. i have this kind of feeling on the -- all over the world. especially happening in china.
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had a very good quarter in terms of ipos, and had very big rally and a correction, just in a few months time. right after the ipo. are smarternvestors and that's why we have so many ipos that come in. we want to participate but we're participate.y to into, show me -- usic at this very moment especially in terms of concept stocks. like those ones. there are smaller ones coming. a participate, last month had very good performance. -- the ipos in china can not ry successful, but i'm so sure those companies coming
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have the same n expectations. right. what about alley -- is that something you're waiting to come market? >> yeah, many talks about that. on the valuations, nd my team, we're more or less looking into -- this is another momentum movement. china has first time -- adrs -- so we're looking at -- comead: obviously they are on to the market, does that suck out the liquidity which might be s normally, in o your view? >> too many supplies. that's the deal, isn't knit let me just bring this shot up. from what we've seen, this is hong kong iposes in recent
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times. let's have a look, it was moving to the upside. november, bang, it went up. hey were a hundred percent plus, wasn't it? insurance, this is not done well at all. making a mess of these pronunciations. they the initial euphoria, petered out. >> yes. >> and this is the problem isn't it? last year's last year, last quarter -- ishaad: it's carrying on into this year. >> of course. it's a cross border correction. year, they were rushed, pushed into the market. brokers, they targeted the market, the timing so well, quarter,last year, last you know that, the stock
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flows ed so much capital from china into hong kong to out those names. that's why three or five of the hina names, they timely targeted the marketing in hong kong. well.xtremely at one stage, then only, you know, momentum timing. then all come down. you know why? because they were expensive. rishaad: yeah. >> if i look at them now, after months, you come down, you know, you reveal business, you see, who will be the winner, so same thing this year. if the market in hong kong is to ipos, to be honest, if i have an investment coming to hong kong in june called recredit. rishaad: recredit? >> recredit.
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measured this because i don't do many pe investments. i'm secondary market. just a small family trust investment. they come into hong kong, so i'm asking them the same question, why do you come in june or july ipos are coming at the same time. exactly. by their towed advisers, their market -- sorry, lease.roker houses this is a good market now. why? because, in the first quarter, so far, the market is still in consolidation phase. consolidation mood, right? because the tightening, because and because sion, everybodys big rally, now, become more calmed down, to
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defensive growth. rishaad: i've just got to leave things, we're completely out of so much, always a pleasure. investment manager. chairperson of that company. you can catch that interview and look at some e a of the functions we talk about and also if you want to take part in the conversation, just us or shall i say instant message us during our programming. check it out at tv go. this is bloomberg. k it out at t. this is bloomberg.
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haidi: a quick check on the latest business flash headlines for you. a national australian bank says it will ensure no customer uffers losses after saturday's nationwide system outage. a.t.m.sch left banking, and retail -- out of service for six hours. permanent data was
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compromised. it's asking customers to contact impact on out the their businesses. office force was weak. opening in some 55 territories $148 million ning in turtle. over $83 taken in north america and the shy of forecast worst opening of the four films releasedar thus far. where we are economically.
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rishaad: markets in the asia-pacific where drifting at the start of this new week -- were drifting at the start of this new week. biggest drop in almost a year >> we have this -- in almost a year. we have this on-again, off-again summit >> the fed chief making a declaration of independence. jay powell saying central banks are under growing clinical pressure. in hong kong, i'm rishaad salamat. haidi: in sydney, i'm haidi lun. coming up, and new signs of strength from china. the streak dating back to october. "bloomberg markets:
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asia." on egg and, off-again, the emotional roller coaster continues -- on-again, off-again, the emotional roller coaster continues. you just have to look at the headlines. we are still talking about this potential meeting in singapore that has been slated for june 12. trump pulled out last week, then we are getting moves to suggest it is back on. this latest lineup saying president moon may join kim and three-way summit. we know the americans are in north korea making way for the summit. there was a surprise summit between the two korean leaders. it does seem like we might get there.
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rishaad: donald trump suggesting we would do. we also have the euro very much in focus. italian political shenanigans as well. the president and the country rejecting a candidate for the finance ministry, skeptical of the single currency, being fairly rude about the germans in the process. let's get to one of the more interesting markets at the moment. they are all interesting, but this one, indonesia, jakarta. haidi: we have interest gathering around jakarta. we have the jci adding about 0.2%. this is for in outflows. they have started to turn positive for the benchmark. check out the indonesian rupiah, edging toward the 14,000 handle. this is perhaps setting the stage for a second roof -- rate hike with an unscheduled policy meeting this week. this is taking the proverbial bull by the horns.
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unlike what we saw by turkey's central-bank, the delayed action there. the eurosceptic finance minister -- appointee being dismissed by the president. we want to highlight what's going on with japanese shares. 0.2%e seeing them swing by as the yen is trading steadily around the 1.09 handle. investors not wanting to take big positions before key u.s. data. the oil scene, very much in focus. asian energy stocks leading the drive across the region. brent below $76. barrel. below $66 per a quick look at what's going on with korean assets given this will they or won't they around the june 12 summit. the korean won is rising amid optimism that may take place, just off session highs. gains in oil. softer treasury yields for the
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won there. kospi up about 0.6%. they are leading regional gains. check out the jump in hyundai engineering, jumping to a 20 -month high. defense stocks -- korean defense stocks sliding. off about 0.6%. japanese refiners are under pressure this morning as the -- japan decides if it will cut oil imports by early august. falling as holdings the government raises the amount they pay to buy gas. quite a few themes today. haidi: quite a few themes, indeed. volumes are still looking pretty light, given we have holidays in the u.s. and u.k. as well.
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let's get to "first word news" with paul allen. trump seems to have confirmed the historic summit with kim jong-un is back on, tweeting that the u.s. team is in north korea to make arrangements. those comments came after kim met south korean leader moon jae-in for the second time in a month. they held talks on the north side of the demarcation line. trump: a lot of people are working on it. it's moving along very nicely, so we are looking at june 12 in singapore. that hasn't changed. and it's moving along pretty well, so we will see what happens. paul: one-time presidential candidate ron -- marco rubio bans chinesehat telecom companies from the u.s. would have widespread support in congress. he says most lawmakers understand the threat those by china and there is a growing
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commitment to do something about it. rubio was responding to president trump's proposal to let zte remain in business after paying a fine. china's island province tynan -- steps -- it ing wants lengthy residency, is banning the flipping of property, and is demanding down payments as much as 70%. the restrictions were announced as part of the plans to boost the island's economy. international airlines are being given more time to adjust references to taiwan, which china insists is part of the mainland. thatnd lufthansa are two have made changes to their websites. others have applied for extensions, including continental. china says all 44 carriers asked to modify their references to taiwan will do so. global news, 24 hours a day, on air and @tictoc on twitter.
