tv Bloomberg Markets Asia Bloomberg June 13, 2018 10:00pm-10:59pm EDT
cup. this is bloomberg markets asia. ♪ haidi: all right, we are waiting for just getting these numbers out on the investment retail. 9.5%.against expectations of mightd: looking to what happen with normal ddp in the future, we have industrial reduction you're on your. just a miss about 2/10 of 1%. six point 8% growth f dustrial production and on a it is on parrace, with expectations of 6.9% but it's quite in this year on year.
helen with us now. are you right into the defense. -- right into the ep end. >> i take it looks like the ips 6.8 is fairly in-line. 0.2% at this poino much of big . rishd: but retail is a big mess. >> i agree. retail sales on the weaker side. especially at a time when cpi inflation was roughly in line. terms,plies that in real it is pace. rishaad: how does that set with the trade data? the trade data showed imports much higher than anticipated. that calls into question that in some regards. >> i think the imports data have been really strong.
also in particular, i think a lot of that has been helped a lot like the oil prices increasing by 40%. a little bit of real volume increase. generally ends -- emily speaking a lot of that was inc. sported the commodity prices. in real terms, it is not that strong. you shouldn't be bringing too many questions regarding the consumption stress at the moment. haidi: were going to talk to you about that. a bit of a miss. explain .1%. we are expecting 7%. except worried? indeed. i wouldn't worry too much, we were expecting that investment growth could slow down a little bit.
arguably in the last few months we have seen some easing gestures. the new regulations onsset seem to be suggesting the pboc does not want toh too much into the leveraging efforts. said i think liquidity situation. that means it will be hard and a lot of firms. exploitationsf seven, it could be an indication that the previous month we saw a robust and a lot of factories trying to get in front of a potential trade work. >> i think is possible. in fact, the by month the data
it does look like import and export there is a bit of iling out there. also, it is actually the numbers for this month, would probably still be the months before. notay, investment owth is too bad. we been looking at year to date. talk abouten you this and aluminum and steel --ductions, just bringing up it has been ramping up and up. be pts of this cut off because we are at record highs for the moment. this is what donald trump is looking at? >> not exactly sure what the president is looking at. the demands there is
and supply side story. it is being brought into question. chineseame time, pomakers have put in place, they are very much helping. rishaad: when will we know the and if we doeforms know that, what is next? think that you are absolutely right. supply-side is ill ongoing. although priority has been given to deleveraging. they already changed the rhetoric of the bits and no longer talk about deleveraging. just removing the risk from the financial system to avoid this major syscrisis risk. -- this is not an
easy job. what they are trying to do is lower the funding cost at the moment well keeping credit channels pretty tight. probably will allow financial institutions to access liquidity in the interbank market at a reasonably low price, but they don't allow so much shadow banking stuff to go out like in the past. that i think is thcurrent priority. it could be causing some credit crunch. haidi: and helen, we have just seen the pboc governor conclude his speech. largely focusing on funding channel and smaller companies were easy monetary transition quite ineffective in china. it surprise you that the pboc did not follow on the heels of the ed and what policy reaction to expect in the second half? >> very good question. i think that we are still seeing
the pboc slowly for the four his ry the fed has we are already seeing two times a limo interest rate moved by five sis poin. since we are still not seeing it, people are saying how come it has not come? some would probably be concerns for liquidity in june given that this is a pretty big semiannual checks on liquidity and everything. i think thatbeti little more cas and not cause too much trouble by raising the interbank rates. at the same time, there is for ary easing they arehe pboc overallving giving that
speaking the fed is committed to be hiking trajectory. our view is they are combining an easy monetary policy and tight credit policy which almost seems to be impossible as they want to control both price and antity oli situation. given the imbalance, thiss something they can keep for the near-term at least part we will probably see a little bit of tot extension going into three, we expect that as there are more signs of growth slowing, it would have to ease a bit more. rishaad: when you say slowing, people seem to think the stabilization -- we are still talking about high sixes and nearly 7% growth every year. how long can china continue at that speed? >> well, i think there are two things there. what is the number being printed in gdp terms?
