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tv   Bloomberg Markets Asia  Bloomberg  July 24, 2018 9:00pm-11:00pm EDT

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rishaad: asian-pacific markets are rising. another round of strong earnings. the dollar and the offshore yuan. the shanghai composite racked up its biggest three-day gain in more than two years. investors are still worried about a trade war. top european figures are heading to washington with growing anxiety in the business community. in hong kong, i am rishaad. haidi: chinese conglomerates may be the king abroad once again. this forces them to doing attend a linoleum of in belgium. this is bloomberg markets: asia.
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rishaad: a big three-day move. this is under i have are. this guadalupe, taipei. let's check in with the early move there. singapore is up by 4/10 of 1%. we do have equities and focus. we have positive earnings coming out of the u.s.. that is helping to lift up equities in the u.s.. this is a question about 2% from the all-time highs in the u.s.. is there room or reason to pop any higher? we are taking a look at what else we are watching.
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when it comes to the nikkei, we are watching the yen with those modest gains. we look ahead to the bank of japan's market operations to see if that is scaling back the bond buying. the bond market is very much in focus. let's get over to sophie. this is a market that is drawing sentiment regionwide. sophie: we are seeing this out of china's policymakers. that helped spark the rally in shanghai stocks. these bond yields are climbing toward a one-month high as well. we math on a lot of potential for chinese stocks here with industrials and materials. they were many heroes. when it comes to stocks to watch today, i want to highlight this on the radar.
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this budget 2019 and 2020 earnings estimates did -- due to intense of u.s. penalties. ons is doing consultation dual pressures. that will begin later this month. they are situated takeover of a belgium. couldhinese oil giant surge profits 50%. has up, the trading has been halted after the rough ride for vaccine makers that have seen the company chairman detained by the police. manager says fund that this provides a bargain given the health care selloff. the fund management says the selloff will be temporary given that investors are overreacting and have strongly in the -- indicated this. meeting,i had of this
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president trump has tweeted that the eu and the united states should drop all tariffs, barriers and subsidies. he says the eu will not do it. he says that the tariffs are the greatest. let's go to jodi schneider. what is the wanted to president is giving to other countries on trade and tariffs? to say that was contradictory would be underplaying it. >> he is saying that tears are the greatest and that we should get rid of them. his point are that the tariffs are the greatest for the u.s.. it is the greatest tool he has for the children if the eu and other countries don't play fair on trade. he thinks there is a $150 billion surplus -- trade surplus that the eu has with the u.s.. he wants to see that playing field level. he says tariffs and further sanctions are his tools for doing so.
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with a goodt come plan, he is prepared to raise tariffs even more. even though the talks are aimed at trying to tamp down some of these trade tensions. what are the main sticking point between the eu and the u.s.? >> one is president trump's worldview. his philosophical do on the eu as a body. he doesn't like multilateral international bodies. he used that as not the best way to get things done. he accused the u.s. of being at a disadvantage in those bodies and to the eu. he is starting from that philosophical standpoint area then you get to the real issues with trade. obviously, that $150 billion surplus bothers him. stackeds the eu has against the u.s. in terms of things like auto imports. he also doesn't like securities and other things that the u.s. -- eu represents.
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what does he want out of the talks? he is not expected to come with a great plan to resolve these tariff issues but instead to takeg and trying president trump's temperature on this and see where they might have areas where they can work together to try to diffuse the situation and lower the temperature. one area might be autos. trying to be af carefree situation or lower tariffs among the major auto exporting countries and bodies. this is the eu, canada, the u.s. and japan. another area may be industrial products and a deal between the eu and the u.s. on that. there was some talk of a transatlantic partnership
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between the eu and the u.s. under the obama administration. they were not completed but there was talks of a narrow approach like that occurring as well. several things in the eu. this is in the president's toolkit. we'll see if there are these things that the president things are enough to avoid another round of tariffs. schneider, thei international editor there. let's get you to first word news with paul allen in sydney. >> theresa may is taking control of brexit talks, sidelining her new chief negotiator with eight months to go. investors interpreted the move as a shift toward a soft divorce from the eu. other leading figures have said that they are already planning for the u.k. to crash out of the single markets next march with no deal on future trade relations. both wednesday in an
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election seen as crucial to u.s. and china ties. a former cricket superstar is seeing as the favorite. none of the three main parties are expected to have a clear majority. that paves the way for fractious coalition talks. pakistan's leaders must work with the military on control of nationaleapons, security and foreign policy. at least 74 people are known to have been killed by wildfires in greece. it has injured 187 people. 11 of them are in critical condition and the death toll is expected to rise. thousands of people are forced to escape the fast-moving flames with many taking refuge in the sea. greece has declared three days of national mourning. u.s. airlines are expected to be complying with beijing's demands about taiwan. carrierspril, foreign
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were told they must refer to china taiwan or the china taiwan region and that should display the island and hong kong in the same color as the mainland. sources say american, delta and united will update their websites over the next few days. ,lobal news, 24 hours a day powered by more than 2700 journalists and analysts in more than 100 20 countries, i am paul allen, this is bloomberg. chinese conglomerates may be renewing their appetites for oversee expansion after a slowdown last year. this could be a $10 billion takeover of the belgian insurer. emanuel joins us now. be the largest yet. this is in their playbook.
