tv Bloomberg Daybreak Asia Bloomberg March 25, 2019 7:00pm-9:00pm EDT
haidi: larry good morning. i am haidi stroud-watts -- very good morning. i am haidi stroud-watts. shery: i am shery ahn. sophie: i am sophie kamaruddin in hong kong. welcome to "daybreak asia." haidi: out of story this tuesday, theresa may loses control of brexit after conceding she did not have the votes for her unpopular bill. the commons will decide. investigate the investigators. president trump says some people behind the mueller inquiry will be "looked at."
-- announcing a challenge to netflix. a credit card with goldman sachs. shery: let's get you started of howquick check markets closed on this first trading day of the week. ending almost close to where they started. we saw the s&p 500 being weighed down by financials. the focus was on the u.s. rates market. we saw the 10 year yield fall at one point. for the first time since december of 2017. investors betting that the fed will need to cut rates as we see mounting risks of recession coming. u.s. futures at the moment unchanged. let's see how we are setting up for the market open in asia. tohie: it could be a day take a breather after the worst session for asian stocks since december, which saw the nikkei 225 drop.
in sydney, we are seeing the asx 200 open little changed. we are seeing stocks fluctuate ever so slightly as we have got the latest data from new zealand showing the trade deficit widening the most since july 2000 six. let's check in on the bond space, remaining in focus. we have kiwi and aussie bond tolds continuing to drop fresh, all-time lows. a quick check on the pound. flip in the board, cable rising in the early asian session. the board, cable rising in the early asian session. haidi: let's get you the first word news with jessica summers in new york. thanks. president trump and key republicans want an investigation into the roots of the mueller inquiry. they are calling for an attorney general to examine why the obama administration decided to investigate alleged russian interference in 2016 and whether
it was an excuse to spy on the trump campaign. president says the people behind the probe would be "looked at." results still no clear in thailand. both parties are claiming the right to form a government and the electoral commission is delaying until friday. show theotes antimilitary party is likely to win the highest numbers of seats. the u.s. transportation department is creating a special commission to look into how new are certifiedns in response to the grounding of a 737 max family. it will evaluate how the faa oversee the process including the growing trend of using employees of playmakers to sign off designs. the review comes alongside a criminal investigation into the 737 max approval process. and president xi jinping
witnessed the signing of billions of dollars of agreements in france, including an order for 300 planes from airbus. the deal is for 290 single-i'll -- a three to single -- single-aisle planes. the cash cow remains grounded around the world after two fatal crashes. global news, 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> thank you. u.k. parameters to theresa may have lost control over the brexit process. house of commons has voted 329-302 to strip power away from may. for more, we're joined by emma ross-thomas from london. we are finally going to see
those indicative votes. how significant is this latest development? emma: theresa may spent two years negotiating a brexit deal. she brought it back. nobody liked it very much. it has been rejected by an overwhelming majority twice in parliament. only now with four days to go until what was meant to be brexit day, parliament has decided enough is enough and they are going to find an alternative to her brexit deal. what does this mean? athin parliament, if there is majority of anything, and a majority will be for a softer brexit, maintaining closer economic ties, and that is why the pound rallied after the result. the only caveat to this is parliament so far has not managed to come up with a majority for any kind of brexit, so it is still possible the end of anek in as much impasse as we are at the moment. the government has said that parliament should they are in mind that what they come up with must be negotiable -- bear in up witht what they come
must be negotiable. theresa may has warned mp's that they must bear in mind that they will probably end up keeping the an. trapped in the e.u. for extended period. that is because there is simply not time to rewrite the brexit deal before the new deadline, which is april 12. so what we can expect now is theresa may will probably, if a consensus is signed, she will have to go back to brussels, ask for a longer extension, perhaps nine or 12 months, as a new brexit plan is hashed out. the option of no-deal brexit is still on the table. that remains the legal default. we have some roller coaster days ahead of us. haidi: we know the european commission is looking like an increasingly likely scenario of no-deal brexit. it is not as though members of
parliament have left many stones unturned up until now, right? is the idea of a second referendum gaining a bit more momentum? emma: there is not a majority for a second referendum, an idea that jeremy corbyn mentioned. of the 2016eat referendum, but a referendum on do you like this deal, theresa may's deal? the options most likely to be debated are a softer exit, the norway plus option, which is keeping e.u. membership in all but name really. single market access but no vote or veto in the e.u. process, a customs union, staying within the main trading rules of the bloc, or as you say, a second referendum. one thing to watch out for is the prospect of a general election. may was making hints that she stood for election on a
manifesto that ruled out staying in the customs union that wanted to pursue an independent trade policy. the idea that of parliament issue the government to -- the tech eshew that -- to eshew that. shery: we have seen three ministers leaving the prime minister's government. what happens to her? emma: that has always been the question, hasn't it? no one dares predict theresa may's demise. for so long, we have been saying that the end might be near. the ministers quit in order to vote against her, to vote for these indicative votes in parliament. they are pro-e.u. ministers who want to see a softer exit, if you like. over the weekend, the speculation that she would be ousted reached fever pitch, but it was a coup that was very short-lived because they quickly
came out and said they were not interested in the job. kim theresa may survive? -- can theresa may survive? it depends. shery: who would really want that job? it is such chaos right now. london.s-thomas in still ahead, we will go through the deals agreed during president xi's trip to europe including a massive $35 billion order from airbus. we will speak to the institute later this hour. coming up next, we will be joined by a raymond lee to get his view on how do you navigate this and interpret what has been going on? this is bloomberg. ♪
they picked up in the u.s. again on monday, pushing the benchmark to 15 month lows and driving the inversion of the yield curve even deeper. this all has implications for the federal reserve. kathleen hays is here with the bond market metrics and the fed comments as well, so kathleen, what drove today's move? is this a continuation? kathleen: and concern about the global economy. today, it's interesting, there was not any real new news. drop in the this benchmark happened on monday. what happened on friday -- sunday in the u.s. -- was asia caught on fire, too. this has become such a global thing now. yields are falling. let's jump into the bloomberg now. we livedk at the chart 24 hours ago. that is the turquoise line which
just had fallen to a record low. we are watching the market. line is the australian's 10 year bond note. it also fell to a record low. 1.77. we have new zealand around 1.86. so that is where we are now. note is the 10-year down to 2.4. let's take a look at this inverted yield curve. this has the whole world excited. this is the three-month build to the 10-year note. it is down to 2.40. the three-month bill is at 2.44. you see that little bit of negativity, which is concerned. they have preceded recession. ims,umber two man at the david lipton, warning that the euro area economy is vulnerable.