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i'm paul allen. this is bloomberg. haidi: thanks. oil continues to struggle in asia this morning after plunging on friday the most in about a year. this after opec and russia saying the market rebalanced that in april -- back in april. let's get more on this. mark, you add oil rigs in the u.s. going up. it does look like these oil bulls were hoping for $100 barrel for oil are seeing some pain at the moment. re: past -- are we past peak oil? mark: there is speculation that the opec meeting with say they will increase applies after a long period of having contained supplies, so that is a negative factor. apparently president putin sees oil prices at $60 per barrel, which is still where -- below
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where the market is seeing it at the moment. he is probably talking about brent, which is higher than wti. wti would probably go back to the $50. as we look closer to this opec meeting, people are seeing the chance that this good group of people which have been containing oil prices for some time is going to break apart and there will be a free-for-all, then oil prices will be back at the mercy of the market. that's particularly why we are seeing the big decline today. rishaad: let's talk about italy. euro on the way up. italy may have had a government, but it says it doesn't have a government because the finance minister who was being proposed was too fragrant for the president. mark: there seems to be a bit of relief today, the fact that italy -- the president of italy did not allow the finance minister to go ahead. he is a big eurosceptic. the president says it would have been a way of sneaking italy out
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of the euro in the long-term basis.l that's the pushback from the president, using his powers to stop forming a government. toasked ask the technocrats get together and form a temporary government. it makes the chance of another election pretty high. it might not happen for a few weeks, maybe a couple of months. -- five-star and the league the public will not be happy that the president is pushing back on their choice. the medium-term picture is not that good for what happens in italy. that will weigh on the euro. there is some really today, but by no means is italy off the radar in terms of being of potential concern for people who invest in the eurozone. rishaad: mark, thanks for that. mark cranfield. you can look at the day's trading on that live blog. you can get the market roundup in one click. also, commentary from bloomberg's expert editors, such
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as mark, having a look at what's affecting your money right now. haidi: let's go ahead. off-again, on-again -- confusing investors. let's try to navigate our way through where things stand now. rishaad: next, though, slave to the yield. emerging-market currencies are seemingly at the mercy of u.s. rates, as this chart shows. chains can be broken. andrew tilton is from goldman sachs. this is bloomberg. ♪
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policy,rms of monetary it's always better for all political leaders to let the central bank governors do the job they have to do and to preserve and secure their independence. i think some of the comments
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made alerted the international community, particularly the investors, to the fact that the central bank of turkey could be under directions, instructions, influence. i think that has created a sense of uncertainty, lack of confidence, which has found its way in the markets. is clearly a challenging moment for central banking. opinion polls show the trust in government and public institutions is at historic lows. in this environment, central banks cannot take our measure of independence for granted. say, and i think everyone on this panel and in this room would agree that the past, present, and future of central banking comes down to maintaining public confidence in money. from globaliews policymakers on central bank independence. those comments inspired by the turkish president's attempts to metal when it comes -- to
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meddle when it comes to currency. they are trying to save the lira. they were not terribly successful, other than in the very short term. rishaad: very short-term, indeed. marketspart, emerging seem to be showing a bit of risk off. let me have a look at the 10-year, have a look at where we are with that yield. it could all change if we get a very strong payrolls report. 2.93% on the 10 year at the moment. there is speculation, of course, if we do get a strong jobs report that the fed will rate hike. this shows that currencies had their biggest gains in march. the 10-year yield slipped back below 3%, also suggesting some of those em currencies -- have a look at that chart. gtv is the way to get to it
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on the bloomberg terminal. joining us is andrew tilton. what happens in d.c. with the fed affects what happens in this part of the world, but not everybody is affected the same way. andrew: indeed. it's been a tough time for emerging markets with higher interest rates and a stronger dollar over the last few months. i think we will see a little bit of relief over the rest of the year, simply because the pace of rate increases we expect going forward is likely to be more gradual. we had about a 60-70-basis point -- 60 basis point, 70 basis point yield. rishaad: who is affected more, and why? andrew: we particularly worry about economies with large current account deficits that rely on foreign capital. obviously, argentina and turkey have been a couple of examples of that. they are running current account deficits in the 5% of gdp range, and that's one of the reasons why they have been so much in focus the past few weeks. rishaad: let's look at some of
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the other ones. let's look at indonesia. it has really been out of the headlines market wise. we've seen the bank raising rates quite dramatically. that could happen again in the short-term. again, this is that current account deficit, is it not? andrew: indonesia is probably the best example in asia of the current -- country running a current account deficit and has seen capital outflow pressure from the higher u.s. yields. you've seen a new central bank governor come in last week. he has made comments quite recently about being proactive with regard to using interest rates as a tool to stabilize the currency, so, yes, i would agree the risk of seeing another interest rate hike pretty soon is fairly high. haidi: are there particular -- i'm thinking of a temper tantrum in the rrr currencies. are there those being unfairly punished by a not be strong u.s. dollar -- by an oddly strong
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u.s. dollar environment? the fundamentals are looking a lot better than when this happened the last time. andrew: i do think a lot of asia is in better shape to weather the storm. we've seen a lot of pressure on emerging-market economies and currencies in general over the past few weeks, but most of emerging asia is running either deficit,urrent account in the case of india, indonesia, philippines, or a significant current account surplus. we don't see near-term fiscal inflation issues as being big problems in most of the region, so we do think asia is slightly better positioned than other regions in that respect. we've seen inloff oil the last couple of days, very different outcome for the likes of india or malaysia, right? andrew: yes. oil really cuts quite differently across e.m. you have a lot of emerging markets where there are significant -- they are
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significant commodity and oil producers. caveat in malaysia is that the new government has talked about resuming oil -- domestic oil price subsidies, so that could be a factor mitigating the benefit of higher oil prices to the economy. but elsewhere in asia, you generally have a lot of oil importers. higher oil prices over the past couple of months have been very unhelpful for asia. the very recent relief we've seen is certainly welcome for a lot of the region. rishaad: andrew, we will talk about china next. who is best positioned in your view at the moment to weather any storms coming up ahead? andrew: if we continue to see higher interest rates, you would certainly expect see the current account surplus countries, korea, taiwan, thailand, so forth -- these economies generally tend to outperform in an environment where rates are moving higher.
