tv Bloomberg Markets Asia Bloomberg June 24, 2018 9:00pm-12:00am EDT
rishaad: asian stocks and negative territories. -- in negative territories. we are now awaiting chinese market reaction. trading remaining a major headwind with tariffs front and center. united states and china and a game of chicken. they warn of a breakdown in global rules. they could bring emerging-market relief. we had to -- we had to stumble. i'm rishaad salamat. this is bloomberg markets. ♪
rishaad: take a look at what's going on in the moment. singapore, taipei at the moment. taking a look at equity pictures. having a look elsewhere, on the downside. taipei, bit of a mixed session thus far. busy week ahead. let's take a look at what we have in store for the china open with sophie kamaruddin. sophie: some swings moving higher but a loss could be anticipated in shanghai despite a rrr cut. plus, the treasury is reportedly planning more curves than chinese investment in industries. zte in the spotlight as it nears the final hurdle. they've reportedly paid the $1
billion fine. it has been a roller coaster ride, zte shares down 54%. we are keeping a close eye on the offshore. set for its longest losing streak since 2016. that's where the u.s. china trade spat still very much in view. that could continue unless the daily fixed income comes up lower-than-expected today. rishaad: let's get more on this china rrr cut. billion inike $108 liquidity. stephen engle is here. do you have an idea with the pboc's goals are here? thinking it was going to happen last friday and it came late on a sunday. it goes into effect july 5. it's a very targeted injection
of liquidities. you said hundred $8 billion, 700 billion yuan. you're looking at the top banks of the big five, plus about 12 joint stock commercial banks. they have strict marching orders what to do with the 500 billion yuan, that's going to be freed up. further on the path of reform in this equity swap at trouble larger state owned companies. it's something the banks have reluctantly had to comply with given this is policy lending, these state-owned banks. the authorities need to inject liquidity, cut back required amount of reserves that these banks keep at the central bank, but at the same time participate more in the equity swap. this going to be another 200 billion yuan, $30 billion at
smaller local lenders to inject into small to medium-sized enterprises. the concern is growth concerns. trade friction and signs of slowing economy with deleveraging. the bank is as expected, adding liquidity. but very targeted liquidity. how does this cut compare with others we 've seen? what is that the case? stephen: that's right. again, you have to parse the words from the pboc. they called it precise and targeted. analysts we've spoken to say we could expect another rrr, perhaps even more open market cash injections. the central bank said they are maintaining a prudent and neutral monetary stance.
you are likely to see this targeted lending. they do want to support growth, but they do not want to give the carte blanche to the banks to lend freely. ,hat would create more risk which they are trying to dwindle. rishaad: thank you so much for that. that's stephen engle, our chief north asia correspondent. let's get a first word news now and it's over to haidi. says theutsche bank trade is not over between the u.s. and the raise -- the rest of the world raises the risk of slowing a vibrant u.s. economy. trumps threats to tariffs on $250 billion on chinese goods and a levy on a new car shipment growthut .3-.4% of gdp this year. the eu says it's ready to
retaliate to the 20% tariff on cars. there rebuffs trumps a session that -- assertion. it says it will escalate in the coming months. meanwhile, eu officials are in china for high-level trade talks. saudi arabia and russia got what they wanted out of the opec meeting with a deal to increase production. minister energy decided to keep oil prices under control. however, iran says it doesn't believe oil will get waivers from the u.s. under the sanctions reimposed by president trump. >> i believe that president markets doing against fundamentals. against the free market and its not to the benefit of the consumers.
price caused by the action. malaysia's prime minister says fair value is 3.8 to the dollar, the same as the previous government imposed in 1998. it hasn't traded at that level since 2015 but they told bloomberg the current exchange rate reflects the state of the world economy, not malaysia's. strengthen,like to but it should be done naturally. >> what is the fair value of the wing it? >> 3.83 would be good. haidi: hear more from our exclusive interview in the next hour of lumber markets, plus catch the full interview in the special conversation on friday at 6:00 p.m. in hong kong and
8:00 p.m. if you are watching in sydney. 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 haidi lun. this is bloomberg. rish? ahead, we hear from one of its earliest and biggest investors of it later on the program. they tried to snatch the chinese market from the jaws of the bears. we talked to the managing your. -- managing director. this is bloomberg. ♪
reserve ratio cuts. nto some banks, it comes i effect before the fifth of july before the u.s. tariffs on chinese goods. it has rattled investors and sent money pouring out of emerging markets. let's get more on all this area we have -- we let's get more on this. what are you making on this and what are you seeing on the ground? guest: we see liquidity tighten a fair bit to the start of the year. way below the last five-year average. loan growth, way below the last five-year average. the signs are visible in the data coming out of china. visible slowdown. rishaad: could you call it a slowdown if you have 6.9% to 6.7%? guest: it is incrementally down, as compared to what the policymakers were expecting.
got to overlay that with the fact that it's not getting easier. there could be predicted growth in the coming months. you look at both the things. the other thing is that most of the are our is in addition with the reserves and they are fitting liquidity by increasing rr. now that it's stable, they need to give it back to this sector. rishaad: it's interesting when you said in your research, the rrr was used in an environment when it was far more effective than it is now. what has changed? guest: the biggest change is the fact the chinese government is no longer trying to be liquidity into the chinese markets. seeking real estate investments and other investments. now the environment is moving to an era of writing -- rising effects of this to declining fx
of this. the structural case for rrr cuts is there. 60% should go to 33% of the next five years. rishaad: there is a lot of balance sheet tightening. a lot of clampdown's. guest: and they go hand in glove with that. you will see a moment where the economy implodes. banks are going to end up booking a lot of and deals and increase lending from all sites. that's something policymakers don't want. rishaad: why is it this particular policy and not another one? guest: they've been doing things like providing market liquidity to people. this is something that allows them to reach out to the broader segment -- rishaad: but the major interest rate cuts, the benchmark interest rate cuts. guest: the have not done that because they need the
environment where the interest rates are rising. if they allowed to go to low in china, it could have a negative impact on the currency. rishaad: it's an interesting conundrum. the rest of asia seems to be tightening the other direction. guest: china has tightened. the chinese economy is different than the other the conversation function. they have another way of addressing those conversations of growth and leverage. rishaad: and the gains and background of geopolitical risk beyond the trade site. we are not calling it a trade war yet. when do we go into that? the thing is, you don't have to have one. the specter of one that could lead to investment decisions that are not going to be good for growth. guest: you are right at saying it's very symbolic. it's not significant in terms of dollar value, but about how they conduct policy going forward.
not just linked to trade, but geopolitics. how the u.s. see china and how chinese policymakers respond. that could create disorder in the economy. rishaad: let's have a look at what that leaves you with investment decisions. it's not let the people taking risk on the moment. what about in the future? what about your strategy? guest: we think about asian equity growth is fairly recent for this year. the big concern is on geopolitics and trade. if it's coming next month, then the environment gets worth. valuations will get cheaper. financial conditions have titans. the cycle has turned around. it used to be tight in indonesia, the philippines. china is balancing the cuts. with multiples are going to be lower this year.
we might end with positive returns this year but in an environment where you take risk off the table. rishaad: that means you are going to places like the u.s. what about your? what a -- what about e urope? guest: we are looking at equities. we took money off in europe, as well. about also concerned developments there in terms of the strain between the cdu and the csu. and immigration. if that worsens and you see the breakout, it's going to be negative for european assets. thank you very much indeed. always a pleasure to see you. we are getting the yuan fix and have a look at what's going on right now. there he go. -- there we go.