when there was significant overcapacity and massive -- at that time it was still 6.9%. that is one thing about being cap between macro and micro. you may not even necessarily the all of tse numbers in gdp terms. ndly, that is what is going on on the corporate le also what we are seeing. at the moment, we are still seeing reasonably resilient growth. it been of little tougher than that and things slowmo visibly, i think policymakers would have to change. not waiting untilhe time when they fall to five or 4%. foraad: thank you so much joining us, helen. just going to have a look at the latest out of the white hoe. tuesday'sllout from
summit in singapore. let's find out what the latest is in first word headlines with paul allen. paul: thanks. present trump has claimed in a tweet that there is no longer a nuclear threat from north korea. he has been facing criticism over the brief and vague statement. state mikery of pompeo would only say he expects north korea to take nature steps toward disarmamenty 2020. on thursdayders before heading to beijing. comcast has made a ng-awaited offer to acquire much of 21st century fox, topping a previous did from disney. the largest u.s. cable tv provider says it's offer values fox's entertainment asset a $55 billion. at $35 per share in cash, that is a 19% premium over the disney offer. volkswagen will pay a $1.2 billion i'm for cheating diesel
emissions regulations. it closes one chapter eveasnew . the world's ggest aumaker says settlement of the criminal impactll have a positive on other proceedings in europe. extended losses, bringing its slide to as much as 20% amid questions amounting about whether the world's biggest cryptocurrency was regulated during last year's price surge. anotherarcher says currency may have been used to boost bitcoin. they've already opened a criminal investigation. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. thanks for that. still ahead this hour, what the
haidi: just getting some news on elon musk, what it is betting to the high speed train to the airport. watching developments and details available on that. thisas a comny that he used us sell 100 flamethrowers, this is substantl deal. getting some more details. deal.icago rail short seller says the muddy waters capital is adding against
a chinese education group saying its profits are fraudulent. the company has a market cap of $23 billion. he says it is beeling in more favorable numbers and lying about investment. >> we are shortl education group a for-profit education committee. >> anyone who invest in u.s. listed chinese equities is l education.h ta this is a $26 billion company. the stock is up some 25% in the past five years. you say it's a fraud? >> yesterday it is a real business, but it's profs our -- profits our project lead. ,f you looke appreciation it is so institutionalized paraguay would they do this? i would point to the value of the chairman's holdings.
three years ago his holdings were only worth about 900 million dollars. today they are getting close to $8 billion. there is your answer as to why. to be clear, it is a real is nest with real a student's and isl learning centers, it just not able to grow nearly as profitably as it has been portraying. so, there is a distinction -- it is important to make this point. there is a distinction to be drawn between this kind of fraud and we will get into the details and some of the other frauds you have exposed, which in the past you have the rose.as empty offices, nonexistent businesses, right? >> yes. there are a few things that are --hat distinthis from force.inal they're not making up 90% of the revenue. there is some making up numbers
in that revee. we are actually able to quantify a portion. one of the other things unique about this is in the past we have said, the trees are not there. you would have to figure out w to get over to yunnan province in china to verify it. in this case, the fraud we believe has inflated net income over t past three fiscal years by 43%, investors can look at our written report and there is a road map. is inof this documentation. you don't have to show up at eight factory to see that this is a fraud. it is in tocuments. >> the documents you speak of, i have had a look at your report. your thesis is supported by chinese government documents per what kinds of documents and how on your to get your hands on them given the fact that the
chinese have a pretty good idea of who you are and what you do? so going back to the very first time we ever exposed a chines fraud, please use financial statements and other soings from s ai the, regularly.file financials in the past, we were saying, these financials show that you only have 5% of the revenue that you are claiming you do. then saw is that a lot of companies began adjusting and they would file fraudulent financials because there is no penalty for tha but, in any event what we see here is a number of inconsistencies within the documents. sometimes there are financials thatave been amended and changed. we say the earlier financials are the ones that look genuine.
