tv Bloomberg Markets Asia Bloomberg June 6, 2018 10:00pm-11:01pm EDT
hesitate to raise rates again, if required. our exclusive interview was coming up this hour. this is bloomberg markets: asia. >> we are seeing gains, on wall street overnight. this off-again on-again trade war roller coaster. investors are thinking with conciliatory statements, not to mention geopolitical risks going into this key singapore summit between north korea and the u.s., not a great deal of concern on the markets it seems. rishaad: across the board we are seeing gains. we will have a look at that as jakarta gets on stream. 1, with thatg6 plus
-- it could be g6 plus 1, with that 1 being the united states. indonesia is online. here is sophie. 0.5%. jci up joining the uptick across the region. stocks in japan set for a fourth day of gains. up zero, the kospi point 7% with steelmakers of the best performers ahead of the camera-trump summit. to highlight what is going on in australia. under pressure after the latest trade balance data. in the mainland markets in china, the shanghai composite is a rallypside after
underway. gains for the hang seng as well. check out what is going on in the commodities complex. we are seeing steel and copper indexes store in shanghai. .rent a bit weaker holding at the 75 handles so far. let's gave to first word news with paul allen in sydney. >> north korea watchers say the regime is destroying its missile driver and testing. only known is the used for land-based mobile medium range launches. this comes days before the summit between rishaad salamat trump.sident it is not clear if the dismantling of the facility is permanent or temporary. president trump insisting they make the first move. one u.s. official tells us the president is being advised not
concessions,any onus onthem onus -- the the north. the latest wage information from japan dims hope. in overall cash earnings in march was the biggest in years and raised expectations. 0.8%.s pay rose household spending fell for a third straight month. golden thoughts and india shrunk in may. the world's second-largest consumer and a considerably weak period of demand. shows inbound shipments 42% lower through may.
the monsoon months of june to august are often a slow period for gold buying. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am paul allen. this is bloomberg. merging asia and currencies have been bouncing back as oil prices have pulled back. their recovery will face a crucial test when crude producers meet in vienna. a surprise decision to hike rates and put the blame partly on oil. along with an increase in other global commodity prices and developments, has resulted in affirming up of input cost pressures and insistence in the forer cpi projections 2018-2019. the price of the indian crude basket imparts considerable uncertainty to inflation outflow. rishaad: let's analyze that
movement by the reserve bank. that is a reserve bank economist. what an interest rate hike make any difference? acts as an interest rate hike in itself. >> you would argue india's oil demand is elastic and it will unless r.b.i.den, hikes so much it brings the economy to its knees. i do not think the oil issue in itself explains the rate hike. emerging markets in general you have to signal proactive nests of higheruble tsunami interest rates and higher dollar. we have seen other central banks in the em universe acting. india is no exception. are they one and done in your view?
>> no. interestwhat would an rate hike do? interest rates may be a blunt instrument. taimur: a couple things. well., growth is doing domestic demand has turned around after a couple years of poor performance. you were talking about a central bank which has an inflation other -- we see price-related developments that are not conducive to its achieving its inflation target in play. what influence do they have? primarily the interest rate. so they will nudge it up. the bank system is fairly dysfunctional right now. they are doing other things besides interest rates to soften the blow.
it can take slightly higher interest rates. rishaad: what about the rupee? how much concern is there on that? bemur: there ought to substantial concern. it was up a 14% on a year-to-year basis. demand will remain substantial. under those circumstances, how can the deficit remain at 1.5%? it will go higher. as you need more and more dollars, you will have a hard time. it is not just the current attack -- account. of the country have borrowed a lot in u.s. dollar terms. there is a lot of repayment due. they would have to come to the market and buy dollars. it would take an optimistic person to say the rupee is fine.
the rupee is not fine. when the momentum really starts going with rising rates, the stronger dollar, and outflows with em, the central bank policy signaling drawing a line in the sand, does that work? or is it like trying to catch a falling knife at that point? taimur: back to my point, what else can the central bank do if you are faced with capital outflow and pressure on your fx? you cannot sit on the sidelines. particularly when investors are looking at not just india but emerging economies. can't stay behind the curve when indonesia is hiking two times, when indonesia is doing dramatic things. want to differentiate yourself as the bank refusing to follow the global trend. if the rates are going up worldwide, how can india remain an island? it can't.