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emanuel: this seems to be a growing trend this year. we saw this a few years back. in this case, the conglomerate is trying to strike another massive deal in the insurance face. this is for countries like muchgal, this one is bigger and it could potentially draw more scrutiny from regulators. you know what you have with the chinese capital controls. how do they get around all of this? manual: we were asking them how they will convene as regulators thehina and then also, from south side perspective in belgium. the key question for insurance
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deals around the globe, it is basically access to customers and to data. it is becoming critical in an industry when the profit margins are shrinking. what is really valuable is the data you have about the customers. rishaad: that is one to watch. baigorri.anuel tona will outmaneuver japan become the single biggest market in asia. we will share that with you, next. later, what to expect out of china's massive ipo's area in --curities ways weights in. bloomberg.this is ♪
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haidi: this is bloomberg markets: asia. i am haidi.
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rishaad: i am a shot salamat in hong kong. -- rishaad salamat in hong kong. joining us is jim mccafferty. in broad brush strokes, what is going on. ? jim: china is paying lip service to what trump requires. china has absolute control. policy,ols its one trip its fiscal policy and it can use its currency to make its goods more competitive in the u.s.. that actually acknowledges the trades. china is using all it has available to it. i will bring you a
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chart. this is showing one has been happening in the emerging markets and the pain their suffering. this is the emerging-market index stocks in the white. those see money flooding on right now. i'm getting a sense that we are china that bottom? jim: is down about 6% so far this year. japan is the biggest constituent of aipac. exhaustion us the stocks have responded to china pumping more money into its economy. endogenouslots of things that asian companies can do to improve the way that investors work with them. things like dividends, corporate governance, shares and buybacks. all of these things --
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china is growing at twice the rate of the u.s.. it is trading at a material discount u.s. equities are in they can do quite a lot themselves to reset the -- were: 1840 is what we getting today. yuand offshore and onshore be converging. 40 is what we got. does this continue to suggest that china is pretty comfortable with a weaker currency? also, if you look at these new spending measures that report growth going into the second half of the year, at the
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fundamentals of the currency might not be so bad? i think china is responding to trumps measures on trade directly. parallels with japan in the 1980's with the reagan administration. that culminated in this accord in new york in 1985. governments around the world agree to depreciate u.s. dollar. what is different is we can't have any multilateral decisions happening anymore because trump is so unpredictable. that is international relations theory. countries are trying to protect their own interests. still a material proportion to gdp competition. saying that the expectations when it comes to these trading relationship are so low at the moment because of all the rhetoric of the trade war. even if president trump manages
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we wasgotiate some wins, in another leg up when it comes to the stock market. i just want to mention that the weakening is another one year low. is there any justification to another leg higher? jim: there is often a disconnect between what is happening in the real economy and what is happening in the stock market. the index is composed of industries and we see that here in asia. perspective of china, korea and japan and taiwan, they're exposed to the u.s. in terms of its trading links. asia, look at southeast they are quite insulated from what is going on in the u.s.. to say the stock market should --e material decline of
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because of what is going on in the wider economy is a wrong implication in our view. you were talking about a realist perspective. is this a prisoner's dilemma? you have something called constructivism, that is what we had back in the late 1980's. you have countries working with each other. that has broken down. it you think about what countries are doing now, i think it is domestic protection while --ng mindful of the national international arena. i think what we are seeing with china right now is a real test of this. if you look at trump, he does not have absolute power. he can't get everything through congress. if you look at the totalitarian the control of monetary
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policy and control of fiscal policy, trump can't compete with that. rishaad: where do we go next? jim: we see markets adjust to the worst case situation in terms of trade war. of course, the whole supply chain is internationally connected. inherit innherit -- the system. we are getting back to some of normalization. this is a trade were but is it also a hegemonic work russian mark -- war? jim: the u.s. has been the .lobal hedge fund -- hegemond user can japan as the second-largest economy globally in 2010. be the point, china will
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greatest economy and they will overtake the u.s.. you have president trump throwing out the playbook when it comes to governance. do you think we will get to a point where the chinese version of governance is looking a little bit more appealing? even as you have this soft power and the rest of it being pushed so aggressively by beijing? jim: if you look at what is going on in the u.s. and what is now, on in europe right all of the social unrest and dissatisfaction is related to a lack of real wage growth. the fact that we have had a lack of real wage growth is back to 2008 and 2009. the fact that we have had dysfunction going on in the economy was probably not sufficient to keep the population in check. from the point of view of
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people's happiness, but they have in terms of packets every month, a model where absolute control seems to be embedded does appear to be working better. concept of whole liberal democracy and whether that is the best outcome for a modern economy will be contested. endorseake japan, they the democracy angle we have in the u.s.. we still have 75 years of democracy in japan with the same party in power. year, apart from to, you can't say the democratic model has been truly tested in asia. it will take time for us to work through. remember, bloomberg users can interact with the charge that we brought up on g tv . they are featured on bloomberg tv, you can catch up on canned houses. this is bloomberg. ♪
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a quick check of the latest business flash headlines. is said to be in china for a last-ditch talks about its semi conductors. and regularsations have been taking part over the last couple of days. the deadline for the $44 billion deal expires at midnight on wednesday. shareholders and other governments have already given the go-ahead. harley davidson has trimmed this 29% downofit margin from 10%. that is less than a squeeze then some expected. they are trying to blunt the impact of higher tariffs impacted last month. china's securities regulator is
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said to have approved the ipo of shenzhen-based manufacturer. about $930ise million, it was previously before a $1.6u.s. billion deal. we are counting down to the open in hong kong. how are we looking? rishaad: we are shaping up. this is the hang seng. let's have a look at some of these other companies. they will probably be making a few headlines. with a noteey out saying that they do see second quarter revenues from these gaming companies to be as solid as they were in the revis quarter. this is a by 1.5%. their continuing to lurch upwards.