if they have downturn, there is fiscal issues. german bunds remain in negative territory. clouds not just over the u.s., but over the european area as well. two major fedd officials speaking in the last 24 hours. is there a concern about what the bond market messaging is telling us? kathleen: when bloomberg television sat down with the chicago fed in hong kong yesterday, he kind of downplayed the inverted yield curve. long-term rates have been low. that is why it is inverted. they cut it back. he has concerns about inflation. here is what he told bloomberg television. >> i am a little nervous about inflation. i think inflation is close to 2%. that is good. but i am worried that it still takes a combination to take
inflation -- keep inflation at that level. i marked down my path for policy rate increases. i basically got parsley on hol. -- policy on hold. kathleen: this is so very important for everybody to know. he opened the door to rate hikes. he said the downside risks loom larger than the upside risks. thantivity softens more expected and inflation expectations run to low, policy may have to be left on hold or even loosened to provide the to getiate combination our objectives. the door may be opened to rate cuts. that is what bond traders are looking for. aidi: kathleen hays with wrapup of that fed speak. let's put this into context and look at the trading opportunities. raymond lee joining us on set in sydney. taking a look at that yield spread, which is what we have been fixated on, and we have also been looking at other things like the aussie 10-year
yield falling to a record low as says this is evans almost a structural implication of where longer-term rates have been for much of the past decade. i am wondering what opportunities for returns there are during periods of inversion if we are not talking about recessionary conditions? raymond: when you have a yield curve that is very flat, particularly in the fixed income markets, you want to focus on the short end of the curve. even the u.s. right now, the two-year interest-rate and tenure interest rate, you don't really pick up watch, maybe 10 or 15 basis points. -- much, maybe 10 or 15 basis points. so for us, we are buying corporate debt, which gives you a spread above the 10 year or two years treasury rate. there is a risk return for this low yielding environment. haidi: i want to throw up another chart which shows where subzero debt is. we're looking at levels we have not seen since back in 2017,
2016. case untospecial itself. i am wondering how this scenario makes you feel about emerging markets? withing to see investors part of the em assets because of the risk aversion. raymond: with the lower yields from the u.s. and also in germany as well, given the 10-year german rates, a lot more negative fixed income bonds into the market. it makes emerging-market bonds look better. one thing to note is emerging-market debt and currencies have changed a lot. are be careful that you lying valuations which are mature now than they were a few months ago. i think the high-yielding em currencies might be a decent paying for your buck -- bang for your buck. focus on the right quality and also the right valuation metrics. shery: we are seeing this glut
of treasury supply focus on the front end of the market. we're going to see that as well? raymond: look, i think in terms of supply, you raise a really good point. the treasury issued a lot of bonds. treasuries are maturing this year. right now, on the 10-year side, we saw 10-year yields with 2.4%, fundamentalsak globally. the only thing that would lead to a longer and rates moving higher -- end-rates moving higher is that. they might have to issue at higher rates to get investors interested in buying. you might see the yield curve steepening again and that would be the key factor to look for this year. shery: we have seen these aggressive moves in the rates market. when it comes to the stock markets or the dollar, really, they have not reacted much. bloombergart on the
-- gtv chart on the bloomberg showing the s&p rally has stalled. what is this telling us? raymond: well, it just tells us that the risk markets s&p equities credit has -- since the beginning of the year. with rates basically going lower now, it is really reflected in the valuations of all asset classes. it has hit the area of their valuation and might just go sideways. u.s.re seeing it in the dollar as well. we are quite cautious. we are generally positioned to still go long rates. we are positioned on the long withnd will be range bound -- and will be range bound with risk to the downside. i want to get your view. the labor market data is pretty resilient and that is something they can hang their hat on. opinionn interesting from a former board member saying that if we have a labor
government taking power in may, there is going to be and inflationary impulse from the spending they will do. how does that play out in terms of what the next two years are? could they have a hike? raymond: generally, when a new government comes into play, the market gets a little bit more bullish, generally speaking, particularly coming up with fiscal policies. that is something the rba will take into account. the the rba to hike rates, they have to see inflation go higher in the 2%, mid 2% range. a good sign is we saw unemployment go down to 4.9%. we will see wage inflation and then wage inflation will feed into broader economic inflation. we are moving the right direction. new government that comes in with a big fiscal package will be good for the economy. haidi: we need to see a resuscitation of the phillips curve. raymond lee, managing director and portfolio manager here in sydney. coming up next, apple unveiling
haidi: "daybreak asia this is." i am -- this is "daybreak asia." i am haidi stroud-watts in sydney. shery: i am shery on. you subscription services include a news tags the in service, video gaming platform, and premium video service to rival the likes of netflix and amazon. and there is a new credit card as well to help pay for it all. let's cross to san francisco, where alistair barr is. tell us how confident and successful was apple in transitioning away from a hardware company into a digital services company now? today has been a
little bit of a disappointment, i would say. the shares actually rallied about two weeks ahead of this announcement and a lot of it leaked out already. one of the big things people were waiting for is how much apple's going to charge for the key service they announced today, which is the original video streaming service to take on netflix. unfortunately, apple did not say how much it was going to charge. service is going to launch in the fall. some analysts here saying that was a little bit of a disappointment. on the news side, there were some concerns because the only real hard news partners that are taking part with the apple news service are the wall street journal and the l.a. times, and those partners are withholding some of the key content. haidi: what about the gaming subscription service? we know that space is wildly lucrative.
that could potentially set up to be a key revenue source in the future? alistair: with this one, apple that not say how much it is going to charge for that service. it is going to launch in the fall as well. there are similar questions revolving around that. apple has done really well with mobile video games in the past, and people do play a lot of video games on their iphones and ipads. apple has a great start with a lot of these services because it's devices are used -- its devices are used by so many people in different ways. the key is whether they are going to choose to pay apple and choose apples paid service --'s apple paid services -- apple's paid services to do that in the future. shery: a couple of analysts are pretty excited about this new car. titanium. it will boost apparently apple pay in a way.
alistair: it had some really interesting features. --for things like paying off when japan after credit card, which sometimes can be confusing to people -- it has a really nice analysis tool. if you pay off your credit card four times a month, this is how much interest you will pay versus doing it once a month, and it gives you heads up to avoid missing payments and things like that. from a user perspective, that is pretty good. from a pure cash back rewards perspective, the offerings are really not much better than some of the other cars that are out there already. >> alistair barr with the latest on apple. let's get you a quick check of the latest business headlines. jet airways soared in mumbai as the chairman finally bowed to pressure and agreed to resign. it marks the end of an era with
him regarded as a pioneer. his departure removes a potential obstacle for creditors who are seeking to overhaul the company. banks are expected to provide immediate funding to keep jet flying. shery: cathay pacific has agreed to a deal to buy hong kong express. the south china morning post says they will make a formal announcement later tuesday, although no details have been released. they have been underwriting pressure from no-frills carriers . moving into that market could attract budget travelers that it does not already served. lyft faced protests from disgruntled the drivers as it held its latest ipo roadshow. movedheduled event was to the olympic club. cuts theyouncing the say lyft has imposed on them. it was then moved because lyft needed more space. lots more to come here on "daybreak asia."