it now looks like they have penciled in about 85% of fake revenue in one is no spirit we e also able to see the gains they are playing with their revenue. most importantly, it is the shareholder registry. that canot something be questioned or when you look at shareholder registries, you see they have been lying about the timing of investments and how it bought -- how it made these investments and etc.. it goes to the heart of what they are doing. runurns out to be more and them final force. waters with our own erik schatzker. the teup, looking at shares as they bottomed out. facese company could still tougher times ahead. we are looking at those. what it may be facing.
rishaad: you are back with bloomberg markets. zte, event after reaching agreements with the united states, troubles are harder from over. they'd need to replace their entire management and board. all of this unnerving investors and wiping out $2.7 billion in market value. edwin china is here with me. it was almost facing bankruptcy. it has been -- it has risen like a phoenix. that's right. >> replacing your entire management but toward as well. fullight, they nominated a slew of ceos.
for theal junction industry. just as we are getting into 5g roll out and have le and the need to rebuild trust and credibility with not just the customers, but also with government and regulators across the entire planet. rishaad: what about lawmakers in the u.s.? they could move further to restrict with the company does there. where are you with this? >> there are a group of vociferous u.s. lawmars trying to to bills that will essentially reinstate the ban that was the source of all the trouble to begin with. it is unclear whether it will gain at the necessarattraction to pass legislation. at the end, donald trump could just be told this legislation. right now it is hard to
handicap. zte have to dos now? >> it has to move to pu a new trust worthy management in place. we know we have a plan to reshuffle the board. we will see what will take the helm. getting down with a carrier and corporate customers and ensure and that over the long-term take the lead in 5g develop. haidi: edelman, thank you so much for that. the on going drama the rounding zte, let's get you a quick check of the is this flash headlines it. discussions with the australian government about providing equipment for 5g wireless neork after reports it was
said to be part on national security grounds. australia chairman john lord isd abc that the company still talking openly and getting a very recepti year here at the australian first said they would ban them from the contract. rishaad: the european central bank taking a poser look -- the closest look to the trading books of europe's biggest lenders. were asked for information on how they price level three instruments or hard to value. the could negatively impact capital ratios. cutting $4000 as the jet engine tries to simplify its business and boost profit margins. would bring them to nearly 10,000 since 2015. rolls-royce says cuts will deliver and you'll savings of between 400 and $543 million.
rishaad: siemens is considering a possible sale or other option for its struggling operations. possibly it was a rival. siemens has previously said it is not part of the company's future industrial core. haidi: let's take a look at the markets as japan heads off to their lunch break. the downside against the nikkei. half a percent lower. the yen holding out 110. the japan 10 year yield unchanged. the bank of japan reducing. it lowered its purchase in the three to five-year segment on picking up the fed the pace or seeming to pick up the pace picking up
the pace or seeming to pick up the pace on tightening this year. we are now expechat to look like four hikes in total of 2018. a reduction with the bank of japan, aut 30 billion yen. the first cut for the three of five-year segments in september. also seeing the pboc staying put on its rate decision.