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towerncludes a corporation. that will be the biggest ipo since alibaba. loan --francis lun will be around to go through all of that. that is next. ♪ retail.
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and it can be included with your internet. which could save you hundreds of dollars a year. plus, get $150 dollars when you bring in your own phone. its a new kind of network designed to save you money. click, call or visit a store today. just as we run you up to the start of the trade of the , lots of things currently moving. trade may be on the back burner. we do have the pboc easing policy and a statement coming out of beijing that they would be investigating infrastructure. there is the biggest three-day rally that we have seen in two years. turkey is booking some emerging market investors. lira again, for the
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it was off by as much as 4%. sterling is moving to the upside as theresa may had a family taken control of exit talks and relegated this. cpi from australia is out any moment as well. haidi: you are seeing optimism for stocks in hong kong. sengung send -- hang adding. on the mainland, the large cap gauge, that is set for a fourth day higher after the best three-day gain in more than two years. you have telco tech and energy shares leading the game for the large cap gauges. you have easing. this is the last that we saw earlier. taking a look at what is going
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on with china, that segment has been very much in focus. this is contractors, she -- machine makers. encourage moreo positive profit dollars with the earnings season looming. goldman sees deep value in the development sector. the coupling looks set to continue. you can check out this chart in the gtd library. there finally i learned enough. see these chinese stocks against yuan weakness. the stock is falling by the daily limit here. the restructuring plan has been rejected by the financial
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advisor. let's get to the market. let's have a look at what is going on. .e are joined by francis lun shanghai is on an absolute tear. francis: before, everybody was praying that they would lend a helping hand. their prayers have been answered. premier held a meeting and asked to the toicials to use their means help the economy instead of credit tightening. there loosening credit.
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this is like 500 billion yuan into the banking system. a return toentially the old playbook. francis: the economy has been shifting toward being domestically focused. the saying is that the government will use the infrastructure investment to boost the economy. the u.n. is in debt. that happens again. sustained economic growth is much more important to them. do you think this is an
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actual fundamental shift in monetary policy and fiscal policy? is a something that beijing would actually admit to? the second half of my question is how this affects their reform, restructuring and .eleveraging francis: you can put that aside. the ship happened last thursday. commercial banks were buying up second quarter papers from corporations. this was given a lifeline to those were the companies. you could inject 500 doing u.n. and the banking system. this is to boost the economy.
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i want to take out -- another look at the u.n.. yuan.. -- what are the fundamentals looking like? the data is going to look very good going into the second half. they could have 6.8% gdp as a result of that. does that lend itself to stronger fundamentals? short-term, ihe think the weakness in the recent months is from the swing of the u.s. dollar. it is the u.s. dollar exchange rates going to 94. currencies, everything, it fault.the yuan's fault.he us. dollar's
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you shift the blame. rishaad: we can see the yuan is basket.gainst its that is the dollar. francis: in 2016 when there was -- right nowght, it is very difficult to shift the money out of china. have you been terms of your investment strategy? i think you got it wrong. francis: i think the central government monetary policy change the outlook completely. you had to revise this upward,
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this is because of the government stimulus. i think we can see that achieved 30,000 in this quarter. what will drive it? francis: it is the change in government policy. rishaad: which stocks? francis: the financials. of theke up about 50% hang seng index. especially the mainland banks. they were trading at five or six times per year. youas extraordinarily low. saw the banks were looking good this time. you explain the
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overwhelming and sustained bearishness? it never recovered after what we saw in 2015. analysts keep saying that you look at valuations and they are really appealing area you look at the -- appealing. they are really hedged against a potential trade war. think it is too much government intervention. the government is ahead and everything. of course, when the market crashes, the government will support it. investors are fleeing the asian market. you can make any money from it. perhaps they need to let
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it grow. us, francis lun. in the meantime, let's get you the first word news area -- news. paul: donald trump tweeted that tariffs are the greatest, sending a warning to america's trade partners. that this man is not carrying a new deal to washington. he wants to sound out possible solutions. >> they sounded nice but they are rough. they are all coming to the white house. i said you had to change. he said we don't want to change. i said ok, we will tariff your cars. mitch mcconnell is warning moscow that more sanctions could
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be on the way. he said that russia has been mingling in american elections and must not do it again. last week, the president stood next to the russian leader and cast doubt on u.s. intelligence. this man spoke to bloomberg as the bank posted second-quarter earnings that beat estimates. shares jumped, rising the most in a month. tensions coulde trigger a market correction. >> they just needs to be a and also,scalation possibly physiological needs. we believe these tensions will be resolved. our view is that things are going to get worse but where they get better. >> ivanka trump is pulling the
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plug on her fashion line 18 months after stepping back from the company after aims of conflict of interest. her products were made overseas, even as the president decried outsourcing. this brought accusations of favoritism and pharma stores have recently dropped this. hundreds of people are dead or missing after a dam collapsed in southeastern last. the news agency says the dam was a joint venture between lau and tie partners. the portion that was collapsed was an auxiliary dam. much of last was hit with heavy seas and storms. it saw three times its normal rainfall. global news, 24 hours a day. powered by more than 2700 journalists and analysts in more than 120 countries, i am paul allen, this is bloomberg.