at thewhere looking story becoming one of central-bank convergence again. taimur: they will follow the fed, one-for-one. if the dollar is rallying at a time rates are going up, it will have to go up as well. ecb isdoes what the reportedly starting to consider, does thisrom qe, strengthen this narrative we are looking at even further? taimur: i think the ecb narrative is well anchored. they will reduce asset purchases on a gradual basis, starting late this year or next year, if things are more challenging in europe. thinks ecb will be super dovish. the issue is with the fed. you could argue the fed has been signaling rate hike and balance
sheet contraction for a long time. governor in an op-ed last week pointed out the surprise element, the u.s. fiscal stimulus. on one hand you have the fed balancing its sheet. suck out sack out -- lots of dollars. whammy witha double respect to em financing. you could've had the situation where emerging markets tried not to follow this idea. once we have our own idiosyncratic thing, we will not follow it. i am not sure that a lot of countries with money due in
2019, that is an option any longer. in just a moment. he will be back to discuss the outlook on the rupiah. onting closer analysis indonesia's central bank governor, telling bloomberg he stands ready to hike again, if that is what needed. rishaad: a look at india's state owned lenders. the very moment when most need a firm hand. why the chief executives are coming under pressure. ♪
to say in his first interview with international media? shabby, he says tapering is an issue for central banks and especially emerging markets. to perhapsg the fed ease the pace at which stimulus is withdrawn. we saw indonesia at the heart of the emerging markets rout. it prompted him to raise hikes for the second time in several weeks. whether it worked or not, this is what he had to say. >> [indiscernible] this is the first thing we did.
[indiscernible] after we are preempting this bout of uncertainty, our rupiah is stable. >> we have heard from goldman sachs saying you need a rate hike in the third quarter, if not in june itself. oure will continue on economic and financial and domestically [indiscernible] yes, there is a possibility of a rate hike, of course. it will be measured and depend
on new information coming in the upcoming board meeting. >> you talked about being ahead of the curve. what assumptions are you making and howe fed next week closely will your own policy decisions be linked? >> our domestic economy is strong. there is no reason to respond in the policy. this year it is 3.6% within our target. now it is 2.1%. [indiscernible] outlook is recovering. banking is quite strong. >> you touched on the rupiah hovering at 3900, and wanting the rupiah to be stronger. what is fair value under rupiah? rupiahfair value of the
is always dynamic. [indiscernible] this new development is in february. 0,300. quite high at 1 again.is strengthening we are seeing now the development of inflows again. [indiscernible] i think this is developing the rupiah going into the future. >> how deep is the market? how much can you intervene on behalf of the currency? this is beyond normal.
the markets are in the process of adjustment. it needs to step in, not to interfere with of the market, but to ensure that adjustment is small. haidi, the central bank was pretty aggressive in propping up the currency. it is spent in excess of $7 billion to stabilize the currency. now there is speculation it will need to beef up its foreign reserves. haidi: stay with us. i want to bring back into the conversation from singapore the chief economist at research at dbs bank. one thing that struck me out of the governorsion,
saying you have to preempted the uncertainty. we are seeing the pledges for more action. the rupiah continues to take a slide. can you preempt uncertainty? taimur: there is a limit of how much the central bank can do. his key concern is not where the central bank stands in indonesia, but where the fiscal and current accounts stand with regards to oil prices. adjusted,ces are not the likelihood of a funding crunch, that fear is not going to go away. you could have the central angst trying to preempt, look ---active, adolor liquidity, add dollar liquidity. he is pledge bound not to increase oil prices. that is the achilles heel of indonesia right now. my heart goes out to policymakers in the central bank.
it is not under their control. >> he has said he will do whatever it takes to stabilize the currency. given he is between a rock and a hard place, what are the options? taimur: there are options. as i was discussing earlier, when the fed is hiking and dollar is strengthening, there is nothing left for the bank to do in emerging markets, than signal they are tough. haslinda: he has made the right moves? taimur: absolutely. he managed to do two hikes in the course of one month. i cannot remember the last time a predecessor of his showed such resolve in office. in terms of communication, he has been pretty good with it as well, yes? aimur: the question is
funding question. when we do our analysis of how much debt indonesian corporate have and how much -- the numbers are extraordinarily high. 25% of indonesian reserves. across the emerging-market universe, which are the countries that have large dollar funding needs? if bank indonesia can come up with a credit line with the bank fed, if or pboc or the need be, they will have a substantial amount of dollar liquidity when dollar would be at a premium. in addition to the rate hikes would be a demonstration of resolve. are there grounds for bank indonesia and the ipi to take issue with fed tapering? taimur: the issue is the following. if the fed is doing something
only in the interests of the u.s. and is negative and the rest of the world, they are not looking at the big picture. asia alone accounts for the majority of global growth. by tapering aggressively or hiking rates aggressively, if the u.s. creates a major slowdown in asia, it will spell back into the u.s. this is an argument many emerging-market central banks have made. as recently as last week we saw governor patel make that argument. i am not sure if in washington, d.c. there is much sympathy to that point. the primary issues are labor market tightness and the fed needs to do those things with those in mind. rishaad: want to get your view as to policy credibility. keen to instill that quickly. is he instilling confidence? taimur: he is off to a good
start. to do two hikes in the course of a month has shown the market he has the president's blessing. without the president's blessing, i do not think bank of indonesia would take such strong measures. what is their office going to do to help bank indonesia? the oil price decision is the issue, independent of what bank indonesia does. if they come up with ways to soften the blow for the current account, perhaps we can have a happy ending to this saga. rishaad: great talking to you, taimur baig from dbs. if you want to watch our interviews again, you can do so at the number terminal. .type in tv
haidi: a quick check of the latest business flash headlines. china announced official rules to issuance and trading of diplomacy receipts, hoping to influence security regulators. they are required to have healthy internal control measures. rishaad: delmont a pacific says market volatility is behind the decision behind its singapore decision. they say it is in the best interests of the company to defer that offering until things improve. a chance to price that ipo today.