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but these economies also are very sensitive to the global growth cycle, and we have started to see some signs that global growth, developed market growth particularly, trade growth is decelerating. to the extent that happens, we would expect to see economies like taiwan and korea underperform. i think you've got a combination of the rate factor and the growth factor. higher rates would -- with still good growth would benefit the small economies. we think we will see pretty reasonable growth, but a gradual easing in the rate cycle. i think that should benefit a lot of the region. if we see a more significant relief on the rate side, the places i would expect to benefit the most are india, indonesia, philippines, which are all running current account deficit. rishaad: we will discuss china next. andrew tilton, chief asian economist -- chief asia economist. that.o>, have a look at
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in on chineseheck market trading. in shanghai, we are seeing a mixed session across the board. 0.2%, despiteout industrial profit growth accelerating last month, snapping a slowing streak that ran all the way back to october. profits jumping almost 22% in april from a year earlier thanks the pickup across steel and auto sector. take a look at this chart on bloomberg at gtv . you can take a look at it in our library.
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china's growth momentum has held largely steady, despite the government's deleveraging campaign. let's get back to our guest, andrew tilton, chief asia economist. weigh in on china, so far so good, right? there were a lot of naysayers when they began this down -- deleveraging campaign, saying it would create instability and an embeddable -- an inevitable slowdown. have they done a good job so far? andrew: i think policymakers have been doing an excellent job of targeting the riskiest parts of the financial system and the broader economy. they have focused on controlling shadow banking activity, dealing with some of the indebted companies in the upstream manufacturing sector through so-called supply-side reform, containing the capital outflow pressures that they faced in 2015 and 2016. i think, really, in an environment where there are a lot of potential warning signs a few years ago, they have focused on those and tried to limit the risk while avoiding a big
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deceleration in the overall economy. of course, they have been helped by a good global growth environment, but they have certainly made some good decisions in terms of where to tighten as well. haidi: the long-standing narrative from beijing is that we are seeing an economic rebalancing away from the smokestack industries into retail sales, domestic consumption, technology, but you look at the gains for natural profits. the strength we are seeing is still very much these older industries. andrew: i think you have had good global growth and a reasonably strong export sector in china over the past year, so that has flowed through in part into some of those older economy industries. on top of that, selected restrictions in supply have helped to boost prices and margins. that's helped to bring back confidence that those firms can service their debt and, in turn, that the banking sector is not sitting on quite as large a stack of nonperforming loans as
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thought a couple years ago. , it dovetailsw into nominal gdp growth, looking pretty strong if we believe these numbers, and it seems like the numbers are not entirely believable. we could be getting 7% plus growth this year. andrew: we are expecting just under 7% real growth, but nominal growth, even better, potentially double digits, which is a significant turnaround from a few years ago, several percentage point acceleration. part of that is due to real growth doing better. part of that is due to prices moving higher, as i mentioned earlier. i would note that we and many others construct a lot of our own proprietary indicators for china. rishaad: imagery, etc. the more they do, it kind of always mirrors the visual numbers. andrew: we see a similar growth pace that was not the case a couple years ago, but certainly is now. rishaad: i want to change gears
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and ask about trade wars and trade tensions and how they fit into your own thinking. how worried were you about a trade war, and how are you now? andrew: i would say quite worried over the longer-term. fundamentally, we're going from two economies that were complementry in terms of the things they produced, the nature of economic relationship, to one in the future where chinese policymakers want to see more technological development, upgrading in manufacturing capacity, more development of service sector industries that could potentially pose more international competition for u.s. firms. that relationship could go from being complementary to more competitive. the potential for that kind of friction is there. we saw with japan, u.s.-japan trade frictions lasted well over a decade. having said all that, in the short-term, we are less worried. we think that some of the short-term tensions can be resolved potentially with chinese agreements as had been
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hinted to buy more u.s. exports and so forth. we are optimistic about this year, but broadly these tensions are going to continue. haidi: tariffs aside, it feels like the tech issue, maybe if you want to look at it as an attempt to curtail china's ambitions, that will be longer term. do you see a solution to that? andrew: well, i think there is a difference between curtailing technological ambitions and protecting intellectual property. certainly, the latter is easier to talk about and justify and focus on and is understandable both for business and government. i would expect to see more efforts in that regard. we know that the u.s. government has been considering investment restrictions on chinese investment in the u.s., but, ultimately, we have not seen anything public on that. it is likely something to be included shortly in their policies. haidi: andrew, pleasure having
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you on with us. andrew tilton, chief asia economist for goldman sachs. one of the greatest beneficiaries of this flow of e.m. is japan. ♪
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>> i'm paul allen with the first word headlines. independent allies have concluded that the oil market achieved its rebalancing target last month, as restrictions hit their goal of eliminating the global glut. sources say the inventory excess plunged in april to less than the five year average for stockpiles. the cartel, russia, and other producers meet indiana next month. banning products from the countries that imposed a diplomatic blockade days before the first anniversary of a standoff. the economic ministry is restricting the import or sale of goods from saudi arabia, the uae, and bahrain ahead of june 5. qatar has managed to absorb the
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shock of the embargo and expanded last year. president putin says japan must read patient over a territorial dispute dating back to world war ii. speaking with prime minister shinzo abe, he said to search for a solution to the territories would go on. soviet troops seized the island at the end of the war in the dispute has kept russia and japan from signing a formal peace treaty. >> we believe it is important to be patient in looking for a solution that would meet the strategic interests of russia and japan, but it must also be respected by the people of our two countries. >> international airlines are being given more time to adjust references to taiwan, which china insists is part of the mainland. air france and lufthansa have made changes to their website, while those who have applied for an extension include united continental and ana. modifys are asked to
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their references. global news, 24 hours a day, powered by over 2700 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. is coming through from the unification ministry, talking about this trilateral meeting involving the south korean president getting involved with the north korean and u.s. summit, which we still don't know if it's on or off. it will depend on the results. in the mix,ix, euro all of this playing out. japan just closed out for the lunchtime break. >> we have a mixed bag when it comes to asian equity markets, but going on for you just said around the summit that could be held around the korean peninsula, it is up today, .8%,
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stocks jumping the most in the region and helping the benchmark snap a two-day drop. when you look at what's dragging indices, it's energy shares lagging, given the drop in oil prices. the enemies stocks have fallen to the lowest level in over five months. indonesian shares are eyeing a fifth day of games, the rupiah is edging toward 14,000 on expectations that the central bank governor could trigger a second rate hike. they are pledging to improve the fiscal monetary mix, 10 year yield sliding 22 basis points, retreating further from the peak of 7.6%. as we mentioned, oil prices have been deepening. crude earlier slipped below $66 per barrel, brent off by 2%.