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china plans to roll out 5g ahead of other countries. more details on that just ahead. this is bloomberg. ♪ haidi: this is bloomberg
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markets asia. i am in sydney. rishaad: i am in hong kong. is supposed to be the biggest ipo since alibaba. the chairman there is tom. he says that they will improve for the next generation technology. >> we will continue to increase our sharing capacity. transmissionfor tower maintenance and more copy has of sharing with us for the developing the need for 5g. we will look to deepen our
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relationship with the local government. rishaad: there are possible snags. this plan could be undermined by president trump's trade war. let's look at the bloomberg companies reported. let's talk about what the major snags or road bumps are. worries about the trade war, the hong kong stock market has not been doing all that well. there is concern that they may not be able to raise as much. as goodany may not be as what they were in better circumstances. the trade certainties -- uncertainties aside, are there long-term structural issues with this company? bruce: the big issue is this is part of a bigger plan that the chinese government has the -- to
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become a leader in 5g. want that you should be able to download a feature-length movie in a matter of seconds. china plans to spend about 200 billion yuan rolling out 5g networks. this would not just about china's howard but the three major state owned wireless companies, china telecom,, china unicom, this is part of that plan. being do you see this as a commercially or politically driven enterprise? bruce: i think it is a bit of both. certainly the government would like to be able to get some of the money for this 5g rollout for investors. if you can raise money by having than that helps to
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further the political role. haidi: thank you for that, bruce. us, francis lun. would you be staying away? francis: i will be staying away. utility of a utility joint venture. the concern is we need the yield. thisding to the figures, is actually under 1% unless the dividend increases sharply during the next two years. it will not be an attractive investment.
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the mainland banks are giving you 5-6%. how in the world will you buy a utility with only a 1% yield? haidi: have you been enthusiastic or bought into any of the arguments so far this year russian mark a lot of them have been very hyped. ultimately we have been disappointed. these smaller ipos actually give you a good return on the first day of trading. you only trade for the short term. rishaad: why didn't you go into the tower? let's say you are there for a date, you will not get into this. you're contradicting yourself. francis: you invest on what the
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market can give to you. if the market is fluctuating getly, this year you can't any money from trading in tencent. then you switch to smaller ipos. rishaad: are you looking for to any other ipos in the pipeline? the other is the first pharmaceutical stock. i think it closes today. rishaad: that is one you're looking for? francis: i think there will be enough money in it. i think it will sell in the first day. rishaad: thank you very much.
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of -- 19ad 29 minutes minutes of trading so far in hong kong. investment --hma investment. haidi: we haven't seen a good investment for them. we have them falling. difficult to his ago that the company announced that expected a first-half net loss due to low investment income. we have had industrial and material stocks falling here including alexa and china. makers arecine continuing to slide. they are easing the decline in recent days.
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i also want to highlight industrial securities, this is a broker that holds 170 million -- 178 million pledged shares. it has been falling 5% on tuesday. bargain despite the selloffs looking temporary. investors are overreacting and bromley indicating many stocks. with these declines, i want to highlight that we see stocks with them swinging. we are coming off of the session low. haidi: let's take you through some of the stories that are trending across the bloomberg universe. we have a terminal all about the seagram here that is freed on $100 million bail after least to an alleged sex cold. -- cult. they are headed for the biggest
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multi-performance in two years. over at tictoc, a feature about employees not showing up for work. inck out those stories trend online or on the terminal, there is pointing more to come on bloomberg markets asia. this is bloomberg. ♪
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rishaad: we're back. this is bloomberg markets in hong kong. haidi, here in sydney. let's get you look at the business flash headlines. this has all changed in madison square garden. coca-cola is being replaced by pepsi. the deal includes all msg properties including the radio city music hall, the beacon theater and of the forum in inglewood. rishaad: technology will be
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based south of shanghai. it was approved on the 18th of july. the registration notices appear to be removed from the website later that day. haidi: we will stay with tech, tencent is looking to become dominant by investing $150 million a year into a $13 billion industry. let's head over to our asian tech reporter. thisis tencent seeing in industry? dave: they see an opportunity to generate more profits than they normally would. they want these place to stick around longer on their titles. what about gaming companies like ea and blizzard? is there anything that separate
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tencent -- separates tencent from them? >> when companies like blizzard and ea want to come to china, they usually need to partner with someone like tencent. tencent boosting this industry in china is more efficient. it is easier for them to get access to the customers and send to their product and broadcast throughout the chinese internet. rishaad: what are the risks with e-sports as an investment russian mark -- investment? this story we wrote recently featured honored of kings. there is potentially a huge amount of investment that is going to waste. rishaad: thank you a lot for that. coming up, we will be talking to fraser how we, the co-author of
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red capitalism. we will ask him what he makes of the pboc's latest missive. this is bloomberg. ♪
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rishaad: markets searching for direction as the rally in china stalled shanghai. unit, one ofher hna the big losers. a seven-month halt in shenzhen. top european individuals head to washington amid growing anxiety in the business community surrounding the -- a trade war. haidi: the tables are turning at signaling aetwork,
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dramatic rise in facebook's long laundry list of problems. this is "bloomberg markets: asia." ♪ haidi: we have been on inflation watch. second quarter inflation numbers out of australia. a bit of a caps on the kobe dollar -- o.b. dollar. we have definitely had more asian than hits on the economies that announced numbers last month. there could be some more support for regional bond markets. yuan depreciates against the basket of currencies. there is an inflationary tone to the rest of this part of the world.