6.48 93, slightly weaker than what we had on friday. just to say also that on that that 6.50 handle. is 6.489. let's have a look at what is going on in the major event in europe, as well. the turkish election. it does look like the incumbent has won the presidency again. >> we are seeing a reaction with his double victory in the poetry and the -- parliamentary. the has helped boost turkish lira after it tumbled to a low at the end of may. it has given some of its event back but it could be set for a fourth day of gains. lira wentr -- and the up. trading at the strongest level in a week with attention on that
governments policy choices. rishaad: thank you so much for that area -- for that. president erdogan has claimed a new mandate. his opponents say the election was not a fair race. let's get to his temple. -- to istanbul. how does this victory look for erdogan? >> this is a clear victory for president erdogan. some said he wouldn't find the 60% he needed and it would go to a runoff. but he clearly did find that growth. he got 53% of the vote. this is an historic win for him and not turkey will transform from a parliamentary system to a presidential one, giving president erdogan the sweeping powers he's been clearly seeking for years now. in the parliamentary race, they
also voted for parliament. he didn't get the majority that he wanted for his party. allies mhpth his party, they do have the majority in parliament. rishaad: where do we go from here? what is the opposite of the opposition, have they conceded yet? simin: it looks like they have conceded. let's not joke around here. president erdogan was the clear winner in this race. talk fromwas a lot of the opposition that there was voter fraud, but none of that has actually taken shape and president erdogan has seemed to have won this election. rishaad: i have a code here, saying this result marks the large step toward turkey's transformation into a one-man regime.
is that the sense that people have there, as well? loved 50% of the country president erdogan. the result of the election shows that. but the secular turkey is very concerned about the policies and they say he's becoming increasingly authoritarian. talking about investors, they are concerned about his economic policies. before the election, during an exclusive interview with bloomberg in london, he actually said that if he wins the election, he would take more response ability over monetary policy. it's no security -- it's no secret he hates high rates so investors are watching to see what happens with high rates. they think it needs to be increased to rein in double-digit inflation and deficit. but president erdogan may push for rates to be lowered. rishaad: that could be one of
rishaad: we are back with bloomberg markets. looking and counting down to that market open in shanghai. benchmark composite is t3 on the edge of a bear market as investors space the specter of a trade war. we are in singapore. it's been a rough couple of a week's for asian markets, hasn't it? >> it sure has. if you look at it for two weeks ago, we started off with the
trump kim summit in singapore, which investors said lacking details. then we went into the fed rate hike. we had news from the ecb. then last week it was escalating trade tensions between china and the u.s.. and all of this combined has led to several research firms or analytics slashing their targets for various soft markets including hong kong and msci asia-pacific. they were siding all of these reasons. and then you also had some of these markets falling into bear market territory, some getting close to it, some falling into technical corrections. it's been a crazy couple of weeks. strength.si relative -- itot exactly hinting is hinting at a stronger start of the week, isn't it? >> it is. so there are a lot of analysts and traders up there who spend a
lot of time looking at technical indicators. for a lot of markets in asia have been oversold. they are below the 30 level for rsi. what this typically means is that it's oversold and now is the time to buy or get back into the market. these have happened before earlier in the year and several of these markets have fallen into oversold territory and up rallying quite a bit after. it could be a good week for asian stocks. rishaad: it's really been a year thus far that we've seen global markets generally flat in the year to date. and asia, certainly many of them are down. what happens next? >> i think it's a lot of wait and see. i think what people are waiting for is what is going to come out of the trade war's going on between the u.s. and china. said,ur guest earlier
it's two weeks away. july 6 is what we are going to be watching out for. anythinggoing to be new coming out of the u.s. or china solidifying the trade war's or backing away from? i think that's really key for what investors are looking out for. rishaad: thank you very much indeed. have.s what we this is what the hang seng looks like come up for a much flat. -- looks like, pretty much flat . industry groups on the move. take a look at these banks, as well. this is because of the rrr cut taking place in china. releasing something like $108 billion into the system. there we have it. no positive reaction to all of this with the biggest loser c, chinathose, cb construction bank.
rishaad: hong kong observatory we'll come at 9:29 here in hong kong and in shanghai. we count down to the open which is imminent. we get to the free markets, things are lower. many people expect it will be higher as we get more liquidity out there and they can lend more money to small and medium-sized enterprises. that's the hope. turkey has got another term for president erdogan. he's got a mandate to govern the country. 53% of them voted for him. 31% for his closest challenger. that's something affecting the
lira, as well. elsewhere, nothing new on trade. tensions are continuing. we are looking ahead to the right decisions in indonesia. they have raise rates twice now in recent weeks. the open is upon us. here's sophie. sophie: we do have the benchmark trading above 2900, getting .5% at the start of the open. this market is teetering on the edge of a bear market. the pboc cuts may not be enough to offset concerns around the u.s.-china trade spat. in hong kong, gains for the hang seng up .1%. simile for the h shares index, it could snap a two-day decline. chinext index. it's entering correction territory. is -- thee yuan
fixing is setting a record at 64893. the yuan has also been on losing ground against wider -- basket of currencies. pboculd be expected, the livekip and said it's at a -- relatively high-level. we are keeping an eye on that stock. movers in hong kong, see nook leading gains, rising the most since april 19. we also see tech shares up nearly 3% and auto players getting grounds. -- gaining grounds. let's check on the laggards. we do have property stocks under pressure. let's check in on chinese
banking stocks. goldman sachs said most will benefit from the move. large banks, including the big five, will have a combined for you from the pboc. what do you expect from this rrr cut? guest: it came to no surprise to me. rishaad: we just didn't know the timing. guest: exactly. they had to do something on the policy and we are concerned about the trade war between the u.s. and china. as you said, it came as no surprise. it's just a matter of time. it always happens on sunday, remember? rishaad: it was friday night, actually. guest: not only watching the world cup, but also watching idiocy sanctions. -- pboc sanctions. note price at all.
all. surprise at just simply release almost $100 billion from liquidity to the market. it will help the market. these are the smaller companies and the micro companies. a big concern about the trade war that china can only act on a monetary policy. nothing unbalanced after the u.s. has another round, $200 billion, i mean equipment to trade. haven't seen as much direction with the banks. it's a mixed bag. who is going to benefit from being able to get the money lent to them? that's going to be key here area
-- key here. guest: that's definitely the best question ever. the pboc has another round of cuts. the cuts are 50 basis points. microere an owner of a enterprise, you have -- rishaad: you haven't been getting the money. that's the problem. big banks are not lending to them. they tend to lend to the sle's. you've got to get the targeted rrr's helping some of those banks. guest: that's the big question. even if they have another round of cuts, it's not easy for them to have another loan to the banks. and inay not help a lot the long run for this sme's. for the environment -- [no audio]
rishaad: what's it going to take for this to actually reverse? guest: if you talk about devaluation, asian markets are trading more reasonably. thelike one month ago even, inclusion of the msci, fund manager, index fund manager, they have to jump into the intro market. i don't really see a sharp rebound from here now to the year-end. but honestly speaking, i
don't see a lot of downside at this moment. the council and the pboc are not 5%,ng action, maybe just less than 5% volatility from now to the year-end. rishaad: stick around with us. this is the director of research at kingston securities. let's get the first word news headlines. i'm joined by haidi lun. turkish president everyone has taken aim -- president erdogan has taken aim at the u.s. in its victory speech. he said he stole lots of votes with the america, saying that's where the 2016 people escape to. chp said it acknowledged his when but that it wasn't a fair race. the uk's five main biggest lobby groups told theresa may they are deeply concerned time is running out for a exit deal to protect
hundred -- brexit deal to protect hundreds of thousands of jobs. businesses will have to plan for a worst-case scenario. may has promised on a brexit plan before the summer solstice july 24. a 2018 low followed renewed worries of government scrutiny and skepticism from bankers. the biggest of the currency $5,000, a decline from december's record high to 60% friday. -- 68%. china's drive for clear skies has pushed past japan's to become the largest buyer of natural gas. tonsimported 34.9 million compared to japan's import of 34.5 million tons. governments have forced millions
of homes and factories to replace coal boilers with gas burners. 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 haidi lun. this is bloomberg. we are having a chat with one of the investors, and the returns he's expecting from the tech companies massive ipo. this is bloomberg. ♪
rishaad: let's have a look at some of the stories trending across the bloomberg universe. on tictoc, you can follow the latest on the turkey's election on president erdogan cleaning victory and a new mandate to govern. subscribers reading about how they been using lehman style tricks to describe their debt. stories writing highly as u.s.
