Skip to main content

tv   Bloomberg Markets Asia  Bloomberg  March 4, 2019 9:00pm-11:00pm EST

9:00 pm
rishaad: this is the feeling that we might be in a form of stasis as busy markets under pressure. the dollar is moving to the upside, that is affecting the nikkei in particular. the hang seng, 6/10 of 1% lower. we also have general weakness. you can see how the dollar strength is affecting these currencies as well. we also have pmi news at. positive.emain let's have a look at what is going on with that one. this is the chinese growth by sector. you can see secondary, primary and tertiary growth. 6.4% there. you can see the drivers that on the tertiary side.
9:01 pm
primary being manufacturing, 3.5% growth. you can see where the weakness is coming from. the position.tly we are on the way down. all that could change as well. david: you can look at all of these lakes. here is the work report he is delivering. colin mckenzie is right outside. we have heard so far, we are looking at live pictures. this is coming in right beside that building. our policymakers giving this report? rs giving thismake report? >> in a broad sense, yes they are. we have heard from bloomberg intelligence. they say this is a pretty rational approach by
9:02 pm
policymakers. set themselves the weakest gdp target ever. between six and 6.5%. bloomberg intelligence says that is no bad thing. they are accepting a gradual slowdown. these are the policy changes around the cuts. 3%s will be a cut of around to the top bracket. tom: particularly in the manufacturing sector. this could lead to $90 billion. this was squeezed by deleveraging and trade tensions as well. more broadly, your tax and fee cuts have been announced. this is the emphasis on liquidity to the travis sector. there is a lot of impact. those are some of the highlights. the deficit as well, that target has been increased to 2.8% from
9:03 pm
2.6% last year. that gives policymakers some scope. in terms of gdp -- we have a 6.6% growth in 2018. most economists think it will be 6.2% this year. >> we were talking to deutsche bank about this tax cut. it is quite significant. it was a lot different than what michael spencer had expected. how does this affect consumption in china? tom: that is the focus. there is concerned by policymakers around the softer
9:04 pm
consumer numbers and retail numbers. we saw back toward the end of 2018, the consumers play such a role, a strong role to help prop up growth. those are the generally strong retail prices. wage growth has been relatively strong. that had an impact on the consumer. let's see how the tax cuts come through. as deutsche bank and others have said, there hasn't been a great deal of evidence that that has spurred the consumer. they are looking at further cuts to social security and broader tax cuts. again, aimed at the trade war and deleveraging. it will come down to how this is implemented and to what extent this provides something of a buffer for individuals and
9:05 pm
companies as well. we will be listening to the pboc. they have a press conference this afternoon. they expect to reiterate this prudent financial policy. they can flesh out toward the bank. the emphasis on the work report is on the fiscal support. they are helping to fund some of the infrastructure spending that fell off. also, some of the tax cuts as well. rishaad: that was tom mackenzie in beijing. thank you very much for coming on. it is no surprise what is being said. they did one of the economic battle. that is new. to the extent that we are facing challenges we haven't had for quite some time. when you think about the last 10 years, china has been focused on
9:06 pm
the stimulus from 2008. following part was the domestic infrastructure, the buildup of domestic demand. the battle is that you're getting the tax from all fronts. this will be a slowdown domestically, and the graphically. all of this has coalesced to open up more challenges for the chinese. >> there seems to be more emphasis on the fiscal side. do you think cutting taxes is more efficient than credit? >> it is a different approach. wyfor: china has tended to move via monetary stimulus. there are various reasons for that. it has an impact on the real economy, it is quicker than
9:07 pm
fiscal adjustment. however, what is quite clear about china is that this long-term move toward trying to solidify and building a domestic senator -- center has to have some fiscal support. it needs to come from lower taxes. that seems to be in the works. this was at the benefits of further monetary stimulus. >> we were just talking about deutsche bank. it is hard to roll back and shift away from this. if we get some kind of trade deal, there is a risk that china is stimulating too much. do you share that concern? the fiscalove on side and nothing on the monetary side. what they are doing that is they are arguing that if we are actually adjusting this will policy, what we are doing is moving to this very long-term objective of hours. we are movingly from
9:08 pm
infrastructure spending, investment and exports and solidifying the domestic demand. rishaad: it is a holistic approach in many ways. if you have the money already, you will use it. >> this is long overdue. for many years, we have spoke about how china is very slow on things like social welfare reforms. although these little pillars of domestic demand and solidifying the consumer base. these have been left behind in the big monetary stimulus. dwyfor: it is a little bit overdue. if anything, beijing would not put it in the sort of way. if anything, this makes their long-term objective of shifting toward demand. that was pre-xi jinping.
9:09 pm
david: is it really like that? 2.8reason i ask is because budget deficit to gdp, that is the target. if you include all local government debt to build them for structure that goes into that takes the ratio up to 5%. you look at the levers they are pulling, they are going back to their old tricks. it is still sustainable. that is the main point. when you look at the budget at the, when you look largest go in terms of national debt, it is still very sustainable in china. the concerns about that seem to be revolving around local and corporate debt. national debt is still quite sustainable.