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more benign inflation looking ahead as well. the shanghai market is just about positive. haidi: -- it is a mixed session, as you pointed out. bp pharma is among the leaders in hong kong. chinese stocks have been have beeng as we seeing imperial and industrial stocks under pressure. the onshore rate is down about a 10th of a percent. yen is slipping after the boj left bond-buying unchanged. korea, we have been keeping an eye on what is going on with consumer confidence and sagging, with the change from the bank of korea, falling. the korean yuan is up 6/10 of
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1%. i want to highlight some stock movers in the region. motors, the stock in tokyo is losing ground, off by 4%. first-quarter profits looked disappointing compared to the previous quarter, with north america a concern. tariffs be imposed, the carmaker may raise u.s. prices and consider joint production in the united states. another company delivered a second quarter operating profit that met estimates. than expected operating loss in the second quarter. it may readjust its china and korea production to adjust to the trade war.
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haidi: supply chain uncertainties very much in focus. with the movers, let's get you the first word news. pakistan voted on wednesday in the election seen as crucial to u.s. and china chives -- ties. a former cricket superstar sees a slight favor, although neither party is expected to raise a clear majority. n's next leaders must work with the military on control of nuclear weapons, national security, and foreign policy. tariffs returned to the headlines on wednesday when president trump meets a delegation from the european union. he tweeted tariffs are the toatest, sending a warning trade partners if they don't agree to what he thinks is a fair deal. nice, but they are
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rough. they are coming in to see me tomorrow. i said, you have to change. they didn't want to change. f your, we will tarif cars. >> the fallout from last week's talks with president putin stands into a second week. mitch mcconnell is morning moscow more sanctions could be on the way. he said russia must not continue meddling in u.s. elections after 2016's presidential elections. comments from president trump that cast doubt on u.s. intelligence. this bank posted second-quarter earnings to beat estimates. zurich,umped in triggered by a jump in investment banking profit. investment trade tensions could
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trigger a market correction. confident andbe there could be a need for markets to correct. it is in the cards. resolved,t will be but things can get worse before they get better. global news on air, 24 hours a day and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am paul allen. this is bloomberg. pboc has fixed the daily yuan to the lowest level since 2017. more, we are joined by mark cranfield. another day, another one year low. seems to be, it
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tolerating this once again. mark: yes, for the moment, it is all fairly gradual. 6.8 is quite a big number. people, the moves have been relatively small day by day. since the middle of june, this was relatively large by yuan standards. dollar yuan at seven hasn't been there for a long time. --ple are weathering wondering whether or not it will continue to creep in that direction. this seems to be an assumption the pboc would defend number seven, but the market is underpriced for this. if we reach some point where the trade war is continuing, the volatility could really pick up. the market is just not ready for that.
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everyone is assured it will be very calm for the time being. rishaad: what happens next? aren't they just going back to their old ways? mark: to some extent. everyone has been telling china for some time, let the market forces drive your currency. when you have the pboc easing policy, money market rates come down. the typical thing that would happen is the currency is weaker. people got used to a very long time of the pboc keeping rates at a high range. now it is moving more freely. when it moves freely, it tends to go a bit weaker. it is going in the opposite direction to where some
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international people expected it. it will be interesting, coming up. as long as we don't see an end to the battle between the united states and china over trade, the uan could continue in its own direction regardless of what is happening in international markets. cranfield in singapore for us. let's bring in teresa -- they are just going back to the playbook, aren't they? >> things are going ok in the markets. sure, but thenres they have to intervene and manage things. sinceve is relatively big is a lot ofere feeling the pboc is still in control.
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a marketinks it is currency or a free currency. if it goes to 7.5%, the feeling is you have lost control and there will be more panic. there is the choice to pick one asset class at a time, often. fraser: one of the good arguments was to give chinese consumers greater buying power so they could import more things and buy more things so the retail investor could spend more. it is in a horrible position. they are trying to partly playoff the trade war impact, respond to the way the rates are moving. then, there are talks about
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currency manipulation, losing control. they are in a horrible position of their own making. the volatility allowed companies and markets to adjust in a stronger position. now they are under pressure and no one wants to take a risky decision. haidi: that window is closing or is closed. the yuan is starting to look like it has weakness against the basket of currencies. how much of this is maybe a turnaround inat the current accounts? fraser: i think that is part of that. the difficulty with the currency is the fixing. it is still so dominant in our thinking. everyone is looking to see what the fixing as. regardless of the currency or economics, we are all ready to pulse-reading
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for the economy, because we are so used to the pboc being under control. violent forve been the currency. it moves son't seen quickly over the past few weeks. fullystill too early to appreciate the different factors at play. think it sounds like you beijing isn't quite a bit of in quite a bit of trouble with all the balls they have in the air. if you have this economic loosening, is that enough to tide them over? fraser: they can muddle through. it will depend on what will happen with this trade war.