and china enter a game of chicken, and china's rrr cuts. is refined our most read stories. bloomberg.com has a writeup on the stories from vienna and opec's agreement to increase output there. check out those stories trending on number of online or on the bloomberg terminal. talking of things that are being moved. sophie: stocks that are on the move, checking in on dpe -- zte 88 day ofcept for losses and falling to a june 16 low but stocks are getting grounds in hong kong, up nearly 2%. in singapore, we are seeing noble group shares rally to an outlook of restructuring, coming after thejumping 25%
shareholders say ok to their restructuring deal. let's check in on korean elders in south korea. after the government unveiled for possible ways to revive property taxes, according to a note from s k securities. it's up over 4% this morning. rishaad: one of the earliest investors and largest stakeholders is set for a windfall in the tech giants $6.1 billion public offering. bloomberg what drove his decision to invest in that company so early. know of this company in the very early days. --n meet make the decision when we make the decision to invest in a company, that's the only ideal. it's nothing.
the secondary markets make the judgments with the numbers. they say we can have another view to observe. react to the innovation the company delivers to them. they don't know the company's background. they have no idea who's a great entrepreneur, they just know this is a small studio. they are screaming about this. they are really loyal to the product. that's why they take a huge risk. means we already got market shares from the competitor. even without signing any hardware. when the company raised funding and the valuation is $1 billion,
it could get enormous return in the future. it looks very expensive, but it's really cheap. >> how much money did you invest altogether? >> $2.5 million we put in. that's something we see a success. >> one of the most successful tech companies in china and you are a major shareholder at less than a million dollars. >> it's great, it's fantastic. we are very happy about that. that it's notis about the history. >> what's another one? what's one perhaps no one has heard of yet but we will hear of in the next five years? >> we mentioned another company. we believe ai and ev is highly related. that's why we invest in
automobiles and a company called horizon robotics. they want chip centers as the infrastructure to global small devices. one of the biggest small devices is a car. think they make great progress right now. still in the early stage. >> some of the vc's we spoke to had a minimum hit rate. toy have a minimum number ipo or grow the valuation by a certain amount. do you have any kind of minimum bar when it comes to your investments? any marked for success at kpi? >> sometimes the venture investment is kind of and ask. you can set up whatever you expect, but it never works. because what we invest in is uncertainty. we have the principal, we have
our strategy. but we don't have the kpi. it's very dangerous. >> are you worried about the potential impacts of trade in -- trade sanctions and a trade war between china and america in the companies you invested? >> in the long run, i don't worry too much. but in the short-term, we worry about how this impacts of the factors. the united states has the best higher education system in this world, and we are working very hard. we have great engineers in this world. they can work together and address business opportunity in the united states and china. americans are so intelligent and so smart. college is a choice. i believe that. i have confidence in the american people. rishaad: richard liu speaking to
rishaad: this is bloomberg markets. up threes price ranged times forecast earnings. she finance officer says it deserves a premium area -- premium. >> we are one of the markets are companies that can be a hardware and e-commerce company, so we deserve a premium. rishaad: i'm joined by a bloomberg intelligence analysts. how does they stack up against
the other big boys in china? the companies are trying to sell himself as an internet company. we compare them to baidu, alibaba, tencent. they have less than 10% of internet sales. the big as have more than 80%. look at growth margins. they are at 14%. look at user base. alibaba has 500 million users. user loyalty to hardware seller is relative to software. rishaad: they are also content providers, too. they talk about loyalty and user base. guest: if you think about eechat, for example, it's cor -- they aren
selling the operating system of the phone. when you change the phone, you stop using the operating system. the loyalty is much lower. rishaad: we are going to have dickie back. thanks for sticking around. maker, a hardware effectively, which is trying to sell itself as being an internet software play. guest: you can call it a high-growth company, but it's definitely a hard where company -- hardware company. there's no question. they smell the -- they sell smartphones. no matter of valuation or market cap, is definitely lower than two or three months ago, where people anticipated. phone just buying a smart
if you ask me to pay 2000 hong kong dollars to buy a samsung galaxy, i say ok. but if you say 5000 hong kong xllars to buy is our me -- iaomi smartphone, i say probably not. rishaad: you say the valuation they have at the moment is looking rather fairytale like? guest: definitely. one more thing i hong kong investor may pay more attention on. firsts definitely the shares listed on the hong kong stock exchange. one more thing, because to delay the cdr might affect the sentiment of the ipo. -- ift think it will be
you want to bet your money on xiaomi, simply subscribe it. some investors will look at valuations, those markets and look at retail investors, what do you think? >> that's one of the icons of tech. capaid they will limit the on the profit margins on cell phones. this will be a high-growth company, but if you like looking at trading twice of the key multiples -- >> that's not apple to apple. one of the prospects in india are growing quickly. high-quality cell phones very fairly priced. >> that's the only thing i'm looking at. it's already the highest market.
they already have the highest market share in india, unlike other chinese companies, they focus in on the u.s. market. rishaad: you don't see them as they used to be before here. you used to get a buzz when they have their new smartphone. you order this phone and it was hard to get. that kind of buzz is gone. said, i won't see this ipo be as high as those internet giants in the last couple of months. it may not be lukewarm, but i don't think it will be very hot. investors have to be cautious with this ipo. >> perhaps more like a razor or more like a tool. >> i hope not. who knows? rishaad: it seems rather
ambitious. what do you make of the cdr being pulled? china deposit receipt. >> that's one thing about china fsc is looking at. probably that it's simply too risky to them, especially since this is the first one. it will be the first one sold. they have to be cautious. problems on the first day would create a bad image to the new cdr. rishaad: it's only half-baked. the have to get the regulation right before they can have them very quickly. >> exactly. speaking, if finally they can issue the cdr and maybe have a year later, it would give a boost to the next share of xiaomi. until then, i don't see it outperform the market. rishaad: thank you very much indeed.
thank you, dickie wong from kingston securities. japan airlines considering its first on sales and story 16. or carriers growth increases $345 million, the biggest rise in bankruptcy since 2010. their rival is fighting to boost market shares. general electric nearing the sale of its factory power generation delivery to advent international at around $3 billion. wall street journal claims private equity is competing and the transaction may be announced monday. quick word on twitter, the biggest winner of the world cup is showcasing a video case -- video streaming strategy. it is up 150% over the last year on interest video and avenue. analysts raising his target.
rishaad: trade tensions at the moment receding. no real breakthroughs. we are where we were friday with regards to brent. anyone winning another -- erdogan winning another term as president. let's find out what is going on. the indonesian session is underway. sophie: gci adding .6%. viewyou take a wider across the region, it is looking mixed. the regional benchmarks set to resume. sliding in japan and korea and sydney.
sorry.roup shares are -- are soaring. that index adding 1.7% this morning. have chinese banks under icbc.re, lowered by the korean won taking it on the chin, extending losses. on commodities, brent falling on his 2% this morning after which's opec deal, goldman sachs called tenuous. thank you for that.
