tv Bloomberg Markets Asia Bloomberg March 17, 2019 11:00pm-12:00am EDT
markets." ♪ >> a second session of gains here in the asia-pacific to kickstart the new trading week after global stocks last week had their best weekly performance. you can see some very strong by coming through in hong kong and china, a little bit of yen weakness with treasuries steady, all lies on the fed this week as they meet, although no change is expected. we will be closely watching to hear what the fed will say. there's also a focus on the yams with a number of central banks in the asia-pacific also meeting this week. blackrock seeing emerging stocks almost recouping last year's lost. speaking of emerging markets, let's have a look at china. the rally is continuing,
essentially going from pariah to prince of the markets, and of bullish pattern has formed in the shanghai comp, suggesting the rally could continue. we will be asking our guests from socgen whether he thinks there's further upside coming through in these chinese market. >> we are seeing golden crosses on some of those industries. ago, indianutes stock markets got going. futures showing that drift upwards, likely to continue. the rupee has a bit of strength, the dollar down .3%. we will be going to mumbai and a short while to get a sense of what the action is looking like. let's quickly see what else is happening. no further reverberations from the ethiopian airlines tragedy. here's the first word news with rosalind chin. >> the department of
transportation is said to be investigating faa approval of the boeing 737 max plane. "the wall street journal" says the inquiry focuses on the lion air crash in indonesia. airline flight recorders show similarities with the lion air disaster. a report is expected next month. the new zealand government has begun an overhaul of gun laws after friday's mass shooting in christchurch that left 50 people dead. the shooter had two semiautomatic weapons another firearm, which he could own legally with the category a gun license. the prime minister has questioned why such weapons are available legally. french president emmanuel macron 's enduring another week of yellow vest protests, about 200 people were arrested after the
shops elysees were attacked and set on fire. 80 stores on the avenue were damaged, for the 18th consecutive saturday of yellow vest protests. the president says strong action is needed. the hong kong government is calling on rail operators to hold an emergency board meeting after subway trains collided during overnight testing. two drivers have been taken to hospital with minor injuries. they are citing disruptions on one of the lines connecting the busiest stations. saudi arabia says opec and its allies still have a lot to do to rebalance the oil market. they say to do whatever is necessary. the cartel met in azerbaijan and the saudi energy minister says they must continue to distribute until at least june. he says the job is nowhere near complete, and excessive u.s.
inventories mean there's a risk of short-term oversupply. >> i think it makes much more sense to start discussing this in may or june, when we actually have a lot more clarity on the state of the market and how these businesses are playing out. >> 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. the federal reserve is expected to send more dovish policy signals at its meeting this week, paving the way for three asian central banks to maintain their policy positive as well. our global economics and policy editor, kathleen hays, is in new york with us for a preview. it is a foregone conclusion. the fed won't move, so what are we watching for? >> we will be watching what the fed signals about interest rate increases in 2019. every three months the federal reserve updates its economic
projections. they look at gdp, unemployment, inflation. it is jay powell once again getting ready to update those sets and last time they did it was in december. we will be waiting to see if ory keep the dots at two one. left, a veryom the narrow consensus that there will be two rate hikes. fed officials were looking for even more this year, and several said there could be maybe none at all. maybe move the markets and the we surveyedrvey -- analysts and they are looking for the fed signal. we will also be waiting to see if jay powell says anything more about when they are going to
stop running down the balance sheet. a couple fed officials said it could happen by the second half and if they are at all concerned about expectations rising in the u.s. on market. economy, what the is jay powell likely to say >> how will he characterize it? >> how has been so focused. you have a strong labor market, gdp is still growing, slowing from 2% to 3%. even so, it is still healthy. he did say at the list press conference in january that he would see inflation rising to get back on the rate hike task and you know he will talk about the global slowdown. the impact of the u.s.-china trade war, brexit, and europe 's slowdown. >> we also have thailand, indonesia, and the philippines. how does the dovish powell fit
into their policy decision? >> it certainly has to be a relief because we saw some major relief hikes last year. the bank of thailand will be up tomorrow with their policy meeting and they are expected to hold their key rate at 1.75%. inflation is key, there's a global slowdown threatening the economy, and they have a big election on march 24, the first since the military coup five years ago. >> we can even look at the bought, still holding pretty strong. foreign-exchange reserves held by the bank of thailand are double what the imf is requiring. they are holding the key rate at 4.75%, inflation has come down -- the do chief is running its now and this chart -- look at that massive series of rate
hikes. inflation has plenty of room to sit and wait and see what happens. finally, hank indonesia, probably one of the most aggressive rate hikers as they tried to steady the rupiah. now with the fed on this dovish hold it has taken pressure off haveupiah and they also elections coming up, another reason for them to breathe a sigh of relief. back to you. >> thanks for that. our asia economics and policy editor in the studio with us. do you think the language narrative is going to change in any way? do you think they will be using the p word, in other words, more than markets were anticipating? we think there won't be any change in interest rates.