9:10 pm
even if the budget deficit moves out, that should not have an adverse effect in terms of china's creditworthiness. the national debt is quite sustainable. david: very good point to make. thank you for staying with us. a level to talk about with him. him in ae rejoining couple of minutes. in the meantime, i want to take you guys to new york. we have an update on first word news. >> we start with china which is linking the cases of two canadians obtained over the huawei drama in vancouver. michael is out that cohen severely violated chinese law. that inrt also said primarynor was kovrig's
9:11 pm
contact. justin trudeau has been following the case closely. >> we will make sure that the respected. is we will go through the cases in a proper and rigorous way. it is unfortunate that china continues to move forward on these arbitrary detentions. we will continue to stand up for this canadians. >> to the philippines. they have gained a new governor. benjamin is the successor. the finance chief confirmed the appointment. saying that his ex. as a professional manager makes him the ideal person to the central bank policy. he will serve the rest of the six-year term which ends in mid- 2023. juan guaido has defied threats .f arrest and returned
9:12 pm
he met supporters at the airport lawmakers saytion his ability to fly in unchallenged shows that nicolas maduro's grip is weakening. threatsce says any against quite a would be met with a swift response. yes trillion government is facing criticism for spending data on a missions ahead of elections in may where climate change is said to be a big talking point. boastingnment has been how official data shows a drop in a missions level. levels.ions global news, 20 were hours a day, on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in
9:13 pm
120 countries. this is bloomberg. rishaad: still ahead, going on the offensive. huawei is preparing a lawsuit against the u.s. government. the details later in this hour. this is bloomberg. ♪
9:14 pm
9:15 pm
david: welcome back. we are looking at markets. overall, we are down across the region. another manic monday. they are in that market and this market in china has been turned over. let's get a chart of. -- up. we can compare to 2015. the reason i ask this is because once mike found out i worked in finances, he asked what i thought of the
9:16 pm
stock market. he took out his phone and showed stock prices. that told me that there could be a return of the retail investor. is this a liquidity driven rally? is that something more special? it is when you get out of stocks. that is the old adage. significant repricing or rewriting of chinese shares? do you think this is largely liquidity driven? could we get back to the level we saw in 2015? dwyfor: the selloff we saw last year was efficient. it pushed valuations down. they are still attractive. when you add on that we have had
9:17 pm
more stimulus, i am not sure if we would have more optimism were broke, all we have had is a range of expected growth this morning. that probably wasn't very far from anyone. the amount of money on the get toes that you can china is different. now they have the valuations that are attractive. maybe there is a little behind this. there is some foundation to what we are starting to see. the cap driver is by to bring it up. >> that is the old adage. we are probably due for a got check -- gut check. rishaad: there has to be some sort of give at some point. >> for that, you would have to see more risk in general.
9:18 pm
money is moving back into risk. one of the key charts that i saw at the beginning of this year, public it available data was the amount of money that came out of mutual funds in q4. it was significant. not all gone back to risk markets. there is a significant amount of money sitting on money market funds and cash funds. arguably, if you are looking for money to be quite back into that, you're looking for yield and valuations. china takes a lot of these boxes. inil you see another moment global markets that pushes you out of the risk trade, you would argue that there is money on the sidelines that needs to be put back into work. there is money on the sidelines. you will be looking for
9:19 pm
something that is cheap and yielding. this exuberance we are starting to see in china and asia has been dragged along with it to some extent. i think this can continue until there is another little event that triggers a risk phenomenon. in other words, you have to be invested. would you consider the fed has being that catalyst? that could take money off the table. at the same time, what do you think? the difficulty with this is the cyclical nature of the story. he decided to sit on his hands, not to do anything on interest rates. see, the market
9:20 pm
is less volatile. it jumps back on the risks trade. what does the fed do? does it start that host cycle? probably not. what the fed has done quite cleverly is give themselves a lot of with. can probably tighten rates toward the second half of the year if need be. core inflation is sufficiently strong in the u.s.. he could do that without the adverse impact on markets. if he does at the same time as paring back some of the expectations. there are some policy tools that he can use at the same time. i think if the fed was to turn around and three or six months i'm and argue that it would be moving back toward tightening, that would have an adverse
9:21 pm
effect on embattled markets. youlways a pleasure to have on the program. thank you so much. we were just talking central banks there. there is a new governor in town. this is the worst-performing currency. the details onp that story next. this is bloomberg. ♪
9:22 pm
9:23 pm
david: welcome back. we are watching the philippine dollar pair back above $52. there is some weakness in the currency. there might be a new central bank governor in the country. david is with us out of singapore. quite a big deal, david. tell us about him. >> a couple of big things.
9:24 pm
one of them was the nomination last night by president dutere. surprise, this is a announcement for the new central bank governor. this was the budget secretary. anticipated that one of the governors would take a position. it is not. basically, the markets are trying to work out what his tie will be. will it be policy continuous he? with the be a bit more dovish? he is tended to favor growth. the market is questioning this. they are definitely looking for what his rhetoric is moving forward. when you couple that with what happened, philippine inflation came in lower than expected.
9:25 pm
it came in at 3% year-over-year. that is definitely a positive. when you combine that with the new governments potential starts, this is a rate cut coming sooner than they anticipated. rate cuts are generally positive for the central bank. one of the deputy governors came out and said it might be premature to mention this. at the same time he says they are on the table. i think the market was expecting the rate cuts. this is a rate cut earlier than expected. >> the inflation's are true. this is the fourth straight month where we have seen pressures lowered when it comes to inflation. we are just on that range as you mentioned for the central bank. is there room to cut rates at this point?
9:26 pm
>> i think that is the key thing. this is back within the range. they may want to see a few more things before they make a decision. the inflation is going in right direction -- the right direction. rishaad: that was in singapore. we are heading to the deputies lunch break, just looking at some of these on the move. 3.3% down to the moment after. --y determined to their there were inappropriate actions. 3% growth. japan reported on this class action suit taking place in canada. that class action is netting something like 16 going dollars -- billion dollars.
9:27 pm
profit forecast with japan is moving to the upside after a down day in the session yesterday. this is bloomberg. ♪ this isn't just any moving day.