haidi: we waiting for the press conference out of seoul where mike pompeo has been there to debrief when it comes to the developments and achievements in that singapore summit between president trump and the north korean leader kim jong-un. they're waiting for him to take the stage. you're looking at a live picture of seoul and the foreign minister there delivering her remarks. we have heard from the u.s. theetary today saying that repair a significant steps taken in singapore but a great deal of work to do when it comes to north korea. after this, he will be heading to beijing to do another debrief on the developments of this
historic week. we will be getting those lines to you as soon as he takes the stage. in the meantime, let's get to first word news. >> president trump says he will confront china very strongly in the coming weeks as the administration prepares to follow through on its tarrif threat. he said china could be upset at the clampdown while also praising his personal relationship with xi. fed's dot plot has upgraded the amount of rate hikes to four as inflation ovehos target fthey raise rates for thd time this year with chairman jay powell saying the main takeaway is that the economy is doing very well. he also promised a news conference after every meeting starting in january. a public to foster
conversation about what the fed is doing to support a strong and resilient economy. one practical step in doing so is to have a press conference like this after every one of our scheduled meetings. we are going to do that beginning in january. that will give us more opportunities to explain our actions and answer your questions. >> the hong kong monetary authority has followed the fed hiking its base rate to 2.25%. the economy has so far shrugged off u.s. monetary tightening. chinese small-cap stocks have jumped. the biggest single sporting event on the planet kicks off on thursday with soccer's world cup in russia. the host will face saudi arabia and the firstat oes culminating in the final in moscow on july 15. the big corporate winners are likely to be brewers, tv
manufacturers and betting companies. the u.s. canada and mexico have been able to come together and win the right for the 2026 world cup. global news 24 hours a day on air and at tictoc on twitter. this is bloomberg. rishaad: good evening. pompeo getting ready to take the stage. seoul the -- al foreign minister speaking at the moment. let's have a look at some of the ththings that areade their and being said that a south korean foreign ministerl. she has been
saying the summit is a turning point to bring the peninsula of nuclear weapons. that is ke pompeo, we can probablylieno what he is saying. to tomickly get over mackenzie who is listening for us in beijing. ands never to south korea handed over to mike pompeo. effortsding our relating to the degree -- denuclearization of north korea. the discussions we held today and most of the three of us flect our three country's commitmento work together. today, the foreign minister and i discussed the outco of the summer with kim jong-un and the importance to stay closely coordinated throughout a denuclearization.
summit two days ago does indeed market turning point in the u.s.-north korea relationship. kim jong-un's public commitment to completely denuclearize is an important step in bringing lasting peace and stability to northeast asia and indeed to the entire world. as the president said, this will be a process, and not an easy one. staying a closely aligned with our allies, the republic of korea and japan will be critical to the success of that outcome. the world should rest assured states, theted republic of korea and japan remain committed to achieving the complete, verifiable and irreveization of north korea. the u.s. alliances with these two countries are absolutely ironclad. we have developed a close friendship, and together we will continue to closely coordinate with respect to north korea as we move forward together. president trump has also made it jong-unat if kim
denuclearize is, there's a bright future for north korea and its people. he outlined that vision beautifully here in seoul when he spoke at the national assembly last november. when vision is strong, connected, secure and prosperous, north korea that is fully integrated into the community of nations. kim jong-un indicated in singapore that he shared the vision. we are eager to see him take the next step to achieve it because the united states is ready for a new chapter in our history. thank you. haidi: we will be listening and for anything else that comes out of that. secretary of state pompeo will be headed to beijing for a similar debriefing. let's head over to beijing now. pompeo really on a mission
across the region to reassure america's allies after a lot of uncertainty throughout by that fairly ambiguous statement signed by the american and north korean leaders. right. is as christopher hill put it earlier in t show, this is about damage control for pompeo, at least that is the way he sees it. it has been interesting to see -- here the secretary of state's mments over the last few hours. he made some unscripted comments earlier when he was talking to president moon and he talked about the fact that the singapore summit was a big step in the right direction, but that there was a great deal of extra work that needs to be taken. that comes after pompeo had claims that he expected that north korea would denuclearize by the end of president trump's first term in office. we just heard there was a him stressing pompeo the alliance between the u.s., south korea
and japan. reassuring those crucial u.s. allies in the region that there was an ironclad allegiance between the u.s., seoul, and tokyo. as you say, reassuring those allies that is so important to this process. g tooing to be flyin beijing later and expected to meet with the foreign minister. he is not is going to be talking about the trump-kim summit, but also expected to debrief them on what happened behind closed doors, but also likely to address some of the trade continue.hat we have president trump overnight saying that he was going to act strongly again vis-a-vis china when it comes to trade issues. think a lot for that, tom.