tables bank of china making headlines over the weekend. --'s find out more and that people's bank of china making headlines over the weekend. let's find out more on that. the amount of cash lenders must hold will drop. the pboc says the aim is to support small and micro enterprises and the debt equity stock program. bloomberg is told that the u.s. treasury department is planning to heightened scrutiny of chinese investments. president trump --
erdogan has taken aim at the u.s. in his election victory speech. he said he saw lots of those from america in the opposition. the leading opposition earlier said it acknowledged erdogan's win, but said it was not a fair race. malaysia's prime minister says the value for ringlet -- the ringgit. that was during the asian financial crisis. it has not traded at that level since then. the current exchange rate reflects the state of the world economy. >> we would like to strengthen our ringgit. but it should strengthen naturally. the [indiscernible]
there is an interview with him and kuala lumpur. global news 24 hours a day, on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ♪ the move that was widely expected, the pboc reduced to the move ratio. that's one day before the first day of u.s. terrace -- tariffs on chinese goods begins. they've done something else, sent money pouring out of emerging markets. this month, that is a particular concern of investors. wet kind of impact are
seeing or will we see from the rrr cut? asprobably not as much people's bank of china would like to have. elf, although it is for major banks and quite a decent amount of money, it is quite targeted. help large banks do their debt to equity swap, which is part of the whole deleveraging process. that is a long-term thing playing out in the chinese markets. it's not necessarily going to have a big impact on the short-term trading of equities. the 50 basis points cut itself is maybe below what people are hoping for. there have been hundred basis points rrr cuts in the past. so maybe this is smaller. we are also getting overshadowed. bloomberg is running a report that the u.s. is looking at more curbs on investments that chinese company's make into the united states under the banner
of it being against secured a measures for the united states. all in all, when investors look at the whole package, they are probably saying, yes, it is nice to have a rrr cut, but it will not stop the trade war in the short-term. rishaad: let's look at what is going on with turkey. erdogan, some say, is president for life. what does that mean for the asian trading day? hand, it's good in the sense that at least of the turkish lira, which is extremely volatile, shouldn't be too much of a distraction for asian markets today. investors are probably happy there is a relatively clear result in the turkish elections and people can start to focus on the business side again. at least that is a positive thing. of course, leading up to the election, mr. erdogan was saying
102 things -- one or two things policy best monetary policy which were unconventional -- one or two things about monetary policy which were unconventional. rishaad: thank you very much. you can follow more on his musings and elsewhere on the day's trading on the bloomberg terminal. there's commentary and analysis from bloomberg experts so you can find out what is affecting your money. ahead, reviving the muscular foreign policy that characterized his previous stint.
objections. >> i think the decision is very clear. the decision is on target 100%. taking that decision, members of opec new that their production cannot be 100%. you can only do that by distributing it, distributing the bridge to the countries as an allocation of increase or you do it as a group. all the member countries elected to do it as a group, and thus the unanimous decision. total conformity level currently falls to 50%. the decision has been made to take it back to 100%. which means we would be adding about one million barrels a day of action production. those countries that have spare whatity would need to add goes to one million barrels. gavin, what happened in
your view on friday? it's an outcome that the market was probably expecting. the million-dollar -- that million barrel figure was in line with expectations. it is an uncanny deal on behalf of opec. they reacted positively to calls for an increase in supply. certainly, there was a letter pressure from the united states on saudi arabia as the leader of opec, effectively, to come up with some sort of production increase. opec can now say that they have ticked that box. at the same time, they have been very clever. there is a significant component of member countries within opec that cannot increase production because of the state of their respective oil industries,
infrastructure constraints, and all that sort of stuff. what effectively opec is doing existing meeting their november 2016 production agreement. complyingctually over with their supply-side cuts. i think they were 152% compliance in the month of may. they are just allowing additional oil to flow under that existing agreement. very clever. they keep the supply-side restraint in tact -- intact. benefits the key opec member nations that can increase production, in particular saudi arabia. it will keep prices in the $70 to $80 a barrel range, which is a sweet spot for opec and a sweet spot for most of those major oil producers.
that is the key price of they spending inify terms of new exploration and you -- and researcher. newsitive outcome -- and research. a positive outcome for all producers. rishaad: brent is down 2% now. the spread is narrowing. what does that tell you? gavin: on friday, we saw an immediate positive reaction on the news, a clear indication that the market like the release. what we are seeing is the realization that, hey, it has happened. traders have taken some profits in the market will get on with business. the direction of oil is still very much upwards. there are key structural issues
affecting the oil industry that will provide price support, not the least of which is the fact that the last 10 years we have seen a significant decline in terms of production of researcher. there hasn't been the amount of money going into the ground or production infrastructure to maintain supply at high levels. overall, i think we will see a positive continuation of a trend that has taken oil from $26 a barrel in late 2015 up to the recent high of $80. opec has been very clever with this particular deal. i want to move now to what has been happening with the threat of a trade war. whiche july 6 as the date is when we will have u.s. tariffs put on chinese goods. what we have been doing and talking about is people worried in the equity markets.
it does seem as though people have been sanguine elsewhere. we have not seen them move toward traditional havens, like gold. why? u.s.: it's clear that the dollar is the number one safe haven out there in the market. you also have to look at -- there in mind that they gold price in the u.s. dollar typically move in opposite directions -- and the price of u.s. -- and the u.s. dollar typically move in opposite directions. the potential for maybe for more, although i doubt we will see the sort of interest rate program that a lot of the market have talked about, i think the u.s. will be fairly sanguine with interest-rate rises. because of the fact there is interest rate talk in the market, that has provided under a support for the u.s. dollar, and that is to the detriment to
most other currencies, probably with the exception of the yen and other comments -- other commodities. maybe oil and copper and cobalt performer anywhere new the u.s. dollar. i don't see that currency strength continuing. want to bring up this chart very quickly. , youave etf's, gold etf's see a next this from those. how much of that has contributed to the gold price decline? huntersust under the 13 -- $1300 an ounce. that has added even further pressure. is it a reflection of what has been happening more than anything else? gavin: a little bit of both.
it is certainly a relevant graphic they put up. it has shown that investors, particularly heavyweight investors, have taken money out of the gold sector, out of the etf's, which typically they have been playing at recent times. and that money has been parked at a safe haven in the u.s. dollar. it sounds in congress when you talk about the world's major nation that is in effect generating this trade war, that investors are putting money into the currency. this is not a typical. for the for stable future, for the near term, the u.s. dollar strength will probably continue. i think it can distract from a positive fanatic that is taking place in the commodity sector, whether we are talking soft commodities or hard commodities. certainly, with china's recovery in late 2015, early 2016, we have seen the core commodities
well.rforming very that trend is still upwards. we have seen cover go from two dollars to three dollars a pound. we have seen oil go from $26 to 80 hours a barrel. -- $80 a barrel. i don't think the bigger picture has changed that much. we're just getting through some volatile times, as we tend to do in the resource base with this trade spat that is currently going on. rishaad: thank you for that. catch up with all our interviews with using -- by using our interactive function. moses is our conversation a short time ago talking about xiaomi. you can listen to all of our programs. do check it out. it is tv . ♪
♪ the fourth most routable startup has filed in hong kong. how bad were they? >> investors are looking at topline growth. it was so a massive loss. some of that was accounting for changes in the fear valley of convertibles. but even on an operating -- the fair value of convertibles. it is getting into payments and ride-hailing. they were able to plead for patients. i think meituan will be the same
story. they are putting out these feelers and customer acquisition a new fields. it remains to be seen if investors will indeed as friday high valuation. rishaad: how likely are they going to get the valuation they are looking for? which is what exactly? >> there will be several sales, which is not unreasonable. like 10 times 2017 sales. whether whetherds on you think it will become the next super app for e-commerce, consumer services online. rishaad: will this be another one of these hong kong only listings or will it have chinese depository receipts, which xiaomi has currently delayed using?