9:28 pm
this is moving day with the best in-home wifi experience and millions of wifi hotspots to help you stay connected. and this is moving day with reliable service appointments in a two-hour window so you're up and running in no time. show me decorating shows. this is staying connected with xfinity to make moving... simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today.
9:29 pm
hong kong. time: 29 in new york. i am su keenan. su: we start with china who is linking to cases with canadians detained over the huawei drama in canada. kovrig covert -- violated chinese law. the report said that an entrepreneur named michael was his primary contact. is canadian prime minister following the case closely. >> we will ensure that that law
9:30 pm
is fully respected. we will go through the process is in a proper and rigorous way. it is unfortunate that china continues to move forward on these are mature detentions -- arbitrary detentions. we will continue to stand up for these canadians. will invokemnuchin special accounting measures until june to help pay government bills without reaching the debt ceiling. he came back after being suspended by congress. the treasury department does have authority to override that to prevent a default on payments. steve mnuchin has appealed to congress to increase the debt limit as soon as possible. justin trudeau has lost another cabinet minister over an influence controversy.
9:31 pm
that has denied the image of the upcoming election. jane says she has lost confidence with how the has done this. they are trying to end a legal case. libya's biggest oil firm will resume pumping today. it was taken over last month. libya's statement producer says that regular output will be restored with a capacity of up to 300,000 barrels through the day. it also says the shutdown led to $1.8 billionars -- in lost production. than 2700 more journalists and analysts in more than 120 countries. i am su keenan, this is bloomberg. this is the start of
9:32 pm
the hour and the last hour. china is lowering. the growth rate will be 6.6%. >> we have seen the strength continuing on here. we have been talking about how the fundamentals are just not there to support the gains we have seen. joining us now to talk us through this is steven chu. >> let me start with the u.s. dollar. basically, since trump has become u.s. president, we know that this is a sabr currency. whatever trump throws at the market, it is always pro-u.s.. know that the fed has hiking rates. -- high yield rates.
9:33 pm
is the market. when the bricks have cleared, we will get a better percentage on the first half of the year. -- the safefe haven haven nature of the u.s. dollar will fade. expecting at least a hike by the end of the year. that was up with u.s. rate and u.s. dollar. that will cause a rebound in the u.s. dollar moving forward. of course, the most important fact is the trade war. we know that is the trade war premium. it is the second half of last year. we saw the dollar china actually rallied from 6.426.9. 6.4-6.9 percent.
9:34 pm
respect of premium to go away once we get a deal. there is less than a premium to go away. be about that level to 6.6. rishaad: this is something we have seen a move toward as we saw the trade negotiations taking place and suddenly we had yuan,alk about the stability about the yuan. quid pro quo, you need to strengthen your currency. >> that is interesting. their list that fourth-quarter monetary policy report. they say that for the policy in this first quarter, they actually want to get the flexibility.
9:35 pm
this imply that we can see a .ore unilateral appreciation rishaad: that will have a direct impact on the weakening itself. there is actually desegregation between the policy rates and the money market rates. it impacts the real economy. they rely more on market operations which ashley mattis for the economy. -- actually matters for the economy. david: i want to bring a chart up to highlight what you mentioned. money market rates have been essentially called down. we had asset managements.
9:36 pm
-- this asset manager said that the tenure marrows -- 10 year narrows. do think that it will? this china need to cut rates? about thet is not all differential. short time span last year where the markets went down but they traded above the differential. we can't really say that. it is going to undermine the currency. the chinese government is undermining these abilities. one of the abilities is stabilizing this. ,nce the markets speculate there is going to be some sort
9:37 pm
of support for the currency. i am not too concerned about the yield premium disappearing. a final question, one of is tones, the only line keep the yuan stable and eagerly room level -- an equilibrium -- keep the yuan stable at an equilibrium level. at least they would be that we won't see depreciation. this does not support this. we know that china has been pushing this reform. we think this is going to reinvigorate the productivity growth in china and the chinese economy is going to bottom out somewhere in the first half. also, with the support of a more
9:38 pm
accommodative monetary policy. we should see the economy stabilizing at 6.2. basically we need 6.2 this year. bites backp, huawei and they might take the u.s. government to court. we will have that, next. this is bloomberg. ♪
9:39 pm
9:40 pm
>> welcome back. huawei could be opening this new front legal offensive. the new york times says it is
9:41 pm
prepared to sue the u.s. government for banning federal agencies from buying the company's products. let's bring in our guest. he is light out of taiwan. it is nice to see you. looking at the title of your piece, huawei is a cornered clawing at empty space. >> they may have legal merit. they are suing canadian authorities over the ceo. that is a personal case. then there is the separate case in which nyt and others are talking about suing the u.s. government over banning huawei products. they may win both cases.