jessica: this is "daybreak asia ." i am jessica summers with the first word headlines. the brexit from its use theresa may losing control of the process after conceding she does not have the votes to drive her deal to parliament. the commons voted to take power away from the prime minister over what happens next. potential options now include a second referendum, keeping the u.k. inside the e.u. customs union, or even canceling brexit outright. south korea may need to boost government spending by $9 billion more than planned to meet president moon's growth forecast. a bloomberg survey of 10 economists says the money should
come in extra budget to help them reach target growth. two point 7%. at initial budget is $414 billion, up 9% on the previous year. the united nations says the powerful storm that raged across southern africa this month has killed more than 700 people. it may have also caused more than $1 billion of damage. tropical cyclone need a -- the tropical cyclone devastated the mozambique port and moved east towards zimbabwe and malawi, destroying roads, bridges, and homes in its path. it also ruined crops as farmers were preparing to harvest after a drought. and goldman sachs says it pays female staff in the u.k. an average half as much per hour as their male colleagues, yet this is an improvement on the wage -- 56% wage gap the bank reported a year ago. the difference ballooned to 66% for year-end bonuses, although again, it is an improvement on a year earlier. goldman sachs says employees are paid the same for similar roles,
but women are often underrepresented in senior positions. global news, 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. haidi: thank you. breaking news on samsung. the company saying in a statement ahead of the first in aprilarnings due that they are warning that the fourth quarter results will be lower than the market expects. samsung saying the decline in memory chip prices is bigger than expected, that they are now saying the display prices fell more than expected. they are now saying the warning that the fourth quarter results will be lower than the market expects.they are saying this in a statement ahead of first-quarter earnings inort that will come out april, saying the decline in memory chip prices has been expected.n
prices fell more than expected. havetock had risen -- fallen more than 2% yesterday, although in the previous week, we saw a gain of more than 4%. it let's get a check of the broader markets with sophie kamaruddin as we set up for the market to open in korea and japan. sophie: stocks are trading mixed so far this morning while bonds are continuing to rally. we have benchmark yields continuing to fall at fresh all-time lows. concerns over profit growth in australia and gains. extending -- australian gains. flipping the board for some of the movers of note bingo, climbing after announcing an acquisition, which is part of the strategy to be a fully vertically integrated business. challenger is adding 6% as it expands its strategic relationship with an insurance company, which will see the japanese company increase its
shareholding. we are seeing gold rising this morning. the supermarket operator saying it will partner with ok to to offer -- with another company to offer online growt grocery shopping. worstook at one of the performers on the benchmark this morning in sydney, that is wesfarmers. a conglomerate losing ground after announcing its $1.1 billion all cash takeover deal linus, a key producer outside of china. shares are halted pending a response to this offer from wesfarmers. haidi. haidi: sophie kamaruddin in hong kong. president trump and key republicans want an investigation into the roots of the mueller inquiry. they want to examine why the obama administration decided to investigate alleged russian interference in 2016. bloomberg's senior editor has the story. even before we have seen the full text of the mueller report,
which the democrats have been calling for, we are now hearing reports that they want to investigate, or rather, president trump wants to investigate the investigators themselves. >> yes. who watches the watchmen, right? [laughter] case right now is showing us that republicans and democrats are quite frankly living in two different realities. democrats are sitting there outng that this is just across the bloomberg terminal, that democrats are requesting the entire mueller report be released no later than april 2. that is very quick, next week. ,nd in the meantime republicans, particularly lindsey graham, donald trump's closest ally in the chairman of committee,judiciary says he wants to get to the bottom of how this entire probe
started in the first place, and he also wants to probe the fbi's handling of hillary clinton's emails leading up to the 2016 election, specifically james comey, the than fbi director, -- the the-fbi director saying there was not a case. affect thet did election. probes on probes arm probes -- on probes are coming to washington. it seems like we had turned a little page. in reality, this is going to continue to fester. is the plan be that the democrats could use at this point? that democrats could use at this point? derek: that is something that is coming out at this point. the plan b the democrats are looking at right now is, frankly, they have got some oversight that they want to do. they certainly want the entire out.er report to come
they would like at least to be told what is in the entire mueller reports, and in the public disclosure of that to get as close to that as humanly possible. in addition, democrats are going to continue on their investigations into all sorts of -- let's say -- side issues that are close to the mueller probe, which was concentrated about russia's role in the 2016 election and the trump campaign's relation to it. so democrats want to look into ,ide things such as trump org. the trump finances, things like that. there are questions regarding donald trump tax returns, which are common place be released for candidates,ntial but that the president has never released yet. there are a bunch of lines of inquiry that democrats can take here, but it is important walking into the 2016 election -- into the 2020 election, i should say -- it is important for democrats to not look like
they are onto a witchhunt. there is a certain amount of carefulness they are going to have to take even as republicans, at the same time, launched their own probes into how the last probes started. shery: as we hear the calls and expectations that some form of the mueller report, albeit presumably heavily redacted, will be released soon, a lot of this comes down to the obstruction charge. it was pretty unusual that mueller himself did not come to a conclusion. there has been criticism that bill barr made a conclusion in his interpretation of the memo. that is exactly right. keep in mind bill barr is a guy who wrote a memo ahead of becoming attorney general before all that process happened. they basically said the president was not going to be able to get gotten on obstruction of justice charges. so there's some questions from democrats about whether or not
-- you know, what spot he had and how distant that decision was. but look, let's be clear, the obstruction of justice charge will not be cleared. robert mueller said, you know, that he cannot quite get there. so that is not going to happen. but even if it is not a legal matter, there is the court of public opinion matter, and that is where democrats want to see the full report and possibly continue to prosecute it in the court of public opinion. shery: thank you so much for that, derek wallbank, bloomberg's senior editor. just ahead, plain talking. the airbus deal -- during xi jinping's visit to paris will look at the implications for that. this is bloomberg. ♪
shery: this is "daybreak asia." i am shery ahn in new york. haidi: i am haidi stroud-watts in sydney. airbus has made a megadeal with china. the agreement was made during president xi jinping's visit. a look at the details. this is massive. it is interesting in the context of the trade war, in the context of boeing's issues with china as well. >> it is a massive deal anyway you look at it, but lots of moving parts, which make it very interesting. it is normally a 35 billion dollar deal. 10 wider range planes. critically, it is almost twice as much as president macron thought it was going to be before the trade war caps off. boeing.body blow to struggles with the
grounding of the 737 max. we are in a trade were between china and the u.s. and this puts pressure on them. possibly, you could interpret play byyou want us to your rules, we still have weapons to deploy an hour and. tell -- at our end. shery: given what is happening with their safety issues, china is looking at excluding boeing's troubled 737 max jet. there is mounting pressure on boeing from several quarters. we know that there is a criminal probe taking place of how the 737 max was certified in the first place. there is an audit by the inspector general of the department of transport and overnight, we heard there is a commission going to take