>> the chairman has said there was for that option. i think they would want to, why not? let thing i have learned from xiaomi is that the cdr regulatory structure is a little immature. so probably not in the near term. rishaad: very diplomatically put. thank you. let's have a look at what is going on with the japanese stock market. we are nearly at the end of the morning session. it is a situation with the nikkei is down by about half of 1%. topix losing a bit of umph. while many of asia's markets have had a rough riders year, we had the fed hiking, interest rates, with the prospects of a u.s. trade war. we have a look at how the
liquidity situation in japan compares with other markets. with the bond brining -- bond brining -- with the bond buying program. inc. is not piled on debt. in fact, they have been hoarding cash, perhaps because of the the financial crisis or bank of england in the late 1990's. japan has been very cautious. this time, it is kind of good because cash is king. louis we look at market, we don't want to deal with a lot of defaults, etc. rishaad: what about these warning signs about markets like the united states and china? imagine the chinese market would be doing very well this year because the msci,
bah.ah you can say there's the trade war. china is very domestic oriented and is not export driven. the real problem is china has too much debt and risking defaults. same thing in the u.s. a lot of corporate loans, they have no commitments. yield fat titans and the curve starts to invert, we might start to see some defaults. rishaad: what about the chinese equity markets? >> japan's equity market is very cheap, trading at 14 times. the u.s. is 21 times for earnings. i think japan has nice low hanging fruit. rishaad: thank you. we will take a break.
is 10:29 in hong kong and 12:29 in sydney. i am haidi lun. russia got what they wanted out of the opec meeting with a deal to improve production. saudi has said they will keep oil prices under control. the deal approaches $1 million per day. iran says they don't believe they will get oil after the sanctions reimposed by the u.s. >> it is against the market, against the free market. it is not in the benefit of the
iran consumers. the level price caused by actions of president trump. says they are ready to retaliate with a 20% tariff. an internal eu memo rebuffs. trump asserts that the block is treating the u.s. unfairly. in china forare high-level trade talks. 's business lobby groups have told theresa may that they are deeply concerned that time is running out for a brexit deal to protect hundreds of thousands of british jobs. they warned that in the absence of clarity, businesses will have to prepare for a worst-case scenario. they want plans before the summer recess starts. hina has pushed past japan to
become the largest buyer of natural gas. they ordered 1.5 million tons in the first -- they ordered millions of tons in the first half of the year. many factories to replace coal burners with gas burners. bloomberg is powered by more than 1200 journalists and analysts in more than 120 countries. i am haidi lun, this is bloomberg. rishaad: haidi is normally with me. look what is happening with japan as we are in the lunch break now. the nikkei closed this morning with a slight loss of 0.4%. >> we are seeing a loss today. energy stocks are trading at 1.2%. benchmark is
extending losses after capping the worst week since march 6. automakers are -- to impose 20%s tariffs on cars imported from the european union. is aexpert says that it reason to worry about an investment plan for automakers even in japan. mostly lower but we are seeing swings on the mainland market as well as hong kong. shanghai shares are on the up, gaining some ground after earlier dropping. the heavy focus on the shanghai session having fallen in the past five weeks. the worst losing streak since 2016. elsewhere we are seeing shares 17-dayla, set to snap a
drop. the ringgit is continuing to decline after the biggest weekly drop in one month. one investment firm says the ringgit may reach 396 as they are underpricing the inherent value. the prime minister said that 380 is their value for the ringgit. the turkish lira has been on the move, jumping by the most in two weeks. it is taking some of the sting that tumble to a erdoganow in may after was able to claim victory in parliamentary elections. rishaad: but does he have a new mandate? how comprehensive, if that is a word we can use, is this victory
for the incumbent? girl president -- reporter: president erdogan clearly was the victor. opposer got 31% of the vote. some experts were saying that president erdogan would not be able to get the 50% needed and this would go to a runoff in two weeks. clearly that was not the case. rishaad: there is a lot of concern that this will be giving him too much power. what is the view on the streets and what are you hearing? reporter: half of the country support erdogan, but critics of
him say he is becoming increasingly authoritarian especially after the failed coup attempt in 2016. after the failed coup, a lot of journalists, judges, and others were either put into jail or let go from their jobs. there are a lot of people who say he is taking away people's fundamental freedom and fundamental rights. rishaad: how fair was the election? i suppose you don't know much about that in turkey itself. what is the general feeling? reporter: initially, the main opposition party was claiming that they were not accepting the election results. however, they have since conceded and president erdogan of thisitely the winner
of this result. rishaad: great as ever. joining us from istanbul. we're opening a five decade dispute over singapore and the price of water to taking a swipe at president donald trump. we are talking about the malaysian prime minister, mahat hir. he has strictly returned to his previous policy. we will look at why contracts with china are now in his sites. >> we will have to slow down. we didn't have the money. we don't believe in that kind of operation. capacity.as the same some malaysian companies -- we want to have more where we benefit. chinese investors, wanting to
bring in technology and capital to set out a plan -- that is welcome. have argued that because of china's rise there needs to be a balance which could come from india or japan. what are your thoughts? mahtahthir: india should not try to dominate the whole world. your personal thoughts on president trump? mahathir: he is immaterial in that he changes his mind within 24 hours. king,ts to be president then he doesn't want to be, then he is mad. [inaudible]
a maner: can you trust who changes his mind about issues and policy every other day? mahathir: you have to be cautious. you have to know whether this is real or not. reporter: how would you deal with a man like president trump? mahathir: like any normal person. no one in this world is perfect. everybody has strengths and weaknesses. we have to deal with them knowing their weaknesses and their strengths. reporter: do you think that the world order would change with a leader like trump? has it changed? we are seeing issues with nafta, now tensions between the u.s. and china and trade. are you concerned he will turn around and make a trade issue with malaysia? mahathir: if it is a good
proposal, why not? there must be balance. i don't believe in absolute free trade. when the competition is between the weekend the strong, you need some protection. reporter: malaysia has shared waters with singapore. have relations soured? withhir: relations singapore have been ok. they are our nearest neighbor but there are issues that we need to settle. maybe we can negotiate a settlement. what is the sticking point? stillir they are --mahathir: they are swtill chargin 310 for 1000 gallons. we can buy half of that.
but one gallon is 17 singapore dollars which is a lot of money. reporter: is there a resolution insight? mahathir: we will sit down and talk with them like civilized people. that is the malaysian prime minister speaking exclusively with us. it is 8:00 if you are watching in sydney. this venture partner has two companies about to go public. find out more. this is bloomberg. ♪
world's biggest ipos. the mainland appears flush with funds. three of the biggest vc's are funding right now. they have generated nearly a quarter of $180 billion jim -- invested globally. fundingage a series round in china nearly triples that of the u.s.. crunch estimating that they have raised in $21 billion compared to nine from their american counterparts. the hongompanies on kong exchange have not performed that well. one is down around 3% since its debut and this health-care company down as well since it stayed you.
this is a monster $6.1 billion share offering. it gets underway monday. tellsvestor, duane kwong, mackenzie why he thinks the next two years will pave the way for megadeals in this part of the world. >> hong kong has just started the listing rule structure. omi may be the first to fire under that listing rule. i hope that the ipo will be successful, paving the way for many more tech companies to go to hong kong. exitnother interesting venue. your thoughts are about the changes around domestic listings? the move in china to encourage more tech companies to list in the domestic markets via the cdr
plan? reporter: -- guest: i think that the cdr rules are interesting. many of the bigger and successful tech companies have chosen offshore markets for listing. the fundamental change in china has to be listing requirements that enable similar companies of bap's to be able to list in china. a lot of people focus primarily on the cdr element. i think that is just one small push. change to the new encourage the unicorns to list here sooner. about barbara and the significance of their role as investors in the tech space. are they proving detrimental in
terms of clout? are they suffocating for some startups? does it make your job more difficult? guest: it has sometimes made our job more difficult, but on the also annd, they are interesting avenue of exit. they were also taking stakes in early investors such as streaming. in terms of the overall competitive and entrepreneurial environment, a more subdued, strategic investment environment is probably healthy. reporter: does that intense competition between tencent and alibaba continue to grind on? guest: i think it will grind on
for a little longer. both companies have strong abilities to not only do -- the networkin effect on the region side or the w, withrce side and no apymen -- payment. get that effect they can into a lot of new business and continue to be successful. i think that it is probably not too early, at least for the government, to start thinking about regulations and how to -- while encouraging the growth of the home champion but also to be mindful of their effect on the overall start of the environment. it hasn't been detrimental
yet, but if untamed and unchecked, this could be dangerous for years to come. the cofounder of oiming, kuang, joined us. beha, how is demand going to affected by the mainland part being canceled? reporter: the initial idea is there would be a listing in hong kong and china at the same time. whatever you say about the company, there is a shortage of tech companies in china. alibaba went to new york. there will be a big rush for xiaomi, no matter what the company is like. that is probably what hong kong investors were counting on. they knew if there was a big
spike in china, that would boost it. an investor would have to look at the merits of xiamoi on its own without an ipo. rishaad: this is quite an impressive list. some a big bodies as well including china mobile and qualcomm. that is about $548 million of the deal. xiaomi will be able to raise around $4.7 billion, the lower end of their range. the problem is it is only 10% of the deal getting sold to these investors. 90% of the deal will be to normal investors. they will judge xiaomi on the merit of the company. rishaad: the valuation. that is something people are fixated on. they look at this and say, what?