9:42 pm
there is a bigger payout exercise going. huawei is doing a pretty good job of turning people's minds from being -- seeing huawei as being a threat and the bad actor. theye are thinking that are not so bad after all, maybe they are a good international citizen. having second thoughts. now they're looking like their belligerence. i don't think that is the payout strategy they're looking for. rishaad: who sues canada? that is the point. they cutting their nose to spite their face? what should they doing in your view, tim? think they are cutting
9:43 pm
off their nose to spite their face. what they should do is keep on with the current campaign. if the goal is to make people think this is a trustworthy company that is not there to steal your secrets and eight and of that chinese espionage, keep up the current campaign. be very wary of how they bring out their founder. he faced the foreign media and said the chinese government helped us with spying. we would defy chinese law. i don't think there is a person in the world that would believe they could defy chinese law. they are coming out and saying things like that. it doesn't help their capability. in engaging with people, they are engaging a lot with the media. they are engaging in a very open and honest manner. it is the best strategy they can do. they are doing so slowly. don't expect quick dividends. ago, the pr team has tried
9:44 pm
to interact with foreign media. they have never really given deep access. it has been very superficial. this sudden turnaround is making people feel suspicious. >> thank you, tim. he is joining us. let's look at the advise. southeast asia's biggest bank is turning its attention to india. are looking to bolster loans and small businesses through a newly formed wholly-owned local unit. he believes that india offers a once-in-a-lifetime opportunity. david: j.p. morgan has won the race for the job of overseeing k.ft stock -- lyft stoc now the ipo overseas managing additional shares. -- is the so-called
9:45 pm
>> good news for jaguar. europeanhe first ever car of the year award they have one. cars their first electric and the company says such vehicles are the future. they suffered a $4 billion loss last month. let's stay on the geneva auto show with talks of trade wars and tariffs dominating that event. bloomberg intelligence reports a jump. it couldn't hit the levels of audi and porsche. ramy inocencio joins us with what executives have been saying. -- ramy: they were
9:46 pm
shattered by talk of trade war. if i told you that was from march 4, 2019, you may not be surprised. that is ashley from 2018. we are talking about the same thing. what is happening with the united states, europe as well in china, will get back to that little more. at least there is positivity when the audi ceo talked to bloomberg. take a listen. automotive is transforming. we will manage. >> that was the ceo of audi. he says it is more concerning what is happening to the west of the united states. we know that the chinese economic slowdown, growth slowdown is happening as we are watching the national people's congress happen. ramy: he is optimistic that there are things you can do to marketate with more
9:47 pm
share. the head of daimler says that the biggest concern is actually those trade tensions going full on deep into this thing. those are the top concerns. not only that, the operating profit for the couple could fall 7.5% at those 25% u.s. import tariffs actually hit. they could shift production on those tariffs. they could also showed some of those costs, prices and pass those on to the consumer. consumers may not want to hear that the daimler has already raised prices on u.s. made suvs. not only that, the ceo weighed in on bloomberg television, saying that she would love to see a lifting of those tariffs before they start. take a listen. >> it would have an enormous effect. we import vehicles and export vehicles. moment, we are
9:48 pm
forecasting a market in europe. all of those things would be impacted dramatically. >> we have audi, daimler, citroen. let's throw in daimler, bmw and mini. we fall into this 23% of imported cars coming to the united states. that is a huge amounts. those five or six that i just mentioned make up about 10% of all the sales. for thisgood reason 25% tariffs to never take effect. linda: -- rishaad: let's get you down to some of what we have as we get you down to the start of the trading day. let's look at what is happening in the market in hong kong. auto is up 9/10 of 1%. there is also talk about this company looking at the truck business. see an italy is having a great day.
9:49 pm
volvo is going to be introducing a car that is devoted toward safety. it will be limited to speeds of only 110 miles per hour. 180 kilometers per hour in the future. that is if you want to drive it on the autobahn. pacific is on the way up. one point in percent. there you have it, those are the movers on the hong kong market. let's have a look at the prospects in india. it is just about an hour away. what is the set of looking like today? coming from a holiday, it will be a truncated week. we missed monday's start.
9:50 pm
we will see building off of what the rest of the guild did on monday. devina: last week was a surprising week. the entire week lined up. this is the public sector bank. there are several pockets that are going to be individually watched. that is going to be the silver lining. what is the buzz behind his public sector banks? what is causing the excitement? >> like i said, a public sector
9:51 pm
are up. week, they have -- they will keep continuing. he expects to see more public sector banks out of corrective action. theye start of the week, had a funding infusion of 48,000. them meet their regulating norms. that is something that is keeping them active. >> thank you. we have plenty more ahead. this is bloomberg. ♪
9:52 pm
9:53 pm
>> time for our battle of the charts. we will have our china markets report. we will talk about things in hong kong and china. let's kick things off. this is rising more than 30% year-to-date. this is how high the index will rise.
9:54 pm
this checks the present ratio. it is the profitability majors -- measures. it is a trading volume which rose to the record high. this intensified. we are seeing the return of margin traders. this is in the form of a rate cut. rishaad: kane talk about what might happen in the future? >> this trend has long legs. >> thank you. china, this talk about
9:55 pm
we are still talking about hong kong. this shows what has happened this year. this company is more expensive in the hang seng index. that is something that hasn't happened for the past 12 months. i have been talking to some people. it is time to rotate into hong kong. this rally in china, it has been worth chasing. it has been fantastic. more than 30% for china. almost every index in the bull market. problem,oes have a these are huge weightings. we need the stocks to do well. something that hasn't happened.
9:56 pm
>> you can interact with the charts using gtd go. go.gtv we are seeing so much action happening in beijing. love toase give some hong kong as well. rishaad: we did pretty well. this is bloomberg. ♪
9:57 pm
9:58 pm
9:59 pm
>> it's almost 11:00 in singapore, 8:30 a.m. in dubai. rishaad: we are entering the last hour of the morning session. stocks tracking wall street down, markets look for details of any potential trade deals, and the dollar is edging higher. haslinda: race for a top -- tough economic value. -- tough economic battle. inhaad: as confident as january?