we think we might give some indication of quantitative tightening, even though we would need to wait a little bit more to get some detail and what will be interesting is in terms of the economic projection where they see gdp and whether we will have a slowdown in expectations. we have global equities at five-month highs, has that run its course >? and what is going to be the next leg up? will it be something on qt, or will it be something which may well be negative? >> yes. -- we arey, constructive on the quarter to
come but beyond that we are remaining very much concerned because we are not seeing any acceleration in the economic think the concern is that it is shifting from a fed being patient to where the growth is and what are the risks of having a recession next year. >> juliette here in singapore. you mentioned a potential recessionary concern, and your thoughts of the balance sheet runoff. i have a chart on my terminal showing investor perceptions about the rate. rish was asking what will be the next leg up but also what does this mean for a lot of the emerging-market central banks here in asia because as kathleen was telling us there are a number of them eating this week. >> yes.
that's a good news at a certain level, and what economists have called out meat from central banks which has also been the case for asia central banks. what will become more the first one is where do we stand in terms of positioning and especially on the fixed income part and number two, where is the growth, and are we seeing emerging-market outperforming in terms of growth and do we have any acceleration? this is a developed market. there are some pockets we like within emerging and china is definitely one of them, but overall, taking the longer term view, we are not seeing any pressure. >> is interesting that you don't
really like korea, you are thinking the bank of korea is the most hawkish central bank globally. >> yes. we have a hawkish central bank in korea and some earnings which have been quite add in the , very intense over the last few months, and we are not seeing any reason why it should improve, given the monetary landscapes that we have now in korea. korea is one of our underweight positions within emerging equity. one of your other traders has been long india. there have been quite a few hurdles because of the
uncertainty with regards to the election, which has been on an absolute tear. that may change at some point -- what will be the instruction? >> the election is an important for investors, especially looking at the history of the indian election. also, coming from foreign money, there could be some concern, whether there is an incumbent coalition. that, what we see in india -- and this is different from what we are seeing in other economies, growth is accelerating again and earnings are also improving. and this is not unique to india but it is one of the few markets where we are seeing that at a time when inflation is on the
lower band of the r.b.i. and where we could see further cuts. >> we have a situation also where valuations are high, historically high. do you think that puts people off? the indian companies have been generally speaking more profitable with higher return equities.han other em we are paying more for that. is interesting to notice today is that you have but when youio, look at all the metrics you tend to see a more average level, and this is something which is quoting us because we are seeing this earnings coming into making
the high valuation based on earnings better. >> stick around with us. we will have more with him. including china's push to get the stock and bond market to play a bigger role in funding companies. whynd later in the show, one analyst says investors should be offloading indian i.t. stocks. this is bloomberg. ♪ s. this is bloomberg. ♪
-- as rishaad was pointing out, there have been a number of indices and stocks touch in that china market as well. whaten your view, i guess, can we continue to see this rally? is it this renewal of the stimulus commitment we heard last week? way have a little bit more thatl on the stimulus could house 2 trillion tax cut. we know fiscal policy will be easing more than what we were expecting at the beginning of the year and at the time of the government report. we have a little bit more implementation and this is one element which can support a row -- the rally.
we have some trade agreement where it would be something -- i think it is becoming more and more mutual. and you have the valuation of the sale price, which is still ok. you have some valuation which has increased but given the remarkable resilience you've seen in the earnings, this is something on which we feel comfortable. trade mentioned the dispute, that could be a trigger to derail the rally. but if it continues, are you looking across all sectors, or are there specific stocks in sectors you are focused on? we are conservative on the markets overall, more on the domestic than the offshore, more on the private companies. i would say that we still find some value.