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>> sophie, thank you. bft is reporting that washington is pressing china to end a multiyear product to buy agricultural and energy exports, aimed at reducing the trade deficit. it comes as alaska says it is moving ahead with a $43 billion project to deliver lng to china. tom mackenzie spoke exclusively to the president of the gas line project, and joins us from beijing. why is the u.s. pushing for these longer-term contracts? >> well, according to the reporting from the "financial times," this will be on the step-by-step basis. for example, around agricultural products and energy, they want to secure these long-term commitment from china, to insulate them from future political tension. that's according to these reports. we know that though commerce secretary will be in china in
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potentialnd we have details from china around aroundons in tariffs, food and health care products. those are the next chapters. but as you say, one of the areas where they may want to lock down a long-term deal, they have a memorandum of understanding, this $43 billion lng pipeline. it would be the largest energy exporting project in the u.s. it was signed in november, when president trump was meeting with president xi, trying to hammer out the details. the governor of alaska is here, and the president of the alaskan gas line development project. it involves big chinese players agreement,c with an 75% of output. we asked them how this project was progressing and if they were succeeding. take a listen to the president,
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who spoke to us over the weekend. >> i call this year a year of paperwork. we are doing the commercial agreements, banking agreements, construction contracts, that type of thing. a lot of paperwork this year. it all comes together at the front part of 2019, where in the midst of the regulatory process is wound. then we pull it all together for a final investment is vision, either late in 2019 or probably early 2020 for the construction. >> and are you in the process of signing any other large purchase agreements? >> asia is the growth engine for the lng industry. we're actively working within the region for the other 25% of capacity, and so we're in active discussions. >> where are you in terms of financing for the project? bank of china, cic, are they still on track? >> yeah.
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we've engaged the bank of china and goldman sachs together to be a team working on the financing for the project. in terms of equity investors, we are starting to package our equity book. it will probably go out later this year, to talk to potential equity investors. >> what is the sense that you get in terms of the impact that these trade tensions between the u.s. and china are having on the broader trade relationship and what it may mean for lng from alaska? >> i think the trade issues, to me, aren't issues. i can't say we don't feel them, because it ripples occasionally, but the underlying demand is there for lng. both the u.s. and china have sort of recognized that lng is one of the things that the u.s. can sell and that china needs. agricultural products are another.
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i think the message from china is, hey, we want to buy more stuff, but we need to buy the stuff we need. from a trade standpoint, lng is pretty well-positioned to be one of those foundational building blocks. >> and you're not overly concerned that hte alaska lng project could become a victim of the trade dispute? >> no, i matter of fact, quite the contrary. this project could be -- not easy, but relatively easy foundational blocks that could be put in place. there's a lot of confidence and a lot of belief that lng is going to be a great trade tool that will help balance the trade. >> are you hearing anything -- are you getting a sense of all that china will be ramping up its purchases of oil and gas from the u.s. as a result of these trade negotiations and investing in energy assets in
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the u.s.? >> i very much see the demand in china, part of the demand being shifted to the united states to satisfy with lng. lng and oil, as well. talkspart of the trade mentioned bilateral investment. i'd expect to see some of that being encouraged to have the chinese companies invest upstream, u.s. companies invest downstream. i see that growing relationship, and let's call it a trade bond, growing trade bond, between the countries. i'm not -- i think they have been making noises about the direction of travel. what is actually being said? forum that took
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place in papua new guinea. we heard someone who spelled out in stark terms, saying that the nations in the meeting were hoping to move forward, but they were very, very concerned about this trade dispute between beijing and washington, saying it was the elephant in the room, travelthe direction of -- that was a key concern. it's worth noting that bloomberg economics has been crunching the numbers, and they say there is a trade war, and you see exports from china falling by 10%. that would result in a reduction of gdp. china, if youan are looking for the optimism, it was interesting, we spoke to the governor of alaska who set them with the vice premier to talk about trade relationships, and his sense was that chinese officials are determined to move
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things forward constructively on these agreements, and potentially that is a sign of optimism. we are looking ahead to wilbur ross and his visit to beijing to hammer out these details. june 2-4 is the day of that visit. >> tom, thank you very much. tom mackenzie in beijing. about up, questions singapore's summit. will it happen? or is it just something which has been kicked around like a football? we will be joined by professor robert kelly, next. this is bloomberg. ♪
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♪ >> we are back. this is "bloomberg markets." i'm rishaad salamat. >> i'm haidi lun. it was on and it is off in now it appears it could be happening
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after all, three days after president trump canceled the meeting in a sharply worded letter to kim jong-un. he says they are talking and preparing for june 12. we are hearing news of officials in north korea. there was a surprise leadership summit over the weekend. let's bring in the associate professor -- great to have you on again. is this a clever game from president trump, or i suspect, you will say this is diplomacy being made up as he goes along? >> yeah, i don't buy the whole three-dimensional chess argument. it looks thrown together, to be perfectly honest. come paook at the way and bolton are sparring, it looks a lot like bolton sabotaged the secretary, by insisting on the libya model,
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and north koreans don't like that model, it ended badly for gaddafi. that suggests infighting in the white house and the president leaves a lot more leadership on this. state would be very nice if you could give a major speech and says here's what we think we could live with, here's what we want, and here's what we are willing to give up. we need to start thinking about what kind of deal would be acceptable. was that what he meant when he spoke about the model? threat,was the implicit and that is one of the reasons the north koreans see it so harshly. and that is of course what happened to libya. live yet gave up everything and they didn't get much back. and then of course came in arab we basically stabbed
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the guy in the back. then he met a pretty grisly and. me that when people are throwing it out, it sounds like are telling uss why they want nuclear weapons. so when people started suggesting that i could hear the difference. , it is thean model move for gaddafi to get rid of his nuclear weapons. you could just restricted to that. what are the red lines for north korea going into the summit, in your view, and the united states? >> for the north koreans, it has to be an unwillingness to go to zero completely, what the americans are calling verifiable, irreversible
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denuclearization. they will almost certainly not do that. the concessions they would demand would be so outrageous that we would never assent. they see them as ultimate regime security, the security of the kim family. north korea has written nuclear weapons it to their constitution, in speeches. my own sense is red lines for the america would be the end of the american alliance of south -- we which is something probably will give them something like sanctions, some withdrawal of u.s. forces on the ground. but this is why you want these things to take place at the staff level, to hash out these compromises and back and forth. view, how will the dust settle, if we are talking a