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that will not be a quick fix by any means. they could have started deleveraging many years ago. they were very late to get round to deleveraging. now, they are trying to deleverage, and they need to pump money into the real economy. a horrible position. haidi: it is a major external factor, the trade war, a really pessimistic scenario going to drive china to a moment of crisis. fraser: it could be. that i think china is doomed is grossly unfair. alone,h the numbers
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china can muddle through. i always thought they were going to shake the system into a crisis. with the trade war, that could be it. what does a trade war actually mean? this is not something we have been used to for 30 or 40 years. trade has been expanding and barriers have been coming down. global trade has been expanding broadly. trump's worldview is, if we buy more of your stuff and you buy it first, that is unfair. defecit, thats a is unfair and he is going to fight that. different picture than what markets are you still -- used to. haidi: there are people in australia that have not lived through the recession.
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a lot of adjustment and uncertainty. fraser stays with us. we look at how china paschi economy will fare -- china's economy will fare amid all these trade tensions. aptaad: we look at an description of asia's credit outlook, on the way. ♪ rishaad: we are back.
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this is "bloomberg markets." fallout amidgns of reports from japan. the united states showing growing anxiety with international companies. guests joining the conversation.
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what are you making of this? >> we are seeing signs of softness in the world economy. a report overnight hinting at some weakness. all -- but big companies are starting to put out warnings, like harley davidson. ware is a feeling the trade hasn't yet proven to be a game changer or derailed the global economy. but there are worries this could be having a material impact. ad: is this having a material impact on sentiment? pmischart shows composite in europe coming off a little bit. that is in white. sentiment, turning down
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again from what we saw at the end of last year. secondhes econd -- the round effects we have to be wary about. what is it that china is seen in the economy that we are not to return to the bad or good old days, as some would say? >> how far will they take the deleveraging versus the growth? the balance is tipped. deleveraging is not the priority. it had already been causing problems for the economy anyway. is a lot of pressure and private sector bankruptcies and involve more strengthen that economy. economy.trengthen the
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the view is they will start doing whatever they can to keep things moving. ende: are they taking a chisel to the economy rather than a sledgehammer? fraser: it is all tweaking. people have never lived through this trade war -- atrade -- a trade war. what does this look like? will there be less containers, are things not going to be delivered? we don't know. theill see once we see impact. in the last quarter of 2008, by theas unaffected global financial crisis, then hugely affected, and then they brought out this huge stimulus. everything depends on economic growth in china. >> are they seeing something we aren't? isn't this it? >> maybe they are being more
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realistic. they are not looking at official gdp. things are unpredictable. rishaad: doesn't this validate what the government has been saying? fraser: to some extent. if you want to talk about tencent and high tech, that is different from northeast china, which is dreadful. ende: if you were looking at an indicator, what do you look at to indicate whether china is slowing down or not? fraser: that is difficult. i don't think there is one. it makes it harder. you don't have a good data set. how much of the cost will companies absorb? how much of the fraction of the trade war are they going to absorb? -- friction of the trade war are
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they going to absorb? you will see a shift in sentiment from companies, talking about doing business there. will they be moving factories out? there is no single indicator. ende: do you see a turnaround in the near term? fraser: i don't think so. we're talking about issues of intellectual property and level playing field. that will not be solved in a short time. 's export disinflation something we should be concerned about? fraser: possibly. we could be back to 6.7 in a few days. we will see. rishaad: always a pleasure. thank you very much. you can catch up with all their interviews on tv .
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the interviews we have been talking about and have a look at the bloomberg functions. you can even instant message during our programming. this is for bloomberg subscribers only, tv . haidi: facebook has its problems. they also have a solution. it is under scrutiny over data privacy. it is taking steps to address user safety. it will release second-quarter earnings later on wednesday. >> 2018 have been a year of reckoning for facebook. concerns around fake news and russian election meddling. the social networks problems continue. in a datan embroiled privacy scandal. mark zuckerberg testified in hearings. there is constant debate over how the website polices content.
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it has seen a slowdown in user growth, particularly in north america, it's most lucid -- lucrative market. user engagement has declined. the photo sharing platform, has grown tremendously, with a $100 billion valuation and one billion monthly losers -- users, more users than facebook had when it bought instagram. users seem to like what they see. s spent 53 minutes a day on the android version of the app, five minutes less than facebook users spend on their app. investors are excited about instagram's room to grow. it is drawn in younger users and is a big hit in new markets. it is no longer about sharing photos. video is now in the mix after the platform launched ig tv,
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allowing anyone to produce and post longform videos. the hope is that it will establish influencers who draw audiences to the app. instagram used to rely on facebook for its success. now facebook may depend on instagram for its own user growth. decided tobook has set up a tech hub in china, despite its cap being blocked therefore years -- its app being blocked there for years. tell us about the hubby and why facebook is persisting -- this hub and why facebook is persisting. >> they have $50 billion in registered capital, which counts as dipping in your toe if you have $600 billion as a company. the hub is being set up in the
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shenzhen province. - it looks like an effort to tap in the that. -- tap into that. rishaad: is this just another ploy to get back into the country? down.facebook played it they have similar efforts in countries like brazil and india. they set up these innovation hubs. it is probably more like an effort to tap into the country's engineers, and, get into a market where they have been blocked. it is quite different from the other markets in which they are dominant. it gives them a chance to see what is going on from the inside in those countries. rishaad: our asian conglomerate editor joining us from tokyo. athie, having a look
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mitsubishi motors. delivering a beat, but not beien g -- being cheered on. sophie: underwhelming first-quarter profits. north america is very much concerned. could raiseotors prices in the united states if auto tariffs are imposed. on stock falling to neutral trade tensions. and hitachi falling as much as 6%. the full year order outlook for the company was weaker than expected. delayed,rs are being but does expect to remain strong. -- capex to remain strong. will investu chem
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$1.5 billion to build a plant in the united states. it will find that investment by itself. you have gaining ground here for a sceond -- second day. ♪ phones have made our lives effortless.