gains for the sixth straight day after a bullish signal for a rally for that benchmark. higher for the second day in the wake of the central bank chief resignation. malaysia going through a shakeup stepping down. the korean yuan is rising for a fifth day, moving toward that 1067 handle. this is asia, bouncing back in emerging currencies. aussie dollar is under pressure after the trade surplus
came in narrower than expected. fuel futures are jumping over 3% in shanghai. inesworld's -- top m providing a boost into copper on these production risk. matt: let's go to the first word headlines. paul: optimism of a weakening trade spat is seen in beijing's purpose of american oil. america send about 330,000 euros a day to china -- barrlels of crude a day to china, from about 130,000 a year ago. weeks of back and forth comments and policy changes pushed
4.5%, wiping a a trillionwiping dollars off market value from the s&p 500. there is no evidence the fbi spied on president trump's campaign in 2016. ryan agrees that russia was the target of the fbi. connectedople loosely with the trump campaign may have been at fault, but it does not mean that chums campaign was infiltrated -- trumps campaign was infiltrated. more questionse to answer. it would have been helpful if we have gotten this information earlier. and if we got all the information we looking for, we could wrap this up. i see no evidence to the contrary of the initial assessment. >> the new italian prime minister is seeking to reassure
markets he will gradually reduce the massive debt virgin -- burden in the country. tax could cost $120 billion in the first year. global news on air, 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. allen.ul this is bloomberg. haidi: investors weigh the on again off again threat of protectionism. look at what the markets are watching? just ahead of the g7, looking for further developments on the trade front. are two big central-bank meetings last -- next week.
we have a rate hike at the federal reserve, the seventh one they have undertaken since the end of 2015. european central bank chief economist saying there will be a pivotal decision buying to end the bund program. scandal netted another victim. im lufthansa when costs unchanged twice after raising rates in january -- left borrowing costs unchanged twice after raising rates in january. haidi: we have the director andy economist at -- and economist at zimb.
we're been talking about the risk posed to emerging markets at the moment and how their hands are tied. this lead to so much domestic uncertainty? questions are waiting to be answered. oil prices as they are today -- they have effectively abolished services tax. the broader global economy remains relatively stable. the external sector remains stable on that front. ofneed policy clarity sustainable fiscal financing going forward. camps may be preoccupied with the scandal itself, but the
macro environment is fairly positive. haidi: you are seeing emerging markets central bankers making headlines, getting ahead of fed tightening, now the ecb potentially following suit. policy certainty when you don't even have leadership certainty at the central bank? over, we willes be looking at the economy itself. we have seen commodity prices a little higher. relativelys well-behaved. zero rate for gst will help. the uncertainty is whether this will postpone big-ticket items.
it will be a drag on the broader economy. strong exports could be offset by slow investments. private consumption could be limited as a result in lower tax remains to be seen. rates -- we may be awaiting the impact on the broader economy. part of the narrative or the stories is u.s. dollar strength, country fundamentals. at inould you be looking terms of who was looking more resilient when it comes to domestic fundamentals? juncture, headline
resilientsupported by domestic demand, reasonably positive from an economy study -- standpoint. there is an area of weakness with regard to current accounts or accoutnt deficits. speaking, they have raised rates to try and help stabilize the currency side, which will stabilize confidence in the broader economy. the fundamentals remain reasonably positive. rates my be -- may be rising side but there is still reasonable flexibility on the policy front. rates remain relatively
manageable. there is room for them to raise rates without the economy taking too much of a hit from the higher cost of borrowing. rishaad: do you think optimism is warranted? that change is looking sentiment itself -- lifting sentiment it self. not sureward, we are what we are seeing in terms of throwing out the baby with the bathwater. investigation, at which point policy paralellels - paralysis may start to hurt the economy?
it is important the topic at some of the business of running the economy in terms of policy cabinet gets on with running the economy in terms of policy clarity. are you finding that foreign investors are also waiting for that? there is a greater demand for malaysian assets. song: tweets from president trump talk about policy, but it comes out of the upm that sts policy going forward. -- sets policy going forward. it is important we get a group of people together to set monetary sustainability.