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month's time? >> i just don't think a month is enough time. if you had a summit within the next month, it would be nice, you wouldhave dinner probably get what you had in the two koreas which was a nice declaration, in part because the issues are so complicated. that is the argument for having the staff work come first. >> the meeting of the two koreas over the weekend without the u.s., was that some sort of signal of alliance? where does that leave the united states? >> i'm trying not to get too excited about it. there's been a lot in the last couple days. it's not a good sign. i think the north and south koreans are saying, the
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americans will bounce all over the place, one day on, one day off, than the south koreans will continue to push forward. i don't think a lot of people in south korea want decoupling. i think a lot of people in south korea -- i think the government is skeptical, but not a lot of people want the americans out. they are trying to focus on the americans to play more consistently. we need consistent signals from the white house on what is going on, and if the trump administration can make up its mind, they will try to make it on their own. >> robert, the number of outcomes you can get from this, it feels like a choose your own adventure book. what do you think is most likely to happen? >> that's a great question. i have a feeling that there might be a summit after all, but it will be a stalemate or a bust. it is 50-50 now on a stalemate. -- the americans
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are high up. if there's a possibility of a breakthrough things have gotten better. a lot of this depends on the president's character. you need to decide he wants do this and commit to it. because the north koreans want it and the south koreans want it to. it is ego rather than national security. >> we wouldn't be here if it wasn't for beijing. >> the chinese have been a sound partner and i reject the idea that the chinese are responsible for what happened. they are desperate to change the and i think the chinese very will much want the americans and north koreans to
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talk. they are worried about proliferation and nuclear safety, we know they don't want the americans for global war. they would very much like to see them sit down which is why you have heard so little from them, a lot of this has been driven by the trump administration and the chinese i think are broadly behind it and would like to see it happen. >> always a pleasure. thank you. robert kelly. let's get the business flash headlines. china's biggest tech names buying in what promises to be the mainland's biggest ipo. alibaba and tencent investing, foxconn. they are buying some listings, 21.8 million
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shares ahead of the upcoming shanghai listing. list in hongset to kong, and it could raise about $10 billion usd. if the application is given the green light. but we are told that they could flip depending on the volume of information in the market by the hong kong exchange. they could value xiaomi at up to $70 billion. model,w private plane and a growing demand for luxury business. they have a range of 6000 nautical miles from hong kong to london without stopping. >> we are getting lines coming through from the indonesian
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minister for economic affairs, talking about the emergency meeting being held between the administration and central-bank later on this week, saying that it is not an emergency meeting, the one being held on may 30. they are holding the meeting to identify measures to maintain the economy, change the negative trade environment, and to look to improving competitiveness and the investment climate. and we have been talking a lot about coming down on indonesian assets. it will be worse hit by this rout in asia. plenty more to come. this is bloomberg. ♪
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♪ putting the best chart figures against one another. you may well laugh. you can access their charts on the bloomberg, with the function of the bottom of your screen. let's start with haslinda. >> i want to take a look at the dollar. we have been talking about the strong dollar and short coverage and that could be easing. and lookok at my chart
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at how speculators continue to cut harish positions on the dollar, and that has been happening for the last five continuous weeks. commission, ite may have dropped the lowest since january. you can see that it is the lowest and that pretty much shows that you may not want to do that and you want to time your trip to new york's ready. maybe later on there will be a better idea. >> ok. heidi? away from south korea-north korea, given all the uncertainty is. it's a roller coaster emotionally but also economically and there are real implications for the financial
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market. swap rose onfault this news that the southern has , saying that north koreans have behaved in an inappropriate way. over the last couple days the bore positive development, the meeting between north and south, now the president saying that it could happen and it has jumped up again. that is the cost of insuring depending onefault the fate of what happens. it.aidi gets we have to leave things there. ♪
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♪ it's monday >> again. i'm haslinda amin. >> i'm david ingles. we are entering the last hour of the morning session. welcome to "bloomberg markets: asia." ♪ >> it don't mean a thing if it ain't got that swing. the market struggles for the direction, but vietnam has entered a bear market. stocks are tumbling as oil extends its biggest decline in about a year.
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falling below $75. >> for some it seems to be on again, president trump says the sides are talking and making arrangements. and bank indonesia's new governor stands with a already, calling an emergency meeting. up as we movee into a frustrating week. ang story short, equities are and we will talk about vietnam in just a minute. , 14dollar is paring back out of the last 17 weeks have been up in central yields are pushing lower. we will talk more about that in just a moment, the peak was in april, one of the best-performing markets in asia so far this year. there's the index for you, we
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are now down 23% from where we and then we will officially enter a bear market. europe,looks ahead to last year we were talking about italy and then spain is in the mix. have a look at the spreads pay the demand into bones widening the spread of treasuries. closely on your jake peavy alive read, we are seeing a lot of haven demand going into the year. the energy market is in focus after saudi arabia said that easing could happen. of course, remember we heard from alexander novak last week, saying the same thing.
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opec is now also saying that a rebalancing will probably happen in april and is likely to remain oil is easingenna up as we talk, gold is struggling to keep gains for the that is impacting the movement of gold and you talk about the rising dollar, emerging markets as a whole. indonesia, key to that, the indonesian rupiah slumping 6% from the end of january. we have the 10 year treasury bonds,in indonesian rising more than 100 basis thets and that has prompted central bank governor to call for an unscheduled meeting on wednesday. we have seen rate hikes up 25 basis points, the first one in three and a half years and if it
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doesn't happen then it will happen soon enough to prop up the assets of indonesia. , well we getumping above that with the next rate hike? for now, first word news with paul allen. >> thanks. one-time presidential candidate marco rubio says the potential zte and other telecom companies would have widespread support in congress. he says most lawmakers understand the threat posed by china and there's a growing commitment to do something about it. he is responding to the proposal to remain -- to let them remain in business after paying a $1.3 billion fine. italy remains of that a government after the would be prime minister failed with his choice of the eurosceptic as finance minister. he withdrew, saying he had done his best to format administration. the president rejected his
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choice of the veteran economist, who has called for italy to leave the eu and criticized germany dominance. china's industrial profits growth accelerated last month, snapping a slowing growth. they jumped 22% in april from a year earlier. the national bureau of it improves in the auto sector. opec and is independent allies are so to have concluded with the oil market retrieving -- achieving its target and eliminating the global glut. it plunged for a five-year , the cartel meets in vienna next month. global news, 24 hours a day, powered by over 2700 journalists and analysts in more than 120 countries.