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has takenesa may control of brexit talks, sidelining her new chief negotiator with just eight months to go. interpreted this move as soft. planning fores are the u.k. to crash out of the single market next month -- march with no deal on future trade. hundreds of people are missing after a dam collapsed in southeastern laos. it was a joint venture between lao, thai, and south korean
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interests. almostring struggled for 24 hours to prevent the collapse, which happened during heavy rains. now known to have been killed by wildfires increase. the flames struck two coastal resorts near athens and injured 187. the death toll is expected to rise. thousands of people were forced to escape the fast-moving flames. many took refuge in the sea. greece has declared three days of national mourning. u.s. airlines are complying with taiwan.'s plans for foreign carriers were told they must refer to china-taiwan. maps should display the island and hong kong as the same color as the mainland. airlines will update their websites over the next few days.
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ivanka trump is pulling the plug on her fashion line 18 months after stepping back from the company over claims of conflict of interest. most of her products remain overseas even as the president decried outsourcing. several department stores have recently dropped the line. global news on air, 24 hours a day and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am paul allen. this is bloomberg. thanks. let's get into the market action. we had that close over in tokyo. we are seeing a little bit of enthusiasm disappearing. it is an up arrow story. off 4/10hinese stocks of a percent. hanseng upying up --
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half a percent. filipino stocks are rising for a second day. filipino peso is set for the best winning streak since a role. -- since april. let's look at the aussie dollar. we got headlines of inflation for australia. the currency down to tenths of a percent. -- two tenths of a percent. delclinig --s declining. we saw a drop in consumer confidence. the bank of korea fell by the most in 20 months. we are waiting on that index. haidi: in the global bond market, pressures are building, coming from turkey's unexpected
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decision not to raise its key rate. the boj could be considered to tweak the edges of its yield curve when they meet next week. kathleen, let's start with tur key. president erdogan on his influencing -- erdogan his influencing central-bank policy. kathleen: it doesn't sit well with investors. a selloff ingered the lira, turkish stocks and bonds. the key rate is 17.75%. bloomberg into the and go to our chart. blueis a very dramatic line, teh rate -- the rate hink. -- rate hike. the white line is the inflation rate. you see how rates suddenly jumped to 16.5%, another rate
10:34 pm taking it to 17.75 this is the first meeting of the central bank of the republic of turkey since erdogan won that reelection and gave himself new powers and made his son-in-law the economic czar. erdogan has rather unorthodox views when it comes to inflation. high rates cause, rather than says, whichon, he is why he thinks the central bank should not be so aggressive. this action curbs fears about loss with the central bank's independence since erdogan has become such a powerful president. this could mean more capital flight, more depreciation of the
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lira and even higher inflation. rishaad: let's look at bonds amid the latest headlines. we have the fed meeting, boj meeting taking place next week as well. kathleen: when we look at the rising global bond yields, this has been going on for a w hile, as the federal reserve stays on this course to hike interest rates. the rate hike does not come until september. there could be a press conference around the meeting. well-known goldman sachs yield for says the the united states, the 10-year yield will be going to 3.6% by the end of 2019. >> there has already been a
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notable rise in interest rates for the medium and long end. the flattening has not been good for fixed income portfolio investors. been this cautious looking for opportunities in credit. it will be increasingly difficult for fixed income investors to do well. there is speculation about the bank of japan, that it is pushing upward on bond yield. back to the bloomberg chart library, so we can look at what is going on. that is the ten-year jgb yield. a pop up to even though there was a fixed rate operation, there is the suggestion that bond traders are waiting for that tuesday decision. you see the french ten-year,
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german ten-year, and u.s. ten year. they have all traded kind the japanese yield. it is a clear signal that global investors are taking this seriously. if the jgb will let this curve shift higher, that has curve for u.s. and european bonds. rishaad: kathleen hays in new york, there. markets head of the us. credit sector is with buffett says, when the tide goes out, you find out who has been swimming naked. >> this is very interesting for the asian market.
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we are close to the white for the past four or five years. at the same time, there are plenty of risks on the horizo n. the rising yields have been talked about. china hasppening in been leading to a lot of volatility in our markets. now is the time to differentiate . valuation output has become stronger, but you do not get involved with everything and anything. so liquidity concerns are lower. that is what we mean when we say the tide is going out. rishaad: defaults are taking place in china.