the chinese banks are also interesting in the context where we see some pause in deleveraging to remain stable. so these are some of the industries on which we would look. >> what was the takeaway overall from the mpc? trust but verify with these trade negotiations -- how much impetus to get some sort of from playing field came those trade negotiations in your view, such as the overall equalization and government contracts? certainly there has been some pressure coming from the u.s.. of competitivet
neutrality between the private sector and the public sector is also something that companies in china are asking for. if we see some external pressure coming, we think that ultimately this is something which is going to be a positive for the economy and a positive for the equity market. i think what would be important beinge equity market is what an equity market is meant for, which is to finance the economy and help in the deliberating process. >> thank you so much for joining us. just having a look at his market perspective. coming up have a look at what's going on market wise, and a look at the equity rally. can it be sustained? plus brexit,. -- can trees and make it
♪ let's have a look at the latest business flash headlines. -- shares taking an absolute hit 8%, an hong kong, down by surprise drop in annual profit. the company blames the slump on chinese tourists for weakness in the yuan and a brand relaunch. down about 35% with earnings falling for four straight years. flights on monday, -- the flight
cancellations are part of its ongoing route to restructuring and will not linked to any lack of support. they are also reducing flights to dubai and bangkok. >> to a story never far from the headlines. theresa may threatening to give up trying to get brexit done anytime soon unless hardline conservative eurosceptics vote for her deal this week. she is expected to meet rebel tories and the democratic union party later today as she tries to bolster support for the twice defeated bill. let's bring in our fx reporter, who has been tracking this for us. what are the near-term implications for sterling, now that this plan is rising somewhat? it is generally positive. it would definitely be possible to remove uncertainty but it looks like there will be a long delay for brexit, with near-term
uncertainty. and no deal is looking very unlikely, but then we have economic data out this week which could have a near-term impact. >> the economic data, the fed -- it was interesting philip hammond was switching sides on the deal, all of this playing in. what do you think it will mean? past,the bill does get she has turned to quite a few people to change their minds. it removes uncertainty and then you will have people seeing how dovish or hawkish does the governor sound? they are underpricing rate hikes at 43% chance of a rate hike by december, and he maintains that hawkish stance. >> always great to get your insight. our fx reporter with me in singapore. the mainland chinese markets are about to go on a lunch break.
♪ it is almost 11:30 a.m. here in singapore. we are in the middle of the trading day, singapore stocks up. we did have nonoil domestic exports rising 16%, well above estimates, but electronic estimates were down 8%, adding to january's slump. markets rising the most in the asia-pacific. let's get the first word headlines with rosalind chin in hong kong. >> thanks, juliette. a new bloomberg survey expects the federal reserve to end after one more increase this year in september.
it was the peak of the cycle with the upper end of the target at 2.75%. back in december the same survey sought to hikes with the cycle peaking at 3.25%. is australian government warning that property markets could hit the wider economy. the treasurer says falling house prices could spill over into household consumption in small business investment. interest rates remain at a record low, and sydney prices have fallen 13% from their peak is the country heads into a general election. under report says the australian budget will return in fiscal 2020, but a pre-election spending spree that upset the bottom line. budget shows underlying cash flows of almost $10 billion eight ud. that is despite a sharp deceleration in growth.
an earthquake and landslide in a popular indonesian tourist resort has killed at least five people. at least 58evening people died and thousands were displaced by flash floods in eastern papua new guinea. most of the water has receded but rescue agencies expect the number to ride. -- to rise. an air asia group ceo has quit facebook after the site failed to prevent live streaming and repeated posting of the christchurch shooting. he took to twitter, saying facebook could have done more, and that he's been the victim of many fake online stories. the new zealand prime minister says she plans to address the issue of live streaming terror attacks with facebook directly. global news, 24 hours a day and at @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. chin.salind this is bloomberg. all right.
we were taking a quick look at markets ahead of the indian open, but we also want to focus in on oil, and with that we have a chart on the terminal essentially showing that wti has approached a technical bullish pattern. opec and allies are meeting in where the saudi oil minister -- urging the coalition to work with production curbs, saying there is much work ahead to balance global oil markets.. there have been reports, but for --in ready [inaudible]
our asian energy reporter is here with us in singapore. talk us through the message. basically, the market is responding not terribly favorably to this. we see opec has at this point -- they are not as sure that the market is out of the oversupply situation. we were expecting them to say perhaps we are closer to a balance, making giant cuts to december and russia could potentially bring the balance close to the market. we have heard from the russian minister that there is still quite a way to go before these cuts are over and perhaps more will be done in the future, but they couldn't give many details on that yet because as it stands so muchet has insecurity that they don't know where to go. they will have to reassess the situation and the market is a little bit skittish.