10:00 pm
haslinda: asian stocks tracking losses in the u.s. overnight. investors no longer content with prospect of a trade deal. they want to see the details. suggesting good news surrounding the trade deal has been affected. we are keeping an eye on the mpc. china has already said 6.5%, possibly the lowest growth aojection ever, if not in very long time. let's take a look at where the markets are right now. , lossesa down by .3% for indonesia, japan, and malaysia. hong kong currently pretty flat. the csi has been swinging between gains and losses, currently in positive territory. this market has been going gang
10:01 pm
busters, up 25% year to date. the best performer in the markets so far. looking quickly at the forest space, a strong dollar story. .6%, to put it in perspective, it was a test performer in asia just last month. some kind of correction and also perhaps it has to do with the surprise choice, we will find out details later. this is how is looking in asia this morning. rishaad: we are looking at india as well, the prospect of the trading day there in mumbai, pretty much flat before things get underway. not generally what's going on in the asia-pacific, but donald keyp may be removing some trade references for turkey in
10:02 pm
that may play out as well. that was announced yesterday, a 60 day countdown for that. .he dollar up .10% the 10 year yield down a little bit as we've seen a little bit for rally taking place indian sovereign debt. let's find out what else is happening out there. it's a situation of counting the cost of those tariffs. the first word news. >> more evidence emerging that president trump's trade war in top -- is affecting the u.s. economy. since the 1930 measures blame for deepening the great depression. it's being born largely by americans. china is linking the case of two canadians detained in vancouver. heofficial news outlets said severely violated chinese law by spying and gaining state secrets
10:03 pm
while working within international crisis group. the other also said man was his primary contact and supplied him with contacts. trudeau is following the case closely. >> we will ensure the law is fully respected and will go to those processes in a proper and rigorous way. it is unfortunate that china continues to move forward on these arbitrary detentions. we will continue to stand up for these canadians. >> staying in canada, justin trudeau has lost another cabinet member, i have coming elections. he is lost confidence in how the government handled the matter. trudeau is said to have pressured him to end a legal case. global news, 24 hours a day,
10:04 pm
on-air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm rosalind chin. this is bloomberg. haslinda: thank you so much for that. china has nervous growth target and announced a major tax cut, saying the country must brave -- brace for a tough economic battle. the national people's congress, tom, it looks like the priority is about stabilizing economic growth. tom: i think that is absolutely right. the daigle -- the delegates, 3000 or so, or filing out -- the delegates are filing out. weighty document outlines the policy priorities for the government for 2019. that speech just wrapped up and everyone is digesting what has come out of that. the focus is on ensuring they can stabilize this
10:05 pm
growth as it continues to slow amid the impact of the deleveraging in the trade technicals as well. as you rightly point out, we had this gdp target that was cut from round 6.5% in 2018 to arrange of 6.5% in 2019. bloomberg economics pointing out that is the weakest target china has ever said itself for. -- set itself for growth. most economists think in 2019 we will get about 6.2%. target,got the deficit which is important. it gives a reflection as to how much scope policymakers have around the fiscal support they are putting in place. the deficit target was increased from 2.6%. on those fiscal measures, we have tax cut as well. .weeping tax cuts of around 3% morgan stanley says it could be valued at around $90 billion u.s., 0.6% of gdp. there was a policy initiative to raise the amount of local
10:06 pm
special government bond issuance, about 2 trillion yuan worth. that will aid in the spending on infrastructure which fell off quite dramatically in 2018. so tax cuts, fee cuts, infrastructure spending, these are the measures policymakers here will be put in play to support the small to medium-size enterprises and manufacturing sector. somber speech, he talked about the challenges, rising insecurities and instability, saying there were hidden dangers and hidden risks and saying china has to be prepared to face those. us.aad: tom, stick with , thank you for coming in. what are your takeaways from the report? >> we don't think lowering the -- ourrate to 6.5%
10:07 pm
calculation has been showing that as far as china can maintain a 6.1% growth, china annualbe able to create jobs consistent with previous years. the main reason the service gdpor is more than 50% of and demographics, every year seem -- since 2014, china is losing one million in working age population. rangence, the 6%-six .5% is not that surprising, and that will help china achieve its per capita gdp by 2020. finally, i want to mention that perhaps the party negotiation outcome between the united negotiation may also reassure the government's that maybe this year they don't
10:08 pm
need a lot of stimulus. the regulator chairman saying china will open up, these are headlines coming through. we are getting there, aren't we? >> yes. this has been a consistent theme since last year. china opera to open up its financial services more for participation, removing the majority ownership rule, so that the foreign banks and different companies and brokerage firms can play an important role in china, by doing so that will help china attract more capital inflow so as to somewhat cushion , maybeential deficit this year. haslinda: is there a sense from what we've heard that china is more aware about financial stability, risk of the country
10:09 pm
compared to 12 months ago? >> indeed. the bigregarding battle, we still think the government is considering poverty relief and containing financial risks as the major priority. given the growth slowdown, the thernment may somewhat ease current deleveraging process and we may see a little bit of read leveraging going forward, but overall, i don't think the government has forgotten its priorities down the road. once the economy has stabilized, will see further financial sector deleveraging process and perhaps more emphasis on the stability of the deleveraging as well. having said that, how
10:10 pm
about the stability of the yuan now? headed, givenit the fx clause could be included in the trade deal? >> i think the politburo meeting last year mention that china would like to strive for stability ranging from financial employment to expectation. this suggests that perhaps the renminbi does have a bottom line in this kind of environment. we don't think it could be broken under this kind of policy guidance, should china and the u.s. have a more positive negotiation outcome, together msciindex inclusion and re-weighting of the chinese a share. this year we may see more capital inflow, and that kind of
10:11 pm
environment, the renminbi will be under pressure to appreciate. >> tom here outside the great hall of people. we've seen in one report that macroed employment to all policy. what is that me in practical terms for the policy agenda here? the biggest concern for the government is to try to stabilize china's employment. every year the government would like to accommodate around 8 million college graduates. indeed, this is a tremendous challenge for the government, so indeed, under this kind of environment, maintaining a certain pace of growth above enough.ld be somewhat so you can see that this is the reason the range of growth has been put their and in addition,
10:12 pm
since december last year, stake council has been using various policies to somewhat stabilize china so that employment , if firms do not lay off workers, they can get refunds of their social security contribution for this year. there are various policies in this government report to on higherpending education, vocational education, so that those college kids who cannot find a job can seek more extended study. tom: interesting, another element was a special bond issue which has been the target set for just over 2 trillion yuan for the year. how significant is that, particularly around spending for infrastructure?