how do you get from this company to this valuation? it was something like $100 billion. price, the at this upper end of the range, $6.1 billion is a big amount. basically, investors will have to decide. is it a hardware company or a big ecosystem and internet services company? is the phone of the control for a venue of services or just a phone? that is the decision investors will have to make. is 20rnings, it's output times pe. apple is about 15 times pe. is it worth more than apple? is it worth him having so much of a stake in the company
sharee of the deal structure? rishaad: this is something we will be watching and we will be talking to you several times, no doubt. nisha is our bloomberg opinion columnist. her breaking news, wherever you -- for breaking news, wherever this is designed for social media specifically with media reports verified by bloomberg. jump on twitter and follow @tictoc. this is bloomberg. ♪
rishaad: it is that time of day, the battle of the charts. wewe have our market editor in sydney and right here with me is david ingles. middle put the -- they will put their best charts against each other and blue -- viewers can access their charts. it will be beauty before age. garfield. [laughter] >> you got that the wrong way round, rish. of the charts, i picked china's equity markets. for most of this month, that has been the absolute pressure point for asian markets in particular,
and also global markets. they are not doing particularly well today and the reason everyone is fretting on this is china is a huge equities market. we are talking a quarter of the asian region market cap. it keeps going lower and lower. you can see the way that has brought the asia-pacific regional benchmark down from being an a performer, just before february, to being an underperformer when it comes to s&p 500. and has brought the msci asia-pacific down even further. we are trying to go the way the world is going to go. this is a good illustration of that and why most equity balls are looking a little bit -- equity bulls are looking
confused at the moment. rishaad: now it is braun over br ains, david ingles. will get an emerging market chart up. the nfci emerging market index. say, -- whatthey youhave at the bottomthere, have the price chart on top, the second panel is the advanced decline line. if that is pointing down, you get more decline on the index. what you see down does indicate that you are getting more stocks at this decline. the red line. ec horizontally is -- that you see horizontally is the peak. jpmorgan just cut their your and
target for acim. rishaad: this is a tough one. saying, look at the future. when i like about this is that it leaves the future open whereas yours has to prescribe something that may well happen. as reluctant as i am, you get a 9/10 david and garfield gets 10/10. your debut is marked by a win. you can interact with the charts go future charts. ♪
david: it is a most 11:00 here. i am david inglis, welcome to the last hour of bloomberg markets asia. battered and bruised, chinese stocks struggle for gains. the renminbi heading for its longest losing streak in 20 months. trade remains a major headwind. the u.s. planning to curb chinese tech and guest -- investments. they are signing security risks.
stocks under pressure as well after opec agreed to pump up more than $1 million per day. the story short, look at gym and right now. -- gmn right now. keep in mind this is coming off what was a fairly rough time for equity markets last week. it was the worst one in about four months. as we talk about oil, look at brent down 2%, top right. we are talking about em's now. we are 5% toward that bear market line. wfyi giveing off - you the bigger picture. this gives a sense of how much money has flown out -- flowed out of these markets.
not just in em but that is where the pain has been felt. this, $1.5 billion taken out of that market so far last week. this is one of the charts we brought back earlier. it does show that not only is momentum picking up, but also, you are getting more and more stocks joining in the decline. he advanced to klein line -- advance decline line, the line going down, that is essentially both theare -- when price and that line are pointing down we are far from a potential reversal. jpmorgan cutting its here and target for the index. 1230 on theing at msci emerging markets index. the week is long, let's hope it
improves as the week goes on. reporter: the eu says it is ready to retaliate to the u.s. threat of a 20% tariff on european cars. the internal eu memo rebuffs trump's assertion that the bloc of the eu is treating the u.s. unfairly. strength is replacing rules as the basis for trade relations. eu members are in china for high-level trade talks. this turkish president, erdogan, has taken aim at the u.s. in his victory speech. voters he saw lots of from america vote for the opposition in the sunday poll, saying that is where the 2016 coup fighters escaped to. p acknowledged his win but said it was not a fair race. the value for the ringgit is 3.8
to the dollar, staying at the peg the previous government imposed in 1998 during the crisis. and hasn't been to that level since mid-2015. mahathir tells bloomberg that the exchange rate reflects the state of the world's economy, not malaysia. : it should be that measure. reporter: what is the fair value of the ringgit? mahathir: i would say 3.8. reporter: you can see more of our interview with him later in daybreak asia. we have a full conversation on friday. it :00 p.m. if you are watching in sydney. -- 8:00 p.m. if you are watching in sydney. worries about government scrutiny and skepticism from global bankers. this scare has cryptocurrency
falling to a 2018 low from its record high. global news 24 hours a day, on whatnd twitter, powered by 700 journalists in more than 120 countries. i am debra mao. david: let's look at how markets here on the mainland and in hong kong are faring. effecte, it comes into next thursday. that is before this first round of tariffs. currency has been deepening. look at this in this mulch was trade outlook with the renminbi heading for an eighth day of losses. the dollar has the longest losing streak going back to october.
a lot of these are tensions between the two largest economies grappling. the u.s. is considering curbing chinese investments in certain u.s. industry citing economic and national security risks. they walk us through what donald trump, steven mnuchin, and others are thinking. guest: this is part of the broader trade makes that donald trump has going on. chinamaking it harder for to come to invest in the u.s. or at least increasing scrutiny. part of them goes toward national security concerns in the tech industry. one of the core concerns that china ishas around this idea that they are pushing state-sponsored and developed tech sector which could give them a leading edge in the world economy. apart from tariffs and other
trade measures, the u.s. is trying to focus on how to make it harder for chinese companies to invest in the u.s. and how can the u.s. protect our own national security interests better? david: i'm not sure if these tripleare connected, the archive, should we draw a straight line between what they are anticipating and how does that compare to what we have seen from the central bank? fact that wedern know is that it is a fairly targeted easing in many respects. certain borrowing companies are facing hiding -- higher borrowing costs. they are trying to eliminate that. this goes toward supporting the set restructuring program they are trying to push through. they say that they will remain neutral and prudent. that is not easing but it is harder to ignore the broader backdrop.