then, when itave, comes to the people you are talking to, oil analysts and the like, about what is the price action going to be like? perhaps they will be in a rage at this level for the next four months. i think that is generally the view of the market. what we are seeing right now -- we are seeing a bit of an up and down between the $60 and $70 range, and when you look at that -- when it reaches to the $70, then the shale drillers come back. when the shale drillers come back, u.s. production and inventories may be affected, which creates a bearish scenario . when it falls down, the drillers go away. we are in this range and until we get more view from opec i think folks were be more scared to put their money on an $80, $90 level, according to the
analysts we've spoken with. quickly, what about the type of oil that is being produced? there is a mismatch, isn't there, about what the market wants and what the market is getting. >> absolutely. these venezuelans produce a very specific type of oil, the united states a certain type as well. -- it is not so simple that the u.s. can send to southeast asia or china -- there's a very specific kind and it is creating big spikes in the price of certain grades of oil as well as certain products. the market is watching this very closely and seeing how it will be affected going forward. >> good stuff, stephen. joining us from singapore, our asian energy reporter. despite the call to stay the course, russia says it is too
early to discuss extending output cuts into the second half of the year. alexander novak told bloomberg that russian oil companies are fully compliant with opec plus output curbs. >> [speaking russian] is too earlyat it to discuss what happens in the second half of 2019 now. too little time has passed. it has been two and a half months since it started, and there are too many uncertainties in the market today which could affect it either way. i think it makes much more sense to start discussing this topic russiaor june, where it has a lot more clarity on the state of the market and how these uncertainties are playing out. >> russian oil companies have sometimes dragged their feet when it came to cuts, have been a bit more reluctant. will it be harder to get them on board if you decide to extend for another six months? >> [speaking russian] >> i think i would not agree
with you about the slow pace of production. they are in full performance with the targets which has been voiced publicly at the end of last year. for the adjustments regularities and specific factors so we could not immediately continue production. have really good research departments and good strategic departments, they will see the benefit of cooperation but of course before we make any final decision on the future they are going to once again gather with a companies, the , and only then will we make a decision. the decision will be defeated by
market needs. >> when will rush of the 100% compliant implementing the 220,000 euros per day? >> [speaking russian] >> currently we are on schedule with regard to production. schedule calls for achieving dimension targets by the end of march and beginning of april. >> last month, the u.s. president tweeted about prices, urging opec to cool off. are you hearing some other consumers, any sort of concern or anxiety about oil prices getting too high? >> [speaking russian] >> we pretty much year these things from the same sources as you do, public space in the media. but if you ask for my opinion, i believe that currently the price is acceptable both to consumers and producers, and you can see that volatility is extremely
low. >> if we are balanced at this moment, do you think there's any need, than, to extend these cuts in june? >> [speaking russian] >> we need balance today at this moment in time but i cannot say the same for april or any other time. . >> last year you always talked about this range between $60 and $70. is russia still happy with that price range? >> [speaking russian] >> we have been consistent in our views, and the $60 to $70 range seems acceptable to the global economy. but i can say at the same time that this is the price range -- there is a healthy level and we will maintain investment in the oil and gas sector. >> the russian energy minister talking to annmarie hordern. indian stocks finishing their
♪ you are back with "bloomberg markets." we are checking in with the indian rupee, some of it is down to some dollar weakness and some of it is intrinsic bullishness concerning the currency. it is going to be rising, the strongest in more than seven months, as we get a look at assets helping to bolster what's going on currency was. slumpingicit numbers last month, the deficit was $14.7 billion in january.
this is also as we get a balance of payments to strengthen the rupee with economics taking place. all of this ahead of an election which has caused a little bit of anxiety with regards to the market, but that was before last week when we had an absolute tear for the equities in mumbai. let's bring in our next guest, who says he is sanguine about the state of indian equities. ahead of institutional equity research joins us now from mumbai. thank you for joining us. give us your thinking. why are you sanguine? three months back, there was a situation where global central banks were tightening and the lack of clarity as to who would win the indian election. in the last couple of months we have seen a situation where
central banks have made a 180 degree turn, dovish on the election front, and a situation with a lot more clarity which will happen in april or may of this year. sense is that there is a fair chance that they will come back to power with equal or higher majority. that seems to be stacked into the prices at this point in time. obviously there's earnings lack ofecovery, a information from the domestic side and i think that has played rise. a very sharp -- sanguine this comes from
indian equities on the political side. >> absolutely. one year it was positive, of only two in the asia-pacific, and this year it should be all about china. do you think ultimately people have been looking to china and ignoring india, with a few problems in their heads about the election and valuations? seen, dothat has been you think people are now looking more positively at india as a consequence, and if so, where do you look? so india is a far more brandic oriented market china which is probably more globally focused and to that
extent i would think india is more defensive. i think india has been far superior to chinese companies. india has not been achieved , indian companies traded these of the emerging markets -- it could be upwards of 48%. think that's don't reason enough not to invest in india. you now have clarity in terms of politics, obviously risk appetite is kind of for five. the question of whether it will remain that way comes off a lot more than what are currently anticipating and if that happens there could be something worse. my sense is that there is a lot of growth that is not being
priced into the indian markets right now. the new government when it comes to power will probably have a lot of things in terms of faster earnings growth in the last five years in terms of the demonetization. i think that will lead to a better tax-gdp ratio in the longer term. singapore.ette in talking about those valuations, you have some calls on pretty big stocks that a lot of foreign investors have been getting into. is your reasoning behind that because you think these valuations are too high, and if so, what are you looking to buy? if you look at what our calls are on the indian market, we like corporate banks, retail banks, and nonbanks which have pricing power.