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i'm a paul allen. this is bloomberg. >> thank you. the north korean some it might be back on. president trump has confirmed it will be happening, saying the sides are talking and preparing for singapore. seeing that are links , and when you look at defense stocks and is having a fairly mixed day in korean air space. this is obviously a constantly evolving story. stephen engle has been following all the investments and we spoke a few hours back -- has anything changed? week donaldast trump called off the summit, i was skeptical that it was called off, i thought perhaps it was a negotiating ploy that worked.
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shortly after that korea came meeting,ng we want a and he also called another meeting with moon jae-in and they met over the weekend. there are efforts to make this happen. donald trump put out this tweet, which we can parse the words as to whether it will happen, the summit or the economic rejuvenation. has reallyth korea and potential and will be a brilliant nation one day. many people are reading that to say the summit in singapore will will happen, or it means eventually the meeting will happen and eventually the economic benefit will happen. they are at a sticking point as what iseliverables --
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kim going to get from this. assurances that he can trust the united states, that they will end their hostilities, that they will guarantee the security of his regime. it could be back on but there are conflict in claims about his participation -- what do we know? >> this is something that came from a local news agency, both sides saying that will enjoy and could go to singapore and take part in the trilateral summit. be,not sure what it would we have another story out of south korea, and when they asked the south korean prime minister, he said it would be very
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he would make a trilateral summit simply because not necessarily go as far as to negotiate a peace deal. that would likely be done at a later date and that was what one giant in suggested, that if they summit does go off well then perhaps later on down the road there could be a three-way summit between those three gentlemen. >> a lot of people are working on it, it is moving along very nicely we are looking at june 12 in singapore, that hasn't changed. it is moving along pretty well. we will see what happens. >> so we are not changing our
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hotel bookings just yet. in, we are past the deadline. [laughter] >> thank you. it is time for our guest the chart segment. here,ou are looking at the white line is the topix index and the question is what is the blue line? it has an elephant for a logo, it is the 61st best-performing stock on the topix index, and it symbolizes strength, intelligence, and familiarity, if that helps at all. and today it is one of the better performing stocks on the topics. we will be revealing the answer later on.
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send us your answers and questions. we will be announcing the answers later on in the show. >> pretty tricky. indonesia's new central bank governor is setting up for a second rate hike in two weeks. we ask an economist, what's the hurry? that's next. emerging-market currencies, are they completely at the mercy of u.s. treasury yields? deutsche bank's chief macro strategist joins us to discuss that. this is bloomberg. ♪
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♪ >> this is "bloomberg markets: asia." on haslinda amin. >> i'm david ingles. let's have a look across emerging-market currencies,
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showing some signs of encouragement going into the last week of the month. we see a positive the dollar rally, but that mail change if the jobs data says that the fed might celebrate. how em currencies have had the biggest gains since march after those 10 year yield, , suggesting that em currencies could be at the mercy of u.s. rates. and the treasury yield curve is also in focus, robert kaplan told mike mckee that he is keeping a very close sky on it. >> every day i will be watching very carefully the shape of the yield curve and what the shape
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of the yield curve tells me is that there are prospects for future growth that are sluggish. i think it is worth paying attention and that is the reason i am's ring let's just keep it at three, i'm not looking to increase that. >> let's bring in our guest, who thinks tenure yields will ultimately be priced later in the year. he is the chief macro strategist for asia, good to have you with us. when exactly? >> that's the big question. i would think the second half of as the markets adjust to the idea that inflation has to stay. i think you could push the idea further into the market and it will be a bit steeper in terms of pricing. what happens with the rest of the world, especially with think if iticy, i looks like that will slow down
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that is probably going to bring back a little more. all, i think we are on that trajectory. there's also another important data to look at. >> i think it confirms the inevitable, it is very hard for these to shift from one data i think that will be i think it look for, needs to shift to be more consistent. you partly answered it already, but there -- is there a number whether it is payroll or
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wages that if it comes in bad we need to re-sync the next meeting? number,'s always a bad our forecast -- i think the consensus is about 190,000, which if it misses by a dramatic degree will impact negatively. pocket, -- full data you also have the core pc number earlier in the week. there is a lot where you can challenge the broader growth for the markets to move back away from the idea -- we are only pricing into hikes. >> the package we are getting,
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you have u.s. gdp, everything in europe, inflation coming out and some growth numbers. we worry about what's happening in italy and spain or is that usual political gyration to put in the back pocket and forget about? >> the problem with politics is that it is noisy, and we are at we have seen over the last five weeks of things significantly pricing, just the last five weeks. the emerging markets are under a lot of pressure. thatnk it is important america seems to be shifting a out of the u.s.-north korea talks so i think it is possible that in the near term it helps performance a little bit more.
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the dollar look at index, that seems to beginning pushed higher simply because of the euro and not anything else. important but what's most important is that dollar yen not follow that same perspective. >> all right. lots more to talk about with you. he is sticking around. you can interact with a lot of the charts, gdp go is the function so catch up on your analysis. check it out. this is bloomberg. ♪
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♪ >> this is "bloomberg markets: asia." i'm haslinda amin. >> i'm david ingles. there is reporting that a delegation from north korea could be hitting to singapore..
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we might just get that meeting on the 12th, so we will keep an eye on that and get a few more details. let's start things off with a big, potential deal in australia. real estate investment trust, jumping in sydney after the blackstone takeover bid. directors are not saying that they will be recommending unit because it does offer significant value. shares up more than 12% year to .ate >> some of china's biggest tech names are buying into what promises to be the biggest ipo this year so far, alibaba and tencent are investing in foxconn and alibaba. they say they are spending the
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equivalent of $2.15 usd per share ahead of the upcoming. want a june said to 7 listing in hong kong which could raise about $10 billion usd. but we are told that time could flip depending on the volume of information, it values the company at $17 billion usd >> let's get back to the markets, and back to our guest. chief macro strategist for asia and deutsche bank. good to have you with us. i want to talk about oil. it is a key focus this week, given what saudi arabia said, that it could be easing the output curve, coming on the back
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of what alexander novick said. what assumptions are you making about oil, and what effect will it have on asian currencies? prices are obviously up pretty muchcantly since the middle of last year. i think at some stage we shifted away from higher oil as a reflection of better demand to where it became about a supply dynamic. if indeed there is followthrough on these production changes then positive, oil is a big part of the basket and if oil is lower -- i think there is still a lot of noise and we need to see through. aroundd that be turned
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right now? they have been smacked. assuming a, we are lower dollar, will that be -- >> that is the best hope. pressure point and i think the fed in the minutes are trying to push toward the think if they push the idea that they can be ahead of the curve, that does help the emerging-market. >> speaking of the emerging markets, next week, the r.b.i. needs. nothing from the inflation report -- what are your expectations? >> i think our viewers will start to hike rates.