[inaudible] we have seen indicators. we know that the global back truck has been choppy or than many expected -- choppier than many expected. on top of all that are trade tensions. realistically, it has been soft as far as data. latin america, europe. enda, thank you so much. mark joins us out of singapore. .e is the global cio out of global health management. mark, a pleasure to have you on the program. with all of the negative news, out most ifto close not all of my long positions in the equity market. is that something you would advise me to do?
mark: we would not advise you to do that. think about the first half of the year. it was much more volatile than last year. we had concerns on the geopolitical front in many ways. equities managed to find a way to grind higher. see the strong underpinning of global economic growth. still in placere as we enter the first half of the year despite the headlines. david:. we will talk about your calls in just a moment. you have some interesting insight here. how ubsant to look at is escalating back and forth between china and the united states. do we get to a trade war or do we avoid that? guest: we think that we avert a
trade war where you see global trade shrinking as a percentage of gdp, or gdp growth. to date, the measures are relatively small in terms of their overall impact. some of the things where the tariffs are in place, commodities can be substituted. there has been some effort on the united states side to make sure these things don't start to impact consumers. david: do we have to start talking about how this impacts the fed? do we have to be watching this t o be asking them? guest: this is an interesting point. some of the weakness we have seen globally has to do with the fed message around these topics. u.s.ottom line is the economy is doing well. u.s. companies are doing very well. our focus isaid,
on the u.s. strength and we believe that the u.s. economy can withstand further hiking. in contrast --s, if they are so focused on what the u.s. is doing, that means they are not trying to be the global central bank and i think that has contributed to some of the near-term weakness that you alluded to in em markets. david: the fed has hiked rates seven times already. when do we start to feel that? look at em or the strength in the dollar, we have felt it to a degree. the real question is, when does the tightening start to withdraw liquidity at a rate that the u.s. economy or the global economy can't tolerate it.
so far, we haven't seen that. signaled --p has ecb has signaled it will put the qe system in the future, the bank of japan is still providing liquidity. while that tightening has begun and continues, in the netted states it is not at a point where the fed is choking off states,- in the united it is not at a point where the fed is choking off growth. typically what killed the rally was the fed hiking rates intentionally trying to choke growth because inflation has gone too high. their policy is different. the goal is not to choke off the but to try to get back to what they consider to be a more normalized interest rate without choking off the expansion and growth. and the ecb, the boj as
well -- mark, welcome back on the program in a few minutes. i want to give you a preview. .he prime minister of malaysia he doesn't believe in absolute free trade and how he plans to deal with donald trump. we have to talk about oil and opec. friends are reaching deals to reduce output. this is bloomberg. ♪
the spread is narrowing between the two. saudi arabia promising to keep --under control if you will. signaling a supply boost. about $1 million per day under opec's agreement. this materialized after iran agreed to climb down from its objections. >> i think the decision is very clear. countries, decision, theers of opec, knew that oil production cannot be 100%. you can only do that by distributing it to the countries as an allocation of increase, or you do it as a group. the member countries elected to do it as a group. it was a unanimous decision. >> total conformity currently.
the decision has been made to take it back to 100% which means we would be adding around one million barrels per day of extra production. -- would mean close to one billion barrels. rishaad: -- david: mark is cio at asset global management. what are your broad thoughts from what we saw on opec and friends over the weekend? mark: as you point out, oil can spike higher from here to $88 per barrel, but what we are saudi arabias the and the united states are working hard to make sure that the sanction regime put in place around iran does not contribute to a spike going forward as we
approach the summer driving months in the united states. there is coordination there. david: this pertains to the emerging markets to begin with. we have seen rough times already and it has not been a bad few weeks. you have close your outperform or and are overweight on em's. help us understand what triggered this call from you. guest: i think that there are a couple factors. the u.s. dollar has been stronger than we anticipated. a trade deficit and fiscal deficit in the united states, there has been a flight to safety toward the u.s. dollar, ironic considering that the u.s. has caused some of the triggers for this perceived need to fly to safety. bank will beral
making policy that is good for the united states, whether or not that is good for the rest of the world remains to be seen. and as the risk appetite has come down, you may not want to reach to em equities at this point but we still are overweight in em and dollar-denominated sovereign bonds where they have attractive spread that we think is relatively attractive here. is there any emerging-market globally back to equities that you would exclude? mark: the countries that have twin deficits are always more vulnerable. one of the broad themes as we enter the second half of the year is the importance for global diversification, whether
that is across different emerging markets which continue to divert in their sources of growth or cross developed markets which are pursuing very different policies on the fis cal, monetary, and political side. david: one last question, you are underweight jb's against cash. what is the prime window? at some point that trade runs into the boj and they will cap yields. mark: this is an interesting one and one that we like. like the rest of the world, japan is recovering and how long can you keep your tenure at zero? it costs little to put the trade on. we like that to underweight versus overweight.
typically you see the 10 year rise at the beginning of a tightening cycle and level off. we believe that is what we have seen on the u.s. side. david: you are also advocating long yen. why? mark: the yen is a great stabilizer in terms of safe haven currency. we think that it can add stability to the portfolio. , on a purchasing power parity basis, very undervalued versus the dollar. over the longer term, we think the yen could appreciate. also on days where you see a shock, money tends to go back to the yen. david: and those days have become more common recently. out ofou, mark, live singapore, the global cio at ubs
early days. when we were making the decision to invest in that company it was just an idea. that was nothing. a lot of those in the secondary market made the judgment on the number. have another viewer observe. how many users react to the innovation the company delivers? those fans don't know the company background. they have no idea about the entrepreneur. they just know it is a small studio. they are crazy about them, to the product. installe a huge risk to their os. on my reading, we already got
market share from the competitor, even without sending hardware. when the company decided to raise funding -- although they although itenue, looks very expensive but it is very cheap. reporter: how much money did you invest altogether in xiaomi? guest: no more than $100 million. reporter: one of the most successful technology companies majorna and you are a shareholder at less than $100 million? guest: i'm sure this investment will return multiples. it is great. we are very happy. for the vc, the challenge is always that the history but the reward. david: that was the morningside venture capitalist cofounder,
richard liu. a quick check at your bloomberg business flash headlines. the chinese online food giant has filed an ipo in hong kong. goldman sachs and merrill lynch are among the joint sponsors. meituan reported 12 revenue of $5.2 billion. it is widening to about 89 million per year back. this rideshare company launching in australia on monday as it pushes ahead with international expansion plans. they plan to use feedback from others and passengers in cities.an twitter could be the biggest winner from the world cup as it showcased a video streaming strategy. analysts say it could be a catalyst.
11:29 in hong kong and singapore. i'm debra mao. the u.s. treasury department is planning to heighten scrutiny. that is under emergency law. it would put president trump's trade tussle with beijing on an irreversible course. the white house will examine possible security threats in areas such as new energy vehicles, robotics, and aerospace. the u.k.'s main business lobby groups told theresa may they are deeply concerned that china is running after a brexit deal. in a letter to the prime minister, they warned that in the absence of clarity,
businesses will have to plan for a worst-case scenario. saudi arabia and russia got what they wanted out of the opec meeting with a deal to increase production. the saudi energy minister promised to act decisively. approaching a real one million barrels a day. iran says it doesn't believe buyers will get waivers from the u.s. >> i believe that president trump is going against the ,arket, against the free market and it is not to the benefit of consumers. debra: china's drive for cleaner skies has pushed it past japan
to become the world's largest buyer of natural gas. despite pollution, government have forced millions of homes and factories to replace coal boilers with gas burners. 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'm debra mao. david: thank you so much. lots to consider. let's get a check with markets. china is going into it. >> not there yet, but we are keeping an eye on that. check out what is going on with the yuan, getting hit this morning. -- being overshadowed by nerves as the u.s. treasury may put more curbs on chinese
investment. we are seeing a mixed bag. the yen trading at a two-week high. stocks the biggest drag in the wake of trump threatening tariffs. asian shares are mixed. down for a third session ahead of cpi data. space, off byties 1.7%. after friday's opec deal. as oil prices slipped, that premium has shrunk to the smallest after friday's opec le. this shrinking spread. david: and of course mark will be joining us in a few seconds. sophie, thank you so much. -- apologies.eld
what are we doing now? there we go. futures down. down about two basis points on the u.s. 10 year. investors reassessing, continuing trade tensions between china and the u.s., and those declining treasury yields. tumbleuities continue to from a horrid few days last week. one bright spot, the turkish lira. fx 24 is your function to get this chart. after the incumbent president claiming victory on the weekend. just in case you are wondering what you are looking at, the different boxes indicate how that moves across your global financial centers.