a couple banks have had a very bad three to four years and have had to write down bad assets. they have had low profitability for two or three years and they are coming out of high provisioning. we think there is strong earnings growth for these companies in the next two to three years, it's a complicated cycle that could potentially revised after a large gap that could drive corporate bank asset gaps. banks are seen as a lot more priced, that could happen. retail banks, the compounding assets could happen between 15% in 20% over the longer term. there are banks which address -- there's a lot of pricing power,
and those are three areas which you like. be staples,ould consumer discretionary. those are the areas that we like and we don't like the i.t. space and we are not too sure about how global growth will pan out. what about the rupee, which continues to rise? it is getting the strongest in more than seven months. you also have the r.b.i. potentially making yet another move to raise next month. r.b.i., my sense is that there could be a benign inflation number over the last many months, which would be substantially below the target inflation rate. our sense is that we will see even 50 basis point cuts over the next 12 months or so.
but that is not conflated too low interest rates. i think there could be a transmission issue and that's a discussion for the longer term. on the rupee side, there are very strong flows, but our sense is that over the next 12-24 depreciate, will driven by -- we think -- inflation rates coming back up to 2% or 3% levels. we expect them to go back to 4% or 5% over the next two years. >> all right. thanks so much for joining us. live from mumbai. a sixs market suggests
session of gains, let's get back where we can go through what to expect from today's session. there has been a lot of strengthen indian markets, and this move in the rupee. a lot of foreign inflows boosting this market. >> absolutely. $3.3 billion in the month of march in the first 18 days of the month, and with that, considering the nifty has both above 11,500 for the first time .7%ix months, up as much as , for the sixth straight day. steady gains for the banking index as well as the broader markets are moving in tandem with the benchmark. we are seeing a lot of strengthen the broader market. reports say that india's biggest infrastructure company is looking at a hostile takeover
of a tech firm -- what does this do and how are stocks situating themselves? >> that's correct. this is perhaps one of the more interesting stories, at this point from what we understand, they are looking for a hostile takeover for mine tree. one of their largest investors is looking to offload as much as 20% in the company and they are looking for a 51% stake in the company whereby it will have controlling interest in the company. at this point we are seeing gains of as much as 1.3%. they will consider a buyback in order to stave off, and that buyback will happen around march 20. we will continue to attractive elements with this story. >> all right. thank you, as always. coming up, banking on a merger.
♪ >> after months of informal talks and years of market value losses, they are starting official discussions on a merger. deutsche bank and commerzbank could give wall street a run for its money. what are the chances of getting a deal over the line? there are a lot of hurdles. >> that's right. as you said, it has been going for quite some time. months if not years. speculation and talking on and off, and they recognize yesterday that they have tried
to come to an agreement. the chances of the deal are high because we have a situation which is really dramatic in germany. main vendors are struggling big-time, they tried to turn around the business for so long and they haven't been able to do so yet. despair, what are economist are saying. >> exactly right. but the thing is -- they have tried for so long and they haven't been able to, so they are going to have to come up with a solution. >> do you think this could trigger further consolidation in other european countries? >> yes, juliet. that is the main question that other banking experts and regulators are posing. is, this deal is of
such magnitude that it is going to -- it could trigger some deals. are seeing a lot of markets take italy or spain, and now the big question is after this market consolidation, are we going to see other side effects and other big players in europe? that's the next step, and that has been brewing for a long time. wheredo have a situation they will want to cross-border merger. thank you so much. just checking in on the markets, tokyo, hong kong, sydney. two and a half minutes of trading left in hong kong, .3% up. asx pretty much flat. nikkei struggling upward.
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