place of how new aircraft are certified and cleared to fly. china is an incredibly important air market that will surpass the u.s. as the largest market as soon as 2022, and it will account for some 7000 new planes in the next 20 years. 20% of global demand. so it is critical for boeing and airbus to be in that market. if you exclude it, it will put a lot of pressure. having said that, it is not in china's interests to exclude one or the other. they have to foster some competition between airbus and boeing so it can get the best prices for its aircraft. yes, it is a blow to boeing in the short-term. it is under a lot of pressure. in the long-term, difficult to see how boeing will be excluded completely as china tries to foster its own home-grown aircraft. that is a long way yet. on thatngus whitley
massive airbus deal. let's get more on president xi's trip to europe. relationships between china and the broader european region -- great to have you with us. and is really interesting in the context that ever since the beginning of president trump trade war, he has been trying to garner allegiance from the likes of europe to push back against the rise of a greater china. is that a sign that xi jinping -- we have the soft, economic power to keep these alliances on our side. >> there is no doubt that president xi is on a massive charm offensive against europe. italy became the first g7 country, the first western european country, to sign up to the belt and road initiative, which is a major thing for the chinese. in paris, president macri will be very pleased with the airbus
deal that has been signed. the europeans are trying to play a third way, walking a tightrope between the u.s. and china. as distinctmselves between both camps. they don't want a cold war. they are wary of china. mornings to be done to hedge against china at this -- more needs to be done to hedge against china. at the same time, they don't buy into a new cold war. in terms of belt and road, pretty extraordinary that italy has climbed on. there's lots of criticism that they are signing on to a debt trap, basically. herve: the italians have, but quite a bit of criticism -- have come under quite a bit of criticism. the germans are not pleased. italian politics are notoriously fickle. there are questions about the wisdom of that. they have been able -- one of
the two big parties and coalition has been able to essentially freeze off cyber and 5g from the memorandum, if i am understanding. that was a big concession pours the u.s. and at the state -- towards the u.s. is not ame time, it legally binding document, like the other countries that have signed up. the italians themselves have been a bit more cautious in the way that they have approached this, but there is no doubt that symbolically, this is a big coup for beijing. vowingwe have seen china greater cooperation on that belt and road initiative to those u.s. and european firms promoting international cooperation. how successful have they been in changing the world's view of that project? herve: it has been hit and miss, but i think what beijing has
done very cleverly is to play the differences between european countries because in a global times' editorial this week, essentially, they were saying things like, well, we are here to revitalize the mediterranean. we realize the industrial heartland of europe is in the north. countries like portugal, italy, and greece, can find their role in regional affairs, their voice in regional affairs again, using chinese investment. in a way, what is clever about the chinese approach is that they are really trying to beef up investments in the southern mediterranean ports and that has the potential to completely shift the way in which trade is currently done. trade at the moment is very much focused on the northern ports. if you look at hamburg, at antwerp, at rotterdam, yet the
chinese have promised the italians, for example, that they are going to default not only the port of genova, but also another port, which would shorten the travel time between hong kong and mainland europe aboutout 10 days. -- by 10 days. they are very enticed the chinese proposition. shery: the europeans have now declared beijing a systemic rival. what does that mean? and how united a front have the europeans presented to china? herve: this is a classic macron at play. at the same time he is hosting president xi on a state visit with all the trappings and pomp and ceremony that that entails, a few weeks back, there was an internal document circulated between -- the document drawn up by the european external action service and circulated between the european leaders, which essentially said that china was
a systemic level. this is similar terminology to what the u.s. has called china, a strategic rival. the full spectrum challenge of china as a power that does not share the same political values is amocracy, i think it new awakening. watch out because macron does like to walk that tight rope. i would not expect him to fall too far into the anti-china camp. essentially, he is asking for europeans to be a bit more realistic and a bit more coordinated and really to emphasize reciprocity between ties between europe and china. that means if european firms are not allowed to bid for public tenders and china, neither should chinese -- in china, neither should china be allowed to do so in europe. haidi: herve lemahieu here in sydney. what's more to come on -- lots more to come on "daybreak asia."
shery: let's get a quick check of the latest business flash headlines. michael avenatti has been charged with attempting to extort money from nike, embezzling money from a client and defrauding a bank. california prosecutors say he stole one point $6 million from a client to cover expenses. new york investigators have accused him of killing nike has cancer late -- he would cancel in use conference if the company paid out $25 million. haidi: softbank vision fund is -- start upobotics and shanghai. they aim to solve 500,000 robot to domestic customers this year. that would bankroll the expansion of a production line underway in shanghai that should be operational in june or july.
pwc says ceo's are most worried about brexit, rising interest rates, and slowing global growth, but agility is key to dealing with those risks. the chairman spoke exclusively to bloomberg on the sidelines of the china development forum. >> we have more uncertainty around brexit than ever before. we have the interest rate environment that continues to evolve in polarizing ways. and you definitely have a slowing economy with more and more signs coming its way. the ceo's are concerned about what does that mean and how do i manage through that? now, i have to compete. which means more market share competition and it means definitely potential for margin compression as they look ahead. there are questions on where am i going to find that growth. >> in terms of the central banks and monetary policy, to what extent does a dovish -- a more dovish fed insulate some of those businesses from some of
the headwinds? >> two things are inevitable. when you look at the last 10 years, an artificially low interest rate environment has protective -- protected a lot of companies. today, we are going to have that problem. we will probably end up having much more winners and losers as of the interest rate environment, with the general trend of an increasing environment over the next several years. we expect to see a tight hominy -- a dichotomy. the flight to quality. question,trade war all what are you hearing again from ceo's and from your corporate clients around how they are positioning for what looks like a potential deal in the next few months? how is it changing the calculus or the strategy? most demonstrate the
greatness of them or the organizations is the ability to plan, and when scenarios change, move with speed. we are not looking at the biggest thing the best anymore. you're looking at the most agile and speedy organizations. if we get a deal, we will change supply chains. if i do not get a deal, i will change my supply chain. if you look at our ceo's survey, the ceo's that moved the quickest are sitting here in china. >> what are you hearing from your clients about the slowdown? robert: china may be slowing down a little bit, not sure. 6%, ifa relative basis, in fact we get there, is pretty good still and terms of what the opportunities are. there are still a lot of upside. speakingbert moritz exclusively to bloomberg's tom mackenzie in beijing. let's now get a preview of the
market opens in japan and south korea. sophie: futures are hinting at gains in tokyo and seoul. than 3%ei 225 slid more with banks among the biggest losers and bond yields continuing to plummet. samsung very much in the spotlight. they may extend monday's drop after issuing a surprise profit warning saying first-quarter results due in april will be lower than market expectations as prices fell more than anticipated, underscoring the steeper than forecast slump in chip prices. remains onugmaker -- the radar interview after a second day of record losses, which brings its market cap to $8t two $8 billion -- billion, earning another downgrade from ubs and gpx. it has said it will expand the lower limit if it does not trade today. that snapshot to watch at the
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haslinda: asia's major markets it and portrayed. sophie: good evening from new york, i am shery on brand sophie: i'm sophie kamaruddin and hong kong. one to daybreak asia. haslinda: our top stories this year,y, a big slide this we are watching samsung after a first-quarter result this morning. theresa may loses control of brexit, saying she doesn't have votes for in a popular bill. the comments will now decide. decision delayed again.