10:13 pm
was it in line with your expectations, and will it be enough? lineng: is pretty much in with our rate expectation. we thought around 2 trillion special bonds could be issued, the number came up with 2.15. the main reason is that last year, to some extent the government has contained local government spending to aggressively, leading to a sharp slowdown of china's infrastructure investment growth. traditionally, this number has and hovering at around 20%, giving china still has a lot of space to push for infrastructure in high-speed rail, subway system, i think in time of need, this is quite a convenient tool for the government to do this. when you have infrastructure
10:14 pm
spending, is slightly different from previous years. basically the local government will be able to issue long-term bonds to finance their long-term infrastructure investment. as a result, u.s. maturity risk will be managed, and i think this is an improvement. us, he willck with be with us after the break. thanks to tom mackenzie there in beijing. just getting some headlines from these vast the new central bank governor of the philippines. he is talking about -- from the new central bank governor from the philippines. --gesting that 2%-to prevent sufficient. the ultimate goal is sustainable
10:15 pm
growth under stable prices. he's also talking about financial inclusion and sound banking practices as well. we have learned what is going on in china, looking at the trade side of things. we will be back right after this break. ♪
10:16 pm
10:17 pm
haslinda: you're watching bloomberg "markets: asia." i'm haslinda amin in singapore. the u.s. and china are nearing the finish line of a trade deal that could be signed as early as this month, but that doesn't mean the trade war will end any time soon, if there are plenty of challenges ahead. let's discuss them with our guest. we saw market reaction today. investors no longer content with the prospects of a trade deal,
10:18 pm
they want to know the details. in the best case scenario, what could be the upside? li-gang: well, the best case scenario is that both countries are taking off the tariffs imposed last year. this will be a big, positive news to the chinese economy in particular. our estimate suggesting the existing terror imposition and the chinese economy will likely bring up chinese gdp growth by 54 basis points in the medium-term, for example, two or three years. year, the impact could be as large as 30 basis points. so if there is no more tariffs, investors should look for upside risks on the chinese economy, given too much stimulus
10:19 pm
put in and the growth will surprise us on the upside. perhaps this is too optimistic a scenario, perhaps the market is looking for something, a compromise deal, whether the u.s. can stop imposing 15% more thetional tariffs on chinese exports. even with that, i think this is not a bad outcome, and as i mentioned, the existing tariffs will impact chinese economy will be highly manageable, even the current fiscal and monetary policy stimulus. i'm wondering how much can be gleaned from the 6.5% growth projection for the year in terms of how the trade war is impacting china. well, the trade war has
10:20 pm
impacted china where the most powerful last year. we been seeing the chinese equity market tumbling, the renminbi depreciating, and the private sector having become extremely bearish. so if this risk can be taken off indeed, 2019 outlook, with further policy assurance, the market should react, and we have seen china's equity market, , willarket, renminbi affect the more positive outcome between china and the united states. look at we also had a what's happening in the u.s. and we had the study from the fed and princeton and columbia universities talking about what happened to these $250 billion
10:21 pm
of tariffs on chinese imports. costing consumers $3 billion a month. do you have a figure that you have worked out as to how much, not in terms of what's happening to the markets, but how much has actually hit the economy proper in china? li-gang: i think from the second half of last year, china's 224,h has slowed from 6.7 6 .4%. indeed, i think a lot could be impact, andar basically at least .1 or .2 percentage points off china's economic forecast last year. indeed, the impact and the u.s. well felt,my was not given the time the u.s. economy
10:22 pm
was really growing at a very fast pace, going forward, given some indicators affecting the home sales are declining, car cells are declining, and also sentiment started to change. we think the second round effect of the trade war will affect the u.s. economy a bit more this year. rishaad: always a pleasure having you on the program. just to say that china's commerce minister has been talking about these trade negotiations, saying they are continuing at the moment with the u.s.. catch up with all the interviews we've been conducting, and you can send us instant messages during our shows. check it out at tv . this is bloomberg. ♪
10:23 pm
10:24 pm
10:25 pm
rishaad: we are back. you're watching bloomberg "markets: asia." haslinda: let's do a quick check of the latest is this flash headlines. for aing a hostile bid deal that would've created the largest gold producer in the world. the board unanimously dismissed $17.8 billion bid, preferring to focus on its own plant takeover of its rival. they plan to proceed with the suit, saying it will not withdraw. >> the pair up would expose newmont shareholders to very risky assets and a very risky operating model. if there's a better way to do that through a joint venture
10:26 pm
structure that could develop that deliver the value of the synergies out of our nevada operations. that would be from the chinese conglomerate. he wants to tap into the booming market for low-cost travel. it seen something like 600 jobs go and they been adding new destinations. assets been trimming its from hotels to stakes and aircraft leasing companies. haslinda: jpmorgan is turning less bullish, downgrading galaxy and when macau to neutral from overweight. the latest analyst notes at any big rally would require upgrades which the bank sees as unlikely in the current macro and demand situation. rishaad: let's look at what's going on in equity markets as we
10:27 pm
head toward the lunch break in shanghai. just about positive but pretty much flat. this is bloomberg. ♪
10:28 pm
10:29 pm
♪ sydney. 2:30 a.m. in we are watching for the central bank decision on interest rates, do with just under a minute. benchmark atrate 1.5%, looking for that to remain the same. we are looking at what he had to say ultimately about where he sees the economy going, saying in january that he is fairly bullish, that they are suggesting that we may not even a level of lushness. changesely to have any in that decision today. a lot has changed since the
10:30 pm
r.b.i. met on the fifth of february. notably the trade progress, affecting risk appetite. the situation could be better. >> absolutely. unchanged, 1.5%. the reserve bank of australia leaves the target unchanged at 1.5%. a quick look at what's going on, we turned into a bit of a spike just to the upside, but that has gone back to where we were before. a sanguine reaction. let's find out what the mood is like over there in me. paul allen is giving us the take. >> thanks. so far, no fresh commentary from the reserve bank of australia,
10:31 pm
no change to the cash rate, as predicted by all 31 economists who have been there for two and a half years now. the rba is saying there is progress in jobless numbers, and that is true. the unemployment rate is very healthy, saying this unchanged policy is consistent with sustainable economic growth. growth has been something of a concern, not just here in australia, but globally. that has been on the radar of the rba. this is one of the reasons the governor shifted his stance earlier this year from tightening to a more neutral bias, saying that the chances of a cut versus a hike are now more evenly balanced. in terms of house prices, which are coming off the foil in australia, that gives the rba scope to cut in the future if it decides to go down that path. a number of analysts we follow, there's an increasing chorus to say the next move could be
10:32 pm
dovish. >> slowing growth has become a real concern for the rba. what can we expect? >> we did have a little bit of a sneak preview on the current account numbers released earlier today. we saw that government consumption added .3% to gdp growth, however net exports shaving off .2% for gdp. we have an expectation that we will see some growth, .4% on the quarter, but this is still a theyway from the 3% that are forecasting for 2019. -- he ise analysts forecasting a flat number, 0%. we will have to wait and see. >> all right, thank you.