is it a good move to be canceling some of these infrastructure projects, the high-speed link with singapore is on the chopping block, seemingly? ong: the team is aruging they are not in a strong enough fiscal position to commit to infrastructure project when the return may be questionable. not so much clarity in terms of how much you can spend going forward. spendng on how much you may be a good idea. clarity is important and what you can collect at the same time, as well.
what is coming in in terms of income and what you are going to recoup. fiscal stability of the government is very much a black box at this juncture. we really don't know. i: would foreign investors be wise to be cautious for now? isg: i would think everyone waiting for clarity. we have the window for this year that is good, oil prices, high energy costs, have helped in terms of offsetting what is coming on from the zeroing of the gst. beyond six to nine months, the team has to form a sustainable policy. i don't think anyone has a
quarrel with 2018 in terms of the budget. in terms of the underlying macro growth, in terms of how much is coming from private ofsumption, cancellation as well --items 2019 is far more important in terms of growth and environment, when we see global growth slowing down and tax prices stabilizing. politics?hat about there are contradictions and ironies, here. the prime minister in malaysia,
comment on those signals, quickly. progress is the prime minister, a unifying force .or everyone it is important he leads by setting an example, and makes sure sustainability and clarity is transmitted for the people and outside malaysia. rishaad: thank you for joining us, song. india and the state banks struggle to attract a suitable chief executive to run them. this is bloomberg. ♪
"bloomberg is markets: asia." macau's monetary authority warns certain transactions can only happen with the approval of authorized institutions. it is prudent for banks and shops to we can see after what they call a vague monetary authority statement. focusing on china and a sustainable investing. ubs has cut 100 positions in recent months in the united states. it posted the highest cost to income ratio among all divisions. : deutsche bank will
probably post another quarter of declining revenue. accelerating its focus on the number of trades with wall street and will/7000 position -- will slash 7000 positions. rishaad: let's take a look at state-owned banks in india. rudderless when they need some strong leadership. nine out of 21 lenders are due to lose their top executives. four are due to report replacements. another boss was stripped of her title due to fraud charges. let's go to our guest. india is in a bad cleanup drive. why don't people want these jobs?
why aren't they being filled? rupees islion 42,000 u.s. dollars. compare that with 400,000 u.s. dollars. that is what the chairman and to state owned banks get. 42,000 is what the ceos of private banks get. a huge difference. the other is government interference in state-owned banks. they want to make sure priorities are managed. everything you do can be second-guessed. people are really scared of stepping into the shoes of the people who have been left running these banks.
haidi: what needs to be done or changed to attract new talent? there is a special board looking at recruiting ceos of these banks, but nothing has been done to make sure you can attract top talent to one of these banks. citibank could lose their slot because the position of the ceo is ending. nothing has really been done. they could increase salaries and ensure whatever steps they take they should not he prosecuted for that two years down the line unless they have done something criminal. haidi: thank you. four breaking news wherever you
charts. david and haidi are picking their best ones against -- pitting their best ones against each other. david, my left corner. chart will be the winning chart. rishaad: i will be the judge of that. -- what this chart says, thank you to me, thank you to make -- thank you to you. all theple, you sis other markets. if you compare apple to microsoft, which had a bigger weighting on the s&p 500 in 1999
apple happensw, heap at the top of the of companies that have a $450 billion threshold. forhave to think the fed quadrupling markets -- thank the fed for quite dribbling markets -- quadrupling markets. haidi: this chart attempts to quantify the markets. 500,pper panel, the s&p the msci asia-pacific index, the story mentions trade tensions across mainstream media. you can see a trend forming.
it is hurting equities. slump playingat out as it carries on without any certainty. outright market reaction could be subdued. my argument is that it goes to resilient -- resilience and the broad-based nature of the rally trillionment, $1.25 lost in equity value, the nature of this story when it comes to trade tensions. rishaad: david, a 10 second reply. david: the fed has been raising rates since january and conditions have been tightening. risk has not been doing too well. rishaad: i will give it to haidi.
delays do correlate with the discount. it was a very close decision. david: i feel so warm inside. haidi: everyone is a winner. rishaad: bloomberg users can interact with the charts we show you using gtb go -- gtv go. if you want to use them again, you can save them for future reference. leave you with this image. equities moving to the upside. 4/10 of 1%. this is bloomberg. ♪ retail.
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emily: i'm emily chang in san francisco, and this is "bloomberg technology." a new data scandal brewing at facebook after the company revealed that shared user data with four chinese companies, including lenovo. we will get reaction in washington with congressman greg walden of oregon. tesla ceo elon musk gave a reasonably upbeat assessment and