thailand must wait until it meets friday as the leading party fights for powers. let's get right to the market action. sophie, what you seeing echo sophie: checking in on stocks in tokyo, we are seeing a slide after that summer despite after some slides for the nikkei 225, adding 1% after sliding 3% yesterday. we do have jgb yields in focus, along with a 10-year note from treasuries, trading about 2.41%. let's check in on stocks in seoul. kospi adding .3% at the start of cash trade. the korean won is gaining ground. let's check in on stocks, and your seeing mixed trading there. adding .2%. we do have banks leading the
track there, giving concerns over profit growth. we are seeing 10 year yields continue to fall at a record low. heidi, a trick -- quick check on samsung shares. -- the after the country company issued a surprise profit warning for first quarter results due in april. we are seeing shares up .1% after sliding 2.3% on monday. >> let's get more on samsung, we're joined by and keenan. we have had numerous analysts warning about how bad this part of the down cycle is. this is potentially the biggest bubble bursting since the global financial crisis. this morning from samsung this morning suggesting it could be the case. >> it really depends on who you believe. to some competitors, like macron, this has been coming for a wild. we have seen shipments slowing. are saying this is a good
time, because we are at the lowest point, and in the second half of the year, things will come flooding back, and if you believe what some of the analysts are saying, that will be the case. shery: you mentioned micron, who else could be hurt by this ongoing slump in the chip market? big high next is another producer. producer of they non-flash, which is the storage site of the memory chip. they have been expressing weaker pricing.or its -- we saw similar warnings from analysts. haidi:haidi: for samsung, how much of this is down to pressure from stagnation and this phone market in particular? the weakness we are seeing out of apple bill past few quarters echo -- quarters? >> the smartphone market is not the big mystery. shipments have plateaued for a wild. that is something everybody should be aware of and accounting for.
the new factor is data center makers [inaudible] ofy have been massive buyers computer memory over the last year or so. they have a cumulative new stockpiles and now they are seeing them slow down the shipments. the other factor is the pc market. are not doing well. but the major market for ram and computer memory. that is hurting as well. why isn't the stock reacting? has all of this negative news on the chief markets been priced in? >> it's back to what we were just talking about. if you believe the company, as you believe micron's ceo, this is the bottom. this is the worst. theyat is true, the way historically trade, now would be the time to buy in. ian, appreciate you for
joining us. let's get you to the first word news with jessica summers in new york. trump and key republicans want an investigation into the mueller in korea. they're calling for the attorney general to appoint a new special counsel to examine why the obama administration decided to investigate alleged russian interference in 2016. and whether it was an excuse to spy on the trump campaign. the president says the people behind the probe would be there is still no clear result in thailand. both main parties are claiming the right to former government and the electoral commission is delaying the foldout count until friday. -- the full vote count until friday. the military group is likely to win the highest number of seats but the army back group may take the most votes nationwide and combined with the military appointed senate.
the u.s. transportation department is creating a special commission to look into how new aircraft are designed. that is in response to the grounding of the 737 max 8 boy. evaluate how the faa the oversees the process, including the growing trend of human being employees and playmakers to sign up designs. it comes alongside a criminal investigation into the 737 max 8 approval process. is -- is xi jinping signing billions of dollars agreements and france, including in order for 300 planes from airbus. the deal is for two which 90 single aisle a320s and 10 a350 widebodies. the order is another blow for boeing, whose cash cow 737 max 8 light remains grounded around the world after two fatal crashes. global news 24 hours a day on air and on tictoc on twitter,
hour by more than 2700 journalists in over 120 countries. i'm jessica summers, this is bloomberg. shery: asian stocks gaining ground today, but this after suffering the biggest decline of the year on monday. global stocks still higher for the year. keep thatit take to momentum going as investors keep an eye on the global slowdown let's taken with? -- dig in with tai hui, chief asia market strategist for jp morgan. great to have you with us. why markets higher today? the a selloff yesterday on back of report data, coming in from pmi numbers from march, but also the dovish tones from the fed. after that correction we saw yesterday, i think investors are withg back into the market shery: caution. when we look at the broader environment right now, we have seen part of that juncker being burned.
we have seen, that will be usually, historically see that happen, these a sessions come, but there is always a lag. this gtv chart on the bloomberg showing that like. in the meantime, we could potentially be headed toward a downturn, how should investors position? tai: investors should still be balance in their portfolios. if you look at burning aches -- earnings expectations, the bar is low. earnings growth expectations are around 4%. that is not very challenging for asian or u.s. companies to beat. i couple of things to watch out for. in we going to see a rebound data over the next 1-2 months? gaugingcrucial in whether a full turnaround and policy by central banks are taking a fact. theer two, look at whether u.s. q1 earnings will be able to meet or beat expectations alongside the trends on puppet
-- profit margins, whether that will come into compression as wage costs go up. overall, we are still optimistic on risk assets over the course of 2019. as you get deeper into the cycle, it makes sense for investors to look for diversification, for example, into emerging-market debt. haidi: it's interesting, because are starting to see some jitters in emerging-market debt and high-yield debt. if you're looking for yield, it seems like an obvious place to go. are we going to see these concerns over global growth as being coordinated or synchronized dumping out of global bonds start to affect emerging-market assets as well? those concerns over global growth will hurt high-yield corporate debt or emerging-market debt. if we look at some of the growth idicators and policy as mentioned earlier, we think a
recession is unlikely in 2019 or early part of 2020, which implies that people in the corporate market is likely to stay low. that is the biggest worry for any corporate debt. the coupon, or the yield offered, and the high corporate debt market or emerging-market bonds looks attractive. on the emerging-market front, with the fed done at least for this year, in terms of interest rates, that will keep a lid on the u.s. dollar. that will prompt inflow into emerging markets. that will benefit both emerging-market fixed income and equities. in terms of the quarantine parts of the market from the herd mentality, it's hard to go best chinese in asia. that correlation is traditionally really low. that is a market that is run up quite a bit over the past few months. is there still further to go in terms of opportunities whenever thing else is looking shaky echo -- shaky? the asian markets do have a
lower correlation with global markets. if you're worried about what is happening in the u.s. or the rest of asia, the asian market is not a bad place to be to diversify your portfolio. the key here is whether we will continue to see flows from domestic investors and retail investors in china to come into the chinese market. for the past 2-3 months, we have flows into institutional investors investing in the asian market. retail investors are starring to come back in. i think the potential into this from those flows can still drive the market. we will see some consolidation, but the end is whether we will state the stimulus policy from the government from china whether it will take time to reinforce that confidence from investors. haidi: we'll started to see that conflagration. as gtv shargh showing that for the past few months, we have seen the shanghai composite trade between that 2960 and 3100 level. other buyers behind -- about
that 3000, 3100 level? every time we get there, it seems trading seems to thin out. the momentum since the start of the year, to where we are now has been so strong. a lot of chinese investors are asking questions, is this done? are we nearly their? we are not looking back to the 2014 15 roller coaster rides were piling into the stock market. the current consolidation to me is a good sign that chinese investors are becoming more mature and not just blindly going into the markets. they're asking the right questions. earnings are starting to improve as well. there are fundamental factors that will continue to drive performance in the asian markets. haidi: we have seen elections upcoming this year, india, indonesia. are there any more opportunities given we are headed toward these emerging-market election years?