10:33 pm
the rba unchanged, inflation likely to remain gradual. let's get the first word headlines with rosalind chin. >> as china's national people's congress faces numbers on growth, the budget deficit, and inflation. is expected to rise 6.5%, slightly lower than last year. inflation should be unchanged while the deficit will be .2% in 2018, breaking aboard a tough economic battle. self-proclaimed venezuelan isder juan wide-out attending to challenge president unchallengedbility is weakening. saidpresident mike pence he would be "met with a swift response." invoked special
10:34 pm
accounting until june to help a government bills, without reaching the legal u.s. debt ceiling. he was suspended by congress but the treasury department overrides that. mnuchin has appealed to congress to increase the debt limit as soon as possible. the oilfield should begin pumping today. it was then taken over again last month by militia forces. restored,tput will be up to 300,000 barrels of crude a day. global news, 24 hours a day and at @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm rosalind chin. this is bloomberg.. gained, weets just
10:35 pm
do see trading on the rupee kickoff with the india open a the rupee willy, be down against the dollar, the dollar up i .25%, a slight rally in the 10 year yield as we see the yield down to 7.3%. nifty futures showing more negativity, one of the reasons could be president planning to end trade benefits -- his notice to congress kicks off a 60 day process before he can take action on his own authority. we have the details. what are the implications? what sort of trade preferences are we talking about? this is going to be a negative implication for india, they are still investigating and
10:36 pm
2%, so theound company is are looking to trade and will have to go back to the drawing board to see how it will be impacting deficit. this is going to be negative for currencies, and the business phase will also be impacted and there is a chance that it can be traders andbut analysts are keenly watching this development. initially it will turn negative for both countries. which companies are likely to be affected? think all the companies are going to be affected and we would call that -- the total import was around ask billion
10:37 pm
dollars. that much impact we are and -- these are some of the companies that will hurt initially if it goes through. >> all right. thank you so much for that. let's get more on india with our next guest, who oversees $50 billion. you are pretty upbeat when it comes to asia stocks. what could be the catalyst, given that it is not even taking part in the rally we are seeing so far? >> right. i think a lot of people are waiting for elections. clearly elections in the long-term -- i think from a psychological perspective there will be more validity around election outcomes. people are waiting for that to be out of the way.
10:38 pm
i think from a limited perspective the real india rate easing willnetary probably play out eventually. >> before we continue our conversation, i want to highlight to our viewers this breaking news. nhk, it coulda be released as early as today. we will keep you posted on developments as the headlines come in. isurning to india, inflation pretty much subdued so far. undershooting r.b.i. estimates. how will this play out? >> i think that given we are running high rates, inflation has remained lower than the rba target. we do expect that gradually and itt rates will ease
10:39 pm
will be a big deal in the capital markets. i think the fundamental perspective will be a big trigger for the market. you alluded to what we are 2018g, not the same as where the indian markets with a few positive ones, not following the trend in the arrest. does a bull market in china impact india in a negative way, just because that is where the money is going? clearly there will become petition between china and india but to my mind fundamentally it is good if global growth is strong because india is relatively insulated. there's a fair amount of integration in the global economy.
10:40 pm
that well point is for inflow will be affected we have to understand that the domestic flows have been quite strong over the last two or three years and there is structure out there because lower inflation is leading to physical assets to financial assets. that has perspective obviously been a big thing. if earnings come back to the think it is going to be a positive for india in the short-term, the fact that more money is going to come out. to me, from a fundamental perspective, it is positive. >> talk to me about the rupee. butre seeing oil prices they have a massive impact on what happens to the economy in
10:41 pm
the currency. how are you looking at that equation? yearss true that over the inflation has become very important for the macro outlook. one of the structural challenges we've seen is that there is no and axport growth driver lot of what we saw -- india has been a very to mystic led the economy. happens, the oil moves to the dollar, and the current account deficit will go from 1% to 3%, which typically drives a lot of weakness in the currency. but that remains a challenge. 85, this is a blessing.