thewill be all over it when secretary of state does actually land there ibeijing well. taking in the other comments coming, he sees north korea as fully integrated into global society. a long ways to go before we see that. what about the impact of the trump-kim summit on south korean markets? they were closed for a holiday. we did see a little bit of movement there. let's have a look at our next guest. easing geopolital concerns are not likelto reduce that syria discount. jim, great to see you. why would a korea discount remain in place? what is a korea discount? asia and japan are trading about 16 times earnings.
korea is trading on nine times earnings. it is by far the cheapest market in the region. think a couple of reasons for that, one is pretty awful corporate governance, which is this oximity to thiso unpredictable north korean state, which has this nuclear capability. political uncertainty is another reason why we have this korea discount. the fahat we have had this unprecedented meeting between kim and trump, i think suggest that the agenda is going toet more safe.for south korea for that reason, the equity risk premiums should reduce which means valuations should go up which is good news for the market. rishaad: there will be a bit of a discount taken off, but let's look at the currency. had is that behave? : the currency, i think has been strengthening recently. that is partly because the economy has been doing reasonably well. your previous commentator was talking about strength in the u.s. and the feds increasing the
rates twice between now and e year end. that is good for the korean economy, but one thing that does concern the currency mkets is if we do have a reconstruction of north korea, who pays for it? is of uth korean government? is it going to be south korean companies? for that reason, we need some currency on this before the markets decide what is quite a happen. where does good to go away for one second as we take a look at what is going on in the news conference. --re hearing from the jpaan japanese finance minister. the north koreans sayingarization action that guarantees have been given as yet. the u.s. is going to be advancing the discussion on security guarantees. that is from the japanese foreign minister kono speaking there in seoul. let's get back to jim.
do you think that this is going to work? jim: i think it is progress. there is a lot of sksm about this event. i am sat here in new york right now and one of the things that trump has said is that americans can sleep easier at night and should feel morertable. i think the key thing from this is that the client the states in east asia which are japan and south korea are home to 45,000 u.s. military.personnel the fact that we had this is about might meet at some point it withdrawal partially of some of those u.s. forces. that would suit the trump agenda, something carter try to do in the 70's d couldnt do. the fact that we have this , and the fact that we have had this meeting is a step in the right direction. haidi: that reduction in u.s. forces would be domestically and politically pleasing for present trump, but also almost
more than anything, that would please beijing a great deal as well. i want to throw out this chart looking at the impact we have seen in termeo tensions between seoul in beijing and on how that has weighed notches on south korea equities, but also japanese equities as well. impact pretty palpable if we have a reduction in a military presence, and tensions between seoul and beijing that have risen over the entire missile system. do we then see some of these tours and consumer beauty product related stocks and south korea seeing a resurgence again? jim: i think we do. we have seen in the past when china put sanctions on visitors to south korea, the impact it had on stocks. we have also seen some pretty ambitious targets for japan in terms of tourism numbers. the fact that we have a deep wrist military situation would
actually accentuate the strength of some of these consumer plays. say a northlet's korea which is less of a threat to the region, than we would definitely see more of a premium being attacked -- attached. haidi: thank you so much for joining us. coming up, the futbaol fueling the energy markets. this is bloomberg. ♪
returning to october production levels. and venezuela do not agree. has predicted for ran is of people, theeh backing up. are saying that iran and venezuela's output could fall by about 30%, whereas iran is pushing back and saying production is not going to fall. they are saying that the iea and others are trying to instigate an increase in opec's production again as they come under pressure from the u.s. president trump to stop this output reduction because prices are too high. iran is really pushing back saying this isn't true and things are fine, and there is no