move we areing the seeing in asia. interesting to see how much further this pushes down. for more on that and perhaps a preview, mark joins us to talk about this. mark, let's begin. what does this mean? >> i think investors are fairly happy that we've got a reasonably clear result here. won and it has doesn't look as though we need a second round. his party has also won parliament. people are thinking the worst case scenario would be we get a split, a second vote on the presidential election and somebody wins the parliamentary side. you can tell from the way volatility is reducing in the lira that investors are relieved about this. we are seeing one-month volatility drop to the lowest
its been in six weeks. in the run-up to the election, the president did say some unconventionalre about the way he sees monetary policy. investors will be hoping he doesn't put too much influence over the central bank. for the time being, it is a sigh of relief for people who thought the lira could be dangerous for markets. anyd: we were hoping that sort of bid the lira received, you could take that and broaden it out. it doesn't seem to be spreading beyond at the moment. >> the dispute between the united states and china is overriding that. the latest story bloomberg is running is the united states at potentially more
cutbacks on the way china invests in the united states, so there are more curbs put on direct investment. at potentially more we are seeing the chinese yuan get quite a bit weaker. it is heading to about a low for the currency. people are speculating that the yuan could be used as a weapon against the united states. although it was a low for the c. positive ring in some respects, some people were hoping for a larger 100 basis points. it is helping to continue the deleveraging story. it is not being taken as well as one would hope. david: the dollar is up, mark. you know what is also up, yen. goodbye to the 55 day support for dollar-yen. what does that mean if we reach below that? >> it is only about 20 below
where the market is currently trading. it is a good sign of where the market direction is. the 55een trading above day moving average. if it gets below it, that could bring out quite a few people who didn't have a major position, but they may now see a trend developing. last week, people were getting excited with dollar yen. it looks like a sudden change in direction in dollar-yen, which is usually a sign of risk off as well. it could turn into a bumpy week. david: we will see what happens when london gets underway. mark, thank you so much. let's have a look at what is happening in malaysia. singapore over the price of water, taking a
swipe at president trump. the prime minister swiftly returned to the outspoken foreign policy. have a listen. the cost is too high. we cannot afford. we will have to slow down. we don't have the money. believe in that kind of operation. [indiscernible] chinese investors wanting to bring technology and capital, that is welcome. because of china's rise,
there needs to be a balance. that could come from india as well as japan. what are your thoughts on that? should not tryy to dominate the whole world. worldk the wealth of the should be shared with all countries. >> your personal thoughts on president trump? mercurial. [indiscernible] >> can you trust a man who changes his mind about issues and policies every other day? >> when you have a man like that
, you need to be cautious. you need to know whether this is for real or not. how would you deal with a man like president trump? >> nobody in this world is perfect. weaknesses and wel with aeverys have to deal with them. do you think the world order will change with a leader like trump? seen issues with nafta, now tensions between the u.s. and china with trade. are you concerned he will make a trade issue with malaysia? >> it must be balanced. i don't believe in absolute free trade.
competition, you need to have some protection for the week. watersysia shares the with its closest neighbor, singapore. our relations better than before? >> relations with singapore have been ok because we cannot avoid the fact that it is our nearest neighbor. there are issues we need to settle. >> what are these issues? what is a sticking point? [indiscernible] that is a lot of money. >> is there a resolution in sight? >> we will sit down and talk
with them like civilized people. david: that was the malaysian prime minister speaking with my copilot, haslinda amin. catch the full interview, our special conversation friday, 6:00 p.m. program, here on the we are talking airlines. choppy weather ahead as trade tensions escalate. can a falling oil price help? ♪
trade tensions to contend with. this, the founder of the transport research firm out of singapore. nice to see you. i want to start with opec. airlines get hit or benefit differently depending on which way they are hedged. of howave an estimate much the industry's profits get hit, or get a lift on a 1% move in oil prices? bump inwould be a 3% airline profits for every 1% drop in oil prices. the bulk of the asian airlines have limited hedging. the profit margins are razor thin. >> david: you are saying because we are hedged at 15%, most airlines get hit?
>> exactly. they have been upgrading their aircraft fleets. they are operating new regeneration aircraft, which are more fuel-efficient. the helps them mitigate impact of oil prices. there arech ones out least hedged, and which ones are fairly covered for now? airlines ande indian characters will benefit from this. those who have very thin profit margins, such as taiwan's china airlines, as well as india, will be the big beneficiaries. you,: i was going to ask do you think it is advisable for airlines to hedge at these levels?
it didn't quite work out well for cathay pacific a few years back. >> i think the key is to treat it as risk management tool and be consistent. it is very difficult for airlines to take positions and speculate on oil prices. the japanese carriers consistently hedge. they hedge about five years out and 40% to 50%. david: let's move on to the trade spot. ins impacts what you do equities in a lot of ways. let me start off with aircraft purchases. is what is happening now a real this moves boeing's position in the market? >> absolutely. it is going to reshape the way
the chinese buyers look at planes. of theow, the majority major chinese characters -- carriers have more boeing planes than airbus aircraft. boeing has a slight market share lead. with the escalating trade tensions, that is going to change. we expect airbus to have increased chances from the chinese players. they do need more aircraft with air traffic growing right now. david: another angle to the some point they come out and discourage chinese tourists from traveling to the united states, who gets hit harder, u.s. or chinese carriers, and who needs that
more, chinese or u.s. carriers? u.s. need the chinese carriers -- tourists more. every year about 3.3 million chinese visit the u.s. they are the third-largest source of arrivals outside of canada and mexico. importantly, if you look at the amount of spending the chinese make when they visit the u.s., it is huge. that is going to have a big impact, not just economically, on the airlines, the retail hospitality sectors in the u.s., but also psychologically a very effective tool. you've seen that happen with
south korea and taiwan when the chinese imposed cuts on them. david: what does it mean for cargo? tensionscalating trade is negative. if you look at the air cargo market, it is extremely strong. asian airlines are big beneficiaries. with escalating trade tensions and potential trade wars, that is going to dent demand for sure. [indiscernible] david: one last question. benefit them? which ones get busy? where does extra capacity get redeployed? >> the airlines will try to
divert their capacity to other regions. europe could be a key beneficiary of that, as well as intra-asian markets like japan. david: all right. thank you for coming on the program. of -- indianer markets open up in six minutes. here's sophie. >> you have the sensex presuming losses over consumer and energy players. watch what is going on with horticulture. this company reports fourth-quarter earnings. also, checking in on icici bank. this after the banks internal investigation into a whistleblower's allegation about accounts found no
irregularities. checking in on currencies, softer footing once again. make 2018 the worst year for the rupee since five years ago. barclays is the most bearish forecaster. checking in on indian 10 year bonds, the yield holding around that 7.82% mark. this after the biggest weekly decline since april 6. let's check on some potential stock movers. this as local media reports they are eyeing a controlling stake in pnb housing. raised.k was keep an eye on this space. david: sophie, thank you. coming up, the scope of its losses after filing for an ipo here in hong kong. have a look at the losses from
david: the world's most viable startup has filed for an ipo in hong kong. we are talking chinese food delivery. they also revealed the scope for the very first time. to tell us how large the losses are, lulu chen is here with us. >> that's right. the good news is there operating losses are narrowing. if you look at the net loss, it is a big figure. for is also accounting their stock which will no longer exist once the ipo is completed. that said, they are still at a loss and their marketing expenses are huge. the other good news is that
their revenue is increasing more than double to 34 billion yuan. david: do you think we will get the valuation they are looking for? what is the sense there? >> according to our sources, the company is still looking for a $50 billion valuation. that puts them more expensive if you look at other companies. when you talk to investors and analysts, they will say the company is demanding such a valuation probably because it thinks it has a better capability of monetizing its platform. it does have a wide range of services and now they are expanding into new services. because they are the market leader in a lot of sectors, they have a better chance of monetizing these businesses. david: is it likely going to be just here in hong kong? >> right now, it is just hong kong.
they are not going to deny or completely rule out the possibility in the future, provided that xiaomi is going to be the guinea pig and figure things out first. david: thank you. lulu chen with a snake the -- a sneak peak at the losses. minder big ipo to keep in as we progress throughout the year. let's have a look at what is happening in turkey. a big weekend. the incumbent president claiming victory. dollar-lira, 4.6241, so we are seeing some strength there. that seems to be the standout. over the next few minutes, interesting to see when that market comes online, and when you get the london traders at their desks.
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