tai: i think it's very much a case-by-case situation. the president was just elected, i think that will be a positive for the markets there. he's often seen as a reformer, and continues to improve infrastructure in the country. typically get volatility on the upside and downside right after elections. it seems a prime minister modi is unlikely to maintain a majority in parliament, so he will be working with the coalition at how far can he push the agenda? that will be key. overall, investors are not looking at the election part of the equation, but whether there is a growth or value story. we did see india performed quite well on the back of growth style investors. haidi: we spoke with charlie evans just in the last 24 hours. he is not too worried about what is going on.
he is worried about inflation failing to hold around the 2% level when we reach and get to that point. you are saying that the opposite possibility, that we get enveloped that inflation, and at the phillips curve is not dead and the market will be unprepared for that if the fed has to credit again. tai: absolutely. indicators,at weathered his inflation expectations or oil price or the dollar, all the suggest inflation in the u.s. is likely to be tamed in the foreseeable future. that is what makes a dangerous. if the market is swinging to one side of the equation, expect the weaker growth and recession, and ignoring the inflation risks in the u.s. economy, if inflation does strike, the market is poorly prepared for that. if you look back at history, what you find is that recessions, on it -- -- don't come on their own, they are
usually triggered by high inflation rates or weaker earnings because of erosion from the market. i do agree that inflation is not an immediate threat. but at the same time, the market is not prepared for inflation to thatn and with that, -- in low probability scenario, that will begin edging to markets. i will keep an eye on this going forward. the u.s. is pretty tight. there are factors keeping growth -- growth rate moderate. as the market conditions tightening, that could pose a risk much further down the line. haidi: no complacency here. always having -- always a pleasure having you on. tai hui, chief asia market strategist for jp morgan. still ahead, we will be hearing exclusive the from the ceo of a u.s.ese bank about why a your curve inversion what worry him. shery: theresa may loses control
shery: welcome back. the equity markets in tokyo gaining ground. rising more than a percent. but check of the stocks that are moving there. sophie: i want to highlight this company that is trading for the first under the week. the stock adding 2.5%. we have seen a lot of re-rating's for the company ubs, downgrading them. getting an $800 billion hit to its market cap. still trading to the lowest level in more than a year. usr in seoul, we are seeing llama airlines, plunging as much as 17% as trading resumes for the stock this tuesday. amid concerns, the company's trouble be rating was put on negative review by two credit
rating firms on friday after it announced it got a qualified opinion for its annual report from its auditor. the stock under pressure in seoul this morning. let's take another look at the markets when it comes to volatility. newbrexit drama taking on a twist, with theresa may losing control of the brexit process to parliament. let's look at the implications with david. it felt like ahead scratcher that in the mid it aftermath of that vote, we did see a bounce in sterling given it is -- it throws open the door to greater uncertainty when it comes to outcomes. did come offling slightly. glass what this means. it means -- people ask what this means. it means more uncertainty. every outcome has a greater probability. one thing that now has to be factored in is the probability of a general election, believe it or not.
that is because theresa may is losing control. we could see a leadership challenge. that, if they vote and they said they vote in the city want to kick the can down the road, the people in the conservative party are very pre-brexit. they're not going to like it. it's a danger that the conservative party might implode. you will see more people going against theresa may. that is one outcome that would not be good for sterling. the second is, even if the indicative votes come out with a general consensus, the question is, will theresa may decide to go with that consensus? it's not a binding vote. it's just indicative of what they would like. the eu has to agree. hypothetically, if they did reach consensus, it would be a milder form of brexit and the camp would be kicked down the road. the third version, what if there is no consensus? if there is no consensus, two options the table. no deal or theresa may's deal back on the table.
might past, which would be positive for the sterling, because it removes uncertainty. noo deal option would be good deal for sterling. sterling does know which way to go. it's being applied by volatility. three week or one month, they already going up. three-week, which covers the april trump election, or vote, is its highest since 2016. shery: it seems the euro doesn't know where it wants to go. this chart showing it has been raged bounce at september. we're hearing from you -- range bound since the -- since september. we're hearing eu officials are stepping of the contingency plans as a no deal brexit appears more likely. david: europe doesn't want a no brexit either, because the u.k. is one of its main trading partners. all of the economies in europe would be impacted negatively. to -- tobe quite happy
kick the can down the road. if there is no real legitimate reason, they're waiting for the inevitable, they get on with it. given the economy has its own problems right now, the idea of another shock would not be positive for it and it would not be positive for the euro. the euro is going nowhere because it is trying to work out what is going to happen. haidi: it sounds like, in the short-term our medium-term, when it comes to the pound or the euro, entering this notion of untradable territory, you should just leave it alone. whips will be fears. especially going into the indicative votes on wednesday night, we will see in asia on thursday morning, which is always thin volume anyway. you will most like they want to stand on the sidelines, because you're not sure how it will play out. adjusted, it would
be good to do -- do strangles or straddles or butterflies. anything with a long gamma. it removes the uncertainty, but it could still play out well. the move was sufficient one way or another, the option strategy would win. that's one reason why we see implied volatility going forward. if you want to do trade this, that is one of the better options. you,: always great having bloomberg asia's fx rate reporter david finnerty in singapore. on brexit onore today's asia of daybreak. yourberg some covers go to terminal, and also available on the bloomberg app. you can customize your settings so you only get the news on the assets you care about. this is bloomberg. ♪
i'm haidi stroud-watts in sydney. shery: i'm shery on in new york. it's been the quickest -- high-profile lawyer of an oddity -- high-profile michael -- high-profile lawyer michael avenatti has been charged with defrauding a bank and extorting nike. they say he stole $1.6 million from a client to cover expenses while new york investigators accused him of telling nike he would cancel he critical news conference at the company paid up to $25 million. >> today, we announced criminal extortion charges against michael avenatti. ae charges were based on of nutty scheme to extract more than $20 million in payments from a public company by threatening to use his ability publicity to inflate financial in reputational harm on the company. unveiled ae has range of new multimedia services, including a rival to
netlist called apple tv. it will feature original content from a number of hollywood celebrities. they've also launched a newsmagazine service, a credit card, and a giving service -- gaming service. airwaystruggling jet sort of two mumbai as the chairman about -- bow to pressure from creditors and agreed to resign. it marks the end of an era, with man by the regarded as an innovator. expected to provide immediate funding to keep jets flying. haidi: cathay pacific has put over a deal to buy local budget carrier hong kong express. cafe will make a formal announcement on tuesday. details of the agreement haven't been released. cathay has been under pressure from local carriers and moving into that market could attract