shortage and supply in the global oil market. saudi arabia and russia want to raise production. what would happen if there is no broad opec agreement here? this is the point ultimately because we have a situation, it is a game of chicken to some extent. the opec decisions have to be decided unanimously. if they decide to reverse on our, they need all of their members to agree. analysts are saying that even without a unanimous decision, saudi arabia and russia could go ahead and raise output anyway. we have already seen saudi arabia stainrease regularly and pressure has increased above the level agreed by opec already anyhow. it doesn't seem to really, or it is not very clear whether saudi arabia and russia will go ahead and boost output or whether they
are going to wait until they get a broader unanimous agreement. what kind of negotiations and we expect in vienna next week? we have also had president trump tweetiin his displeasure at higher oil prices. : in one word, i think it is way to be very factious. it is very divided at the moment. we have countries like iraq, iran and venezuela writing to other members and saying let' stand up against this u.s. pressure. we don't want to increase production, there is a lot of countries that can't raise output so they would rather see high prices. whereas other nations like saudi arabia and russia care more about their market share. i think it is going to be very tense at this meeting. anna.d: thanks for that,
a quick look at what has been going on in korea. ere in seoul.nce takingg out of we have been hearing about a nstructive dialogue between the three people concerned there, the americans, the south koreans and the se as well with all foreigninistersand in this case, mike pompeo, who is the secretary of state. how completeabout denuclearization would encompass verification. factions believe will not be happening without denuclearization on top of that. the japanese foreign minister talking about japan and the summit needs to lead to a resolution with some of these abductees in the north. that is the we have just now. let's tell you about elsewhere. we have been talking about russia and saudi arabia. guess what? we are to talk about them in a different context. their the first wants to face
this, what kinds of companies are expected to benefit from the world cup and what are the usual suspects? >> the list is pretty endless, to be honest. name few of them, adidas and nike are some of the usual suspects. 32.as is sponsoring teams playing in 2013, they sold 8 million jerseys. it is probably going to be a good year for both of these companies. there is also bookmakers, companies that you can place us with in the u.k. some of the usual suspects that can do well during the world cup this year. rishaad: what about the more rprisingusinesses that may well flourish? >> some of the sort of slightly surprising ones would be pizza
companies in australia. everybody want to have pizza while they are taking their beer and watching the game. dominoes, the enterprise in australia could see a boost. electronics, a videgameaker, people could be playing their games on the side. much,d: thanks very indeed for that. germany users couldn't pick there -- can pick their winners by going online and filling out the brackets and see how your productions stack up. i am very excited now. it is time now for our battle of the charts. going to picki their charts against each other. is davidhings off
today and is a warning for him, because yesterday he just ran the clock out and one. it will work this time. david: i can't use that strategy anymore, nor did i do that on this has to do with the fed. we heard from jay powell this morning. he talked about how the fed funds rate will be neutral relatively soon. i actually brought this chart up before. i want to bring it up again mode actually shows the fed funds rate is already at that neutral rate. that is a conceptual rate. i think what a lot of people will agree with is that we are nearing the end of this targeting cycle, in the back half. we are perhaps inhe0th time. of regular we will see how it goes, but it does indicate they will not be able to raise as much anymore. rishaad: or do they give
manchester united extra time? let's turn it over to haidi. haidi: i'm going to brush up on my football analogies before tomorrow. i'm taking a look at the u.s. dollar. at the ricocheting affect we have in a bloomberg dollar index overnig, it pulled back and we're not quite sure where he goes next. if you are a dollar ball, you might want to be convinced in this chart. indexoomberg dollar spot formed this golden cross earlier this week. it is when the 500 day moving average crosses the 200 day moving average. technical.ove a good i also dislike the fact that this is a really pretty chart of the looks of it like a dinosaur or jargon that is about to awaken. exact.stegosaurus, to be
rishaad: if you close your eyes, a looks exactllike that. i'm going to go with haidi on this one. sorry, david it is haidi's turned today. catch up on some of the key analysis, you can save those charts for future reference. wants to come of course from the fallout of the rate hike coming through inorn news conference taking place as well. ♪ what's a gig of data?
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