10:42 pm
thenk that's why but if the emy -- then themakes it self, currency that comes to my mind will be range bound. >> we will have more for you after the break, but stick around with us. we just got more headlines coming through from the wrist ceo of nissan. we are suggesting that this has been set at ¥1 billion, and that's the price we are looking at. looking out for the possibility
10:43 pm
that carlos ghosn could be out of jail and unveiled today. this is bloomberg. ♪
10:44 pm
10:45 pm
♪ we are back. a look at what's going on in mumbai. let's go through what we can expect from the -- >> -- around a quarter percent. the nsc 500 trending downward, the banking index also largely falling in and with the benchmark
10:46 pm
foreign portfolio investors remain interested in indian equity markets despite the volatility we have seen. all eyes will be on the auto sector. >> so having said that, how are they reacted? well, we have seen subdued volumes come in, trending higher by around 1%. there a dual factor currently under pressure with the likes of and others down by as much as 2% with a larger decline in the volumes for the month of february which is why that is under pressure today. >> all right. thank you so much for that. mannish, when you take a look at the earnings, it
10:47 pm
looks pretty good. >> yeah. what we have seen over the last whether itur years, is corporate banks, some of them are now starting to turn around. you aresolidated basis seeing good earnings growth for the next two to three years, around 20%. >> will that be enough to sustain foreign interest in india given that we are likely to see -- good that impact india? at indian -- at are a gdp the day we country and a lot of countries will see that for the next two
10:48 pm
to three years with domestic flows remaining strong and interest ratings hopefully in front of us. and wethat altogether can get reasonably strong returns from the market. >> talk to me about what has happened this year. it's the constants of events. we had peopled looking at the upcoming election who may not see a return and on top of that we have valuations historically high and remaining the us. a lot of that issues as well. these should make the market less attractive, with induced a? at valuations you will see the context of the earnings cycle. over the last 26 years, the growth in headline index
10:49 pm
earnings will be around 5% or 6%, less than gdp growth and a lot of sectors will come back and the earnings cycle i think will be pretty strong, backed by the fact that the rates go downward. in that sense, valuations are not super cheap but earnings are strong and it will provide a backdrop for consistent returns for the next two to three years. >> thank you very much for joining us. we just had the reserve bank of predicted, malaysia is also out with its decision, leaving rates unchanged although we have a weaker demand, i cut
10:50 pm
later this year. enda curran is with us. there is more wiggle room for the central banks after the fed decided to cause this. >> that's exactly the story. we have seen something of a shift from tightening last year india leading the push in that regard. today we are not expected to move growth, inflation is subdued but the big correction is leaving something of an government, and investment is a touch weaker as well. the government is pushing through much more fiscal trends there is the and anticorruption drives. if they up together, need to they may have room. andhat could be wiggle room if you take a look at the debt
10:51 pm
in the country, that's another challenge altogether that may impact what they do going forward. >> most certainly. they have to be caught visit of household debt. this is an issue facing both banks and in the tightening cycle last year we have central banks and korea mindful of how far they could tighten without tipping borrowers over the edge and likewise you don't necessarily want to be adding to that debt. if the feddoubt that takes a pause for now you can see the china story trade the way it is and then we see more central banks having to ease under the policy side of. curran.s so much, enda we have theg lines
10:52 pm
tokyo court approving the bail, setting the bond at ¥1 billion. that theyn saying could be released as early as today and bail has been set for ¥1 billion, confirmed by the tokyo court that has been given approval. this includes misappropriating funds as nissan motor. we will get the breakdown of the news. this is bloomberg. ♪
10:53 pm
10:54 pm
♪ 107 days in jail, two appeals, third time lucky. looking like carlos ghosn has one bail and should be released as soon as today.
10:55 pm
the tokyo court has approved that bail, let's get more on all this with dave. >> this has been approved by the tokyo court, there is an appeal that remains so it is possible that the prosecutors could we invite him. this is what happened one time before, and you have to think that because this has gone on so long and because there has been a recent uptick in pressure from his new lawyer, that this may be a response to that and that he may soon be leaving jail. we've never had bail said before, have we? >> that's right. this is the first time they have announced the amount of ale, which comes to about $9 million us so it's a huge amount to
10:56 pm
but for carlos ghosn you have to imagine he's ready to pay that and get out of jail. we got news that the family has been trying to get help from the u.n. human rights commission. how much pressure has there been from the international community to release him? it seems like it might have been a good move to go to the u.n.. japan has tremendous clout, japan contributes 10% of the u.s. annual budget. it has a lot invested in that group as an organization and as at the -- as international opinion. various look at his nationalities -- brazilian, lebanese, and french -- the two biggest countries have both been in a situation where they are
10:57 pm
not fully prepared to come to the rescue, at least not in any big way, of someone who is perceived as a global elite. it will be perceived as a global industrial titan who could be existing beyond sovereignty. there has been some to mystic political pressure and going to the u.n. could be a real pressure point for japan which has a history of maximum participation in the u.n. and is probably lows to contradict the pressure. >> very quickly, could this bill -- put this bill in perspective, it's on the higher side. great deal ofbe a money for any ordinary person, even for someone like carlos ghosn. that's $9 million usd, but i think you will be glad to pay it. >> all right.
10:58 pm
latest on carlos ghosn. bloomberg "daybreak: middle east" is next. ♪
10:59 pm
11:00 pm
♪ emily: i'm emily chang in new york, and this is "bloomberg technology." retaliation, the huawei cfo is suing canada, alleging she was wrongfully detained. will this set off another diplomatic firestorm? plus the countdown is on, tesla announces the date to unveil its model y crossover. is demand really there? hundreds of amazon employees are


info Stream Only

Uploaded by TV Archive on