haidi: business -- this is daybreak --jessica: this is daybreak asia, i'm jessica summers of the first headlines. threesome a is losing control of the process and brexit after conceding she doesn't have the votes to drive her twice defeated deal through parliament. the comments vote is 329-302 to take power away from the prime minister over what happens next. atential options include second referendum, keeping the u.k. inside the eu customs union, or even canceling brexit outright. president trump and key republicans want an investigation into the root of the mueller inquiry. the calling for the attorney general to appoint a new special counsel to examine why the obama administration decided to
investigate alleged russian interference in 2016. and whether it was in excuse to spy on the trump campaign. the president says the people behind the pro-would be "looked south korea may need to boost government spending by $9 billion more than planned. moon's growthent forecast. a bloomberg survey of 10 economists says the money should come at a next her budget to help gdp reach the government's target growth of 2.6-2 .7%. initial budget for this year is $414 billion. that is up 9% on the previous year. as the united nations is says the powerful storm that raged across southern africa this month has killed more than 700 people. it may have also cause more than $1 billion in damage. tropical cyclone a day malawi,ed zimbabwe and destroying roads, bridges and homes in its path. hotlso wrote crops, just as
-- farmers are preparing harvest after a drought. global news 24 hours a day on air and on @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. was take a look at asian markets. -- let's take a look at asian markets. sophie: modest gains across the board. the asx 200 is down just .1%. thee continuing to drag on shares market amid profit growth concerns as we have bond yields trading near all-time lows. the 10 year yield for aussie bonds has studied after a three-day decline. in tokyo, japanese stocks are rebounding, up 1.4% on the nikkei after the worst day since december is electronic makers and railway stocks the biggest losers. go exn mind, 1500 stops
dividend on wednesday. today is the last day for investors to buy shares to receive the next payout. over in seoul, the cost be is being led higher by consumer stocks, although that event has pattered out a bit. -- petered out of it. let's check in on samsung shares, which are under pressure, down by .1% this morning after its surprise profit warning on its continued slump in memory chip prices. up, amidshares on the reports they plan to launch two new switch models. the wall street journal reporting they will be out this summer. exchange climbed nearly 4% to rising to a december 4 i as the group moves closer to buying the tokyo commodity exchange. over in sydney, wesfarmers is losing 3.4% after announcing a $1.1 billion all caps takeover of linus, a key producer of earth.
shery: the head of one of japan's largest lenders says he is not overly concerned with the inversion of a much watched part of the u.s. yield curve. speaking exquisitely to saidberg, mizuho bank ceo it could be sometime before the next recession hits. my impression is global landscape has started changing as the year 2019 has begun. with the reversing of the yield curve symbolizing the trend. as i recall, that happened to 2007 -- in 2007. it come to a time where we raise the moderate level. will it lead to a recession? there's a timeline. in 2007, the recession came 1.5 years later. responses by central banks, such as a safety net, has become more sophisticated. we don't need to be overly optimistic. about 650 nikkei fell
yen. that is symbolic, impacted by the u.s. market. >> any concerns over the yen appreciation? think it is a matter of how to view the situation. dollars 10 to be bought and crisis, but the same trends also are seeing with the yen. we see yen buying when the situation becomes uncertain. also due to the shift in u.s. monetary policy, yen has a higher. this is something we have to watch out for four different trend from last year. we've come to a time where we have to pay close attention to the economic situation in china and others because japan's exports are affected by them. the outlook and interest-rate rate look down by the boj is sticking to the 2% price target. the easing of monetary policy. when you say about your policies over central bank check out --
bank? >> a turning point came a bit earlier than i expected. i think u.s. monetary policy candidate to early as rates would have had more room to cut if they had not raised more. the boj's policy has helped us exit the -- inflation. this is a huge a couple in. we have to raise levels. 2% target is a means, not a goal. goal is stable economic growth. we have to come to a time where we have to consider whether the policy is appropriate against this goal and consider the impact of reversal rate of the side effects. the boj people know these things very well and they are doing difficult jobs of navigating monetary policy. haidi: airbus has sealed a mega deal with china, a $35 million agreement during president xi
jinping's visit to paris. angus wheatley has the data. this is day, even though we have a caveat to these deals, that are heavily discounted by the time they finally go through. it's a big blow for boeing as well. angus: a big blow for boeing. world'sm the fastest-growing travel market, it's going to surpass the u.s. in 2022, is the largest travel market source. a huge demand. a blockbuster deal you don't often see. $35 billion. it's a must twice as big as even france expected it would be last year. it's a boon for airbus. it's a shot in the arm for france. it's a hammer blow to boeing. it is really at the moment from the grounding of its 737 next week. competitor toy the bulk of the planes china has ordered from airbus. we have heard from boeing's ceo dennis muilenburg that boeing could be included in
a final trading between the u.s. and china. could we see some positive ramifications out of the trade war for boeing? this: it's key to look at through that trade war prism. boeing is a shiny target for china. it's one of the biggest exporters. partly because the planes are so expensive. of 20 series are upwards $100 million. having said that, it is unlikely to see boeing excluded from china. china wants to foster competition between airbus and boeing, it gives prices down for them. it's a key market for chinese airlines. upwards of 7000 new planes in the next 20 years. 20% of global demand. hasnow that president trump said a trade agreement might because -- close. -- be close.
tariffs ino keep place until he sees china comply with their demands. china once those tears lifted immediately. it could be china is using this purchase from airbus as a way to send a message to the u.s., saying, listen, if you want to make demands, we still have weapons to deploy. we know that china has agreed to buy more u.s. goods. we've seen productions of other agricultural products rise. still a bit of ammunition yet to deploy. that's what we have seen yesterday, partly at least. haidi: thank you so much, angus. moment, the decision delayed again. confusion in thailand as the electoral commission says wait until friday. we will be live in bangkok, with the latest. this is bloomberg. ♪
haidi: let's get you a quick check of the markets in asia. we are getting asian markets looking -- licking their wounds after yesterday. a terrible decline. the nikkei 225 is coming back with an upside of .8%. saidg off that, one point that 1% higher, the cosby is trading higher. as is the situation when it comes to trading in australia. we saw have concerns about global growth. brexit unresolved as theresa may loses control over the brexit process with the latest vote taking place in the house of commons today. we are also seeing the situation with the yield curve inversion and negative yielding debts starting to build up as well to 2017 levels. adding to a global sense of jitteriness over what the rest of 2019 holds for global growth. where are geopolitics playing when it comes to large parts of
asia, were also talking about an election year for the markets such as thailand. election, noeral clear result there. both major parties are claiming the right to form a government there. election authorities are facing calls to resign. countpeatedly failing to -- to account for voting irregularities and delaying the vote release. i want to ask you what the outcome of this outcome would be. we've seen the book you later number of times. an outcome is been pushed back. and mounting number of irregularities. do we know what is most likely? it's really a deadlock at the moment. we have both major parties claiming victory. they will both have to try to form coalition governments.