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does that worry you? manjesh: what is happened in the past few days, there are concerns around increasing defaults. issue start to go down a bit. in terms of the kind of fiscal and monetary package that has been announced in the past few that will make some difference for the accessibility of fines -- funds. we were not expecting the easing to be coming up so quickly, though our economists have been theing for easing in second half compared to what we saw in the first. this is a good sign from a macro-development and a view. -- point of view. expecting the
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role of other currencies and assets at the moment to be more destabilizing? manjesh: it is going to be a concern going forward. continues unabated seven in amore than term, the rest of emerging-market currencies will be coming under stress. for has implications corporations, which will be issuing dollar debt. the risk is that it spreads to the other em market. are already seeing what is happening in some countries in terms of pressure and currencies. factor to look out for. haidi: i want to put up this
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quick chart, which goes back to one of the points you made about this synchronized rising global bond yields. -- rise in global bond yields. there's the question of whether japan will tinker with its policy when it meets next week. how much of this is market participants creating a bit of activity during what is seasonally a pretty quiet time of year? forward?ou see going tweakect the boj to maybe things around the edges of currency control. manjesh: if you look at the official stance, it does not look like anything has changed. said, the local
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participants, traders around the world, will look at a certain probability something will change. maybe not in the next meeting, that over the next 6-8 months -- but over the next 6-8 months. in terms of the impact on u.s. treasuries, german bunds, thatw drive the benchmark pricing for the global credit market. behavior ofaffect the local japanese corporations and retail. how will they be putting their money back into the domestic market? will that have any meaningful spike? $2.5 trillion of bonds
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held by japanese funds. a massive liquidity shift. manjesh, thank you so much. aming up, is expected to be net and neck finish with united states and china -- neck and neck finish with united eights and china. we'll take a look at what is at stake. ♪ haidi: china's stimulus policy,
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emerging markets are not quite out of the woods. atwill take a closer look the question as to whether this momentum trade is going to be here for a little while longer. cutting bets on e.m.,
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stocks and bonds are seeing more difficulty after a painful quarter. it has left money managers divided over the outlook from goldman sachs over rising corporate profits to help upsell e-trade risk. the set has rebounded this month, as you can see from the line in white, which you can find in the library. the best performance in two years as foreign funds have pulled out more than -- millions of dollars from thai equity. voting: pakistan is wednesday to shape the future of and oner-armed nation that aims to compete with china's global infrastructure ambitions. it is a three-way race at the moment. a former cricket captain could
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squeak in. >> he has really struck a chord with the urban youth. railingeeinr -- been against these political families that for me core -- form the core of the pakistan political system. he is trying to make inroads into they, we have had enough of these parties, time to try something new. families are affected as well. the public wants a new face. he is also very famous in the country as an ex-cricket star. he is a guy who has military support. that is one of the key things in pakistan to win power and govern effectively. haidi: what is the upshot of
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these -- of this election in terms of relationships with china and the united states? dan ten: president trump has gone after them quite hard on twitter, saying, you are not doing enough to help us with terrorism. turning tos been china for infrastructure spending, $60 billion to try and bulk up the country. the military controls relations between united states and china. khan is seeing as being less of a restraint on the military than one of the other parties. him, the military will be quite happy and it might pose your concerns with united states. haidi: dan, thank you so much for that. india, the housing
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downturn is posing a challenge to lenders who are struggling to recoup $20 billion in loans. banks are now taking control of land parcels and unfinished projects. our asia finance reporter joins us. how big of a stressor is this on real estate? how will it transmute to indian lenders? slump foras been the the last four been years. -- four years. finally, this is catching up with banks. billion -- lent $20 billion for financing these projects. will have to push many
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of these land parcels to be liquidated. a large part of these land parcels are pulling down prices, forcing banks to hedge. rishaad: what does this mean for the developers? how does this all pan out for them? years, the last four the citizen sector has been low in india, demand has been waning. there has been stress. if they are forced to fail wouldn't be, tehhey able to resolve the loan. there is no light at the end of the tunnel for developers.
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hopefully there will be some measures to help banks recover. rishaad: thank you for that, our asia finance reporter in mumbai. for breaking news wherever you are, bloomberg and twitter have launched tictoc by bloomberg. we have live video coverage, and hourly updated news reports. jump on bloomberg and follow tictoc. ♪ haidi: it is time for battle of
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the charts. it is an all-sydney battle today. you can play along on bloomberg by running the function featured on the bottom of your screen. adam? aboutmy chart reminds us long-term valuations. markets inn covering the day-to-day move. this shows you valuations over a long period through asia. the price levels we are at now is the level at which we have perceived rallies in the past. we are hearing negative momentum
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from all sorts of different angles. we have to remind ourselves a lot of this is already baked in equity prices. long-term investors will be incrementally added d toheir position -- ad their position with relative valuations. peopleart should remind what valuations look like for equities on a very long-term basis. rishaad: a very calming chart, there. garfield? garfield: i thought i would take a little bit more of a macro view. especially since the key release we had in sydney today was cp. -- was cpi. it was a mixed bag, but very much in line with the way asia has been trending. you can see inflation tracked
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against msci, asia-pacific stocks. inflation surprises tailed off well before the market. if inflation is surprising to teh upside -- the upside, the pulse of the economy is teh same -- the same. australia possible inflation 'sso missed -- australia inflation also missed slightly this time around. we will get more of a decline in the price of next. -- price index. any rallies we have at the moment are going to be capped until we start seeing serious policy followthrough, which will have an impact on data. rishaad: a pretty tight one.
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adam's. it was more calming and suggesting everything is going alright, according to plan. garfield, you have to wear the raspberry beret. adam has the top hat, today. haidi: i like adam's chart. maybe it tells me i am a bit more of a pessimist when i am looking at a lack of inflation. interact with both charts on g tv . plenty more to come. this is bloomberg. ♪
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emily: this is "bloomberg technology." coming up in the next hour, president trump tweets tariffs are the greatest and dozens of business leaders traveled to washington to argue that policy is forcing them to raise prices. plus, big tech slides past the high bar. google delivering a monster quarter, and


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