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central banks everywhere in asia and emerging markets could start reverse the tightening policy and the question is not just about what they do in terms of hiking reach -- there is a lot about committing to the idea that this will not be just a somethingte hike but that will follow inflation. >> and indonesia is a perfect example. there is an unscheduled meeting this weekend -- do you think they are doing enough and have done enough? >> i think the right things, given the transition in forership, is come in exactly the right messaging. it is always hard to call on what they do but i think the
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important point is not in terms of the actual policy measures but the commitment they actually show. >> what -- what a 25 basis point hike to it? perspective. the if you look at the entire cycle, they have moved a long way ahead. the rates went down significantly at the end of 2015. a lot of the emerging markets, they need to do a lot more to bridge part of that gap. it is more the message. >> all right. we thank you for your insight. weaker dollar, he says. we are looking forward to the afternoon business in tokyo. we will get the latest of the reopening, next.
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that is where it's trading. this is bloomberg. stay with us. ♪ what's a gig of data?
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♪ >> 11:29 in hong kong and singapore. i'm paul allen with the first word headlines. president trump seems to have confirmed the historic summit with kim jong-un is back on, tweeting that the u.s. team is a north korea to make arrangements. the comments came after kim met moon jae-in on the north korean side of the demarcation line. lun could join the proposed summit in singapore. a lot of people are working on it, it is moving along very nicely full. we are looking at june 12 in singapore, that , and it is moving
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along pretty well, so we will see what happens. says japant putin must be patient over a territorial dispute dating back to world war ii. said the search for a solution to the current violence would go on. soviet troops cease to the island in the war in the dispute has kept russia and japan from signing a formal peace treaty >> we believe it is important to be patient and meet the strategic interests of russia and japan. >> international airlines are being given more time to adjust references to taiwan, which china insists is part of the mainland. air france and lufthansa have made changes, while others have asked for an extension. china says all 44 carriers were asked to modify their references.
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global news, 24 hours a day, powered by over 2700 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. >> you are watching "bloomberg markets: asia." i'm haslinda amin. . i'm david ingles. let's get a check of markets. , south korealy up very much in the mix and let's get a look at some stories. outlier, bearan market territory after falling 21% from back in april but keep a lot of the index indicates the selloff may be overdone. also i want to highlight what's going on with indonesia, a fifth and we could get
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some good news from the new central bank governor, and i want to check in on indonesian bonds. they are pledging to improve the fiscal and monetary policy yield and retreating further from the peak we got earlier this month. take a look at the commodities complex, deepening losses below 75, and it could be a bullish sign for stocks areso energy tracking lawyer, as the prospect of oil coming online for energy companies. so oil continues to slide in asia after plunging on friday the most in 11 months.
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say the market's rebalanced in april as they managed to eliminate the global glut. for more, let's bring in mark cranfield. forget about $100 oil. >> there's a real capitulation going on today, which is pretty impressive considering it's the u.s. holiday. andets are down a lot people seem to be taking a higher supply of oil. --s could just be the start don't forget, oil has been of the long way. it is very impressive that they got like this in the first place. >> where can we expect oil to be? >> president putin is saying extend dollars -- if we see
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something like that it probably means that wti has to go into the 50's. a lot of our friends are waking up in europe, we have a lot to talk about. back, positioning going we will do everything we can and we are negative again. what would it take to see a reversal in the bearishness? although italy doesn't have a government yet, the risk is they will go back to having elections. the president has rejected the idea of the finance minister that was proposed. and a bit of a eurosceptic he didn't want that and he will probably introduce a temporary
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government in the meantime but the italian government has voted for a particular kind of populist group and they probably want to see their people in government. election itanother could mean they will get an even larger share of the vote than last time. italian bonds and the euro currency will be under pressure for a while and it will not go away just because the president has deflected it in the short-term. >> italy is always the story. thank you. teaman follow mark and his and everything that is happening across markets right now. place foris your today's action. speaking of, one of the bigger stories, the central bank governors indonesia has called
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an unscheduled policy meeting for midweek and called for a second rate increase in two weeks. do you think they have done enough? >> i think it will be as and theye as possible, will not be meeting until the end of june. giving pretty good forward guidance about their intention. should they even consider a hike? >> i think preemptive means they will do whatever it takes, even though there is no risk to financial stability, they just want to say things can get worse , there's the potential to be ahead of the girl -- ahead of the curve. saide finance minister moments ago that measures will
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be put in place to prop up the make classes and to indonesia a more attractive place to investors. what policies would you like to see the to ensure it happens? the government is saying we will be tightening policy and preserve macro stability but at the same time we realize growth iss week so the central bank coordinating with the finance ministry and other agencies to ease policies, talking about a higher value ratio and lowering the payment requirement while using some of the fiscal constraints. ultimately what we want to see is a regime change because that is what makes indonesia over the longer term, less dependence on portfolio financing. what is the biggest risk for
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indonesia over the next 12 months? isi think the main risk predominantly in the external thee, it has to do with currency and foreign positioning in the bond market and we have seen a lot of selloff in the rupiah but at the end of the day it hasn't come down too much and there's a lot of hedging activity and that is precisely why they have to stick with this preemptive stance. >> when you look at the underlying fundamentals, it is ok. what the markets seem to be focused on, current account metrics, where is that within this space? it is -- financial,ch more relatively manageable under 1% and most of it will be going to
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capital investment. it's not a significant risk. >> are you still fairly cautious? is that driven by the other side of the dollar? >> at the end of the day, the dollar is the driving force, and across the em space we think volatility will continue in the short-term even if they haven't changed much. and growth does continue to chug along. raising hikes in june and september, how do you see central bank governors reacting to those rate hikes? we think it is just indonesia where they will he trying to go to protect the said the currency.