the numbers will be very tight. it's a bit of a deadlock at the moment. it seems difficult to see that there would be a functioning lower house of parliament emerging from this. there is a 250 seat senate. that will basically determine who will be the prime minister and how any government that is formed can go ahead and can govern. you mentioned there is a lot of irregularities been reported. there are a lot of complaints. it remains to be seen how that will play out. the election commission has said it won't release the full numbers until may the ninth. that's quite a long way away. it remains to be seen what will happen between then and now. there is a coronation. the king will be correlated in may. -- correlated in may. things will be kept quiet until
-- coronatd in may. shery: this is the first election since the 2014 coup. it is expected to be messy because we're going back to voting. can we expect some certainty in that sense that at least this first hurdle has been overcome? in the sense that it is a return to democracy, it is partial democracy. the senate is appointed. theas been handpicked by coup d'etat, the military junta, so that does give them an upper hand. if a government does emerge, whichever government emerges, its effectiveness will be determined by the senate. it leaves the senate to pass any legislation. bloomberg asia market
equities editor margot. investors have returned to emerging-market currencies, pushing many higher after last week's selloff. i'm next guest see some, but not all benefiting from the weaker dollar and the fed's dumbest -- dovish shift. manpreet: --manpreet singh gill, head of ficc strategy at standard chartered, he joins us now from hong kong. let's talk about the dollar first. there seems to be some conflicting forces at play here. the feds dovish tilt versus growth concerns. you seem to be siding with the fed being stronger this year. manpreet: absolutely. weres, what it implies bond yields in interest rates, for currency markets, that is the most important factors. if you go back over the past two years and look at where the dollar has rallied, it has been a shift upward in interest-rate expectations that has been a key driver. we think that is beginning to flatten out or potentially
reverse at some point. that takes away one big support for the u.s. dollar. when you start comparing interest-rate differentials, which have been a good indicator of currency plays, including in em, that is being used against the u.s. dollar and for the large part, we see that is a positive factor. shery: how does it go for the chinese yuan, which is key for many asian currencies, given the fact that there could be some optimism over a trade deal, but at the same time, we continued to see the pboc using it in order to support the economy? manpreet: for the renminbi, we haven't outlook of stability. the two key drivers. a trade deal would be positive in the short-term. we come back to the fundamental drivers of interest rate differentials. maybe falling or not lysing --
rising for the u.s., but we spent the pboc to offer some support to growth as we go through this year. this indicator doesn't follow for the renminbi, but bond yield differentials are also usually a good indication of dollar-cmy. as youve been more so look at local -- recent rates. we think that if it pushes lower, stronger support for a weaker dollar will not come through on the renminbi. goodd 6.70 is a expectation. haidi: in terms of domestic fundamentals, there seems to be a strong school of thought that believes that china is over the worst and we are seen a bottoming out of growth. at this point onwards, we're policyg to see monetary trickle through. what that provide support for the currency? manpreet: possibly. it depends on how the inflows will trigger bounces off what
the impact the bond yields are. i agree some of the measures we have seen recently should offer some support, at least over this year. we have some stimulus and support measures. support frommore the monetary side. if we get a trade deal, even if it is somewhat delayed, that could trigger another positive. there islusion means support for inflows into local equity and bond markets. when it comes to currency markets, we think interest rate differentials are important. support will be quite key for the currency over and above the other factors. growth is part of the reason why we love equity markets offshore. that's where it will be the most positive. stability is good. arerest-rate differentials front and center of the currency conversation. end with the to final word on time when. our previous correspondence giving us an update on the
elections. still no clarity. oft after the great sense uncertainty for foreign investors who have been waiting for policy clarity and political clarity from thailand for a number of years. i want to look at this chart looking at fundamentals for the thai baht. not too bad in terms of fx reserves. twice with the international monetary fund would consider to be adequate. we have seen the thai baht holding up resiliently. do you think thai assets, for fx assets, they are resilient regardless of how much uncertainty there is over the political environment? we would expect the thai baht to remain quite resilient. the political uncertainty and the elections is something we lived with for a few years. that hasn't hurt the economy or the thai baht. the thai baht has been a great example of a good modern currency. it has been a good near image of what the u.s. dollar has done. and ebbssen and fallen
and flows with what the u.s. dollar has done. it has been quite resilient outside of that. uncertainty is not something investors like, with elections, there is a. of uncertainty -- period of uncertainty. valuation's are a bit more elevated. as far as currency is concerned, we come back to the basic drivers of fx reserves. interest-rate differentials. we think those one of quite well. they reflect a little bit of what the u.s. dollar might do. that would be a flat or slightly stronger thai baht. shery: always great to have you. manpreet singh gill, head of ficc strategy at standard chartered. still more ahead on daybreak asia. this is bloomberg. ♪ shery: will come back.
let's get straight to sophie kamaruddin and get a preview of what to look in the markets are. cathay we are watching pacific on reports it has agreed to take over hong kong express. look cap casino operators are in review after bernstein revises estimate once again. let's get around of earnings from chinese property players this week. we want to jump in the terminal, how chinese developers have performed this year. still higher for the year.
the hang seng is a debt laden sector. our policy risks provide relief from weaker sales. the line in yellow on this chart, of about 70% so far this year. 2018 earnings missed estimates come a but we did see net profit grow 20% despite a lower property market. the white is up more than 60% ahead of its results do this afternoon. the stoxx may come at a pressure it is deleveraging efforts fall thank you for that. let's break that down further. patrick long joins us now. we are seeing her contracted sales this year? are we seeing -- is that overly optimistic considering the weakening your get? -- market? >> i've seen the situation that we have seen reported earnings.
in terms of the sales target growth, they are more conservative. they are still targeting 16% growth. and 10% growth. we can see them achieve 30 or 40% growth. we have seen some slowing this year. for the major players, there should be some minor consolidation with the week market coming in. [inaudible] in terms of sales momentum, 10% targets for those players is still achievable. shery: some hong kong property companies continue to deliver higher earnings last year. can they manage that and
have the developers achieve echo-- ea --gs earnings? >> we see some good rental income. they have a new office at one million square feet. also looking where strong demand is. the rental growth here in hong kong is strong in terms of offices. we see a decentralized market getting some improvement as well. retail, we see the recovery of the retail last year. we see restaurant growth momentum for the harbor city this year. that's why we are still seeing growth for the current income
supporting earnings. always appreciate your time. patrick wong from bloomberg intelligence looking at chinese and hong kong property players. let's get you a quick look at the markets. asian investors licking their wounds after yesterday's horrible session. the declines we have seen, starting to bounce back. the nikkei 225 seeing an upside of 1.6%. cosby also inching higher despite that latest profit warning from samsung. we are seeing a flat session of trading here in sydney. ♪
tom: it is 9:00 a.m. in beijing, shanghai and singapore. yvonne: we are counting down to the open of trade of hong kong and mainland markets. david: here are your top stories this tuesday, looking at samsung on the slide after a warning of a disappointing first-quarter performance. chip prices and demand are falling. yvonne: theresa may conceding she doesn't have the votes for an unpopular bill. the commons will now decide. on boeing, china is ordering hundreds of planes with a value of $35 billion. ♪