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otherwise, core inflation has been relatively manageable, growth is steady but not overheating. we don't think they will have to rush the height rakes and we expect a relatively stable outlook across the board in terms of policy rates for the rest of the year. >> we have been talking about indonesia, but they are not doing so well. >> it depends on how you define it. they are going through some transformations and they are overshooting in the short-term, but the central bank has been signaling a longer-term perspective with a lot of noise and ultimately they are still data dependent and if they think it will continue accelerating over the next few months, they would consider another hike. but for the time they are signaling a longer-term
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perspective and they will continue for selling their longer-term policy goals like financial deepening. >> you know what surprised me recently, thailand. in that 4.8% last week seems to be a good reflection of external demand. true but we haven't seen any underlying change. thai authorities are relatively optimistic and we are looking for a more moderate pace of growth but generally the main takeaway is that growth will be stable and we will wait to see whether it stays in this 1% to 4% range. that gives them the confidence to think on monetary policy. >> i know you don't comment on
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markets, but today vietnam entered a bear market. what are the fundamentals? things are stable still? >> that is our view. it looks extremely solid and we will continue to see growth which are impacting em economies. we do have quite a positive outlook for the markets this year. , it ising at the ringgit inching lower because crude is extending its decline -- what assumptions are you making about the economy? >> ultimately, we sink malaysia is external count is relatively stable. it -- ae a wide away wide array of regulations in place that support the currency, and when you look at the broader
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economic picture, the government has appointed an extremely competent economic team in a well-respected person coming back. ultimately we think these difficult economic problems will be resolved so we are not too worried. >> all right, joseph, stay with us. chief. still to come, we check on the indian markets and discuss how the economy to benefit from weaker oil prices. this is bloomberg. ♪
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♪ >> we are exactly 31 seconds into the session in india. sophie kamaruddin has a decent open. .3% due toadding
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what's going on in the health care space. afterarma gaining over 4% lower material cost estimates. and also on the earnings lineup we have the bank of india to report this monday. another item of note, the show down in electronics that will be on the radar. with oil prices slipping, it is gaining ground against the dollar and rising for a third session, easing concerns over increasing fuel prices, which are at an all-time high when it comes to mumbai. a 10 year yield toward 7.73% level than the last word on the r.b.i. front, they , ae for the first time ever three-year term. >> thanks so much.
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post itsupees set to biggest drop in about a year. is still with oil is good for india and other oil-rich in countries -- how much of an impact will it have? >> it is still early days. fridaya correction on but it is higher than it was are seeing that as a downside risk for countries like india. >> are you liking india right now? >> generally we are quite happy with the policy direction. what we are looking at is the cyclical recovery and that is on the back of public infrastructure which is hopefully dragging a forward.
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but we are seeing inflation in in our economist says they will have to raise rates. >> the question is will they raise rates this coming meeting. we will get a chart up to show you, we are down to about 6% on that, what does hsbc call? we call for two, it is a lag in which it takes place and you cyclicalook for the cover to gain traction. >> we were talking during the break that the reasons for them to hike rakes are different -- it is more because -- is it a positive story? >> there's laura domestic they are mostly
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hiking rates to protect the external balances and in india there are signs of a cyclical recovery that we will see in the gdp data and that will lead to which is always the case in india. ultimately we think r.b.i. will look for more data in august. >> what assumptions are you making about inflation, which has been really stubborn in india, and that we are expecting lower oil as well? >> so i think the oil change is something relatively recent and when you look at inflation it will be reflecting high oil prices from last year and previous months. there are some upside risks to inflation and that is why we think r.b.i. will have to be cautious and deliver 50 basis points this year. >> anyone else we should be
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talking about who might be tightening policy? we talked a little bit about india, indonesia, the philippines. are there any others? >> there is risk of a potential hike in the philippines, and then of course korea, markets are looking at july. >> we heard a very good observation, they are basically saying when you look at trade tensions in china, from their point of view, the economies that could get hit have value added part, thailand, taiwan, korea. are those the countries we should be worried over? thailand, which is intrinsically part of the export supply chain into china? >> we think so.
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if you want to look at the short-term, when those products were destined for the united states. at -- they were necessarily targeting the most sensitive parts of the supply chain which involve the most but ultimately we really don't know how it kicks in at the end of the day. so of course we can just look at the value added to china, the linkages to the u.s., which gives us a good indication. it is changing every day on the trade front. >> all right. it is a binary event. thank you so much. our hsbc chief economist. in a few minutes, we will be revealing our guest the chart. have a look at it one last time.
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the white line is the topix index and my question is what is the blue line? a few clues. maker. a rice cooker the lessons is not so much about what the company makes, but i believe it is the logo. we are giving it away if you are familiar with high-end right hookers in japan. it starts with the letter z, and the first syllable does mean elephant. it is the 61st best-performing stock. function on the bottom left part of the screen. if you have any questions, ask them. answer is out in a few minutes. stay tuned for that. this is bloomberg. ♪
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♪ >> this is "bloomberg markets: asia." i'm david ingles. >> i'm haslinda amin. let's get a quick check of the latest business flash headlines. the chinese energy company failed to pay of million dollar bond this month. china energy reserves and chemicals say they plan to suspend the interest payments and other bonds due in 2021 and 2022 while they consider asset sales. 14th onshore default. qualcomm is reported to be meeting regulators in china this week. they will be talking to authorities in beijing before the u.s. commerce secretary arrives for trade negotiations. qualcomm says that is cautiously optimistic that the merger will gain approval.
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planning new plane models by the end of next year to meet growing demand for luxury business jets. the aircraft will have redesigned cabins, optimized wings, and a new rolls-royce engine. the larger will have a range of 6600 nautical miles, enough to fly from hong kong to london nonstop. --bard here >> look at that. it should be enough. the question is can i afford it? what i can afford is this next chart. we will be revealing our guest the chart. what is the is japanese appliance maker that has outperformed the topix index by leaps and bounds?
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and are up 44% year to date the answer to that question is a company that has an elephant for a logo. there we go. that's the answer to your chart of the day. a little more affordable than a private jet trip. >> i have a confession. one.'t own my mom does. i don't cook and she does. i'm sure you have one. >> no, i don't have one. i don't cook as well. there you go. remember, bloomberg users can interact with the chart using jake peavy go -- using gtd go. you can catch up on the analysis
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and safeguards for future reference. that's it from us. "liberty daybreak: middle east" is next. this is bloomberg. ♪
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