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tv   Asia Edge  Bloomberg  February 14, 2016 10:00pm-11:01pm EST

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expected, has abenomics failed? growingnd airbus see clouds in asia. coming up, a big earner -- lebron james, already the king of the court, but now he has claimed another crown. all that and more on this monday edition of. "asia edge" haidi: we've got the good, the is, the bad being that china playing catch-up, but in the worst possible way. we are off our intraday lows. elsewhere around the region, we are seeing a recovery rally. the yen down. gold prices are down. we are seeing more of a risk on appetite when it comes to equities across asia, being led by tokyo to the nikkei 225, up over 5%, this after it shed 11% yesterday.
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regionally, we are seeing stocks .ome off three-year lows thailand, just coming online, up by 9/10 of 1%. it's a bit of a combination of two things to disappointing gdp .oming out of tokyo also the topics in particular, the automakers. we are seeing strong gains in the energy space. we had that 11% surge on friday, which drove gains across u.s. and european markets. we are also seeing milk
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producers, the likes of frontera, joining games after those numbers out of china came in better than expected. we have had the really disappointing read on china trade numbers. about 0.5%.down by this as valuations continue to be high, in particular in comparison to the rest of the emerging markets, and also the divergence between hong kong and widesti stocks, the since about 2009. that is driving gains in hong kong and the selloff on the mainland. shery: a day of dramatic headlines with china dominating the news. we are going to take a look at the pboc's comments on the yuan. first, i want to bring in stephen engle. record trade surplus, all these numbers coming through.
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stephen: not very good for january, worse than expected. them out inreak dollar-denominated terms and yuan-denominated terms. there is a bit of a discrepancy. these are year-over-year numbers. first, we bring in the plasma. china exports are this is dollar-denominated, down 11.2%. .ecember was down 1.4% let's flip the page to the -denominated exports. you can see an improvement in december, which could have been frontloading of exports. it could have been over-invoicing, and then the crackdown. there has been capital flight from china. have been reflected in that december number. january, maybe the crackdown is
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coming, or maybe there is significant sustained weakness abroad, down 6.6% in yuan terms. now imports of -- it's a domestic demand problem, as well. in dollar terms, imports down 18.8% in january. the survey was down 3.6%. that is a bad number. i believe that is 15 straight months of decline for imports. inated,it to yuan-denom and we see a similar picture. we were expecting an increase of 1.8%. what does this mean? it means a record trade surplus of $63.2 billion. you know, there is so much to talk about, even with the yuan. are these numbers going to continue? what happened today? increased.
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>> the pboc governor broke his long silence. what did he say gekko >> it's pretty significant he spoke at all. it's the first time we've heard hou since last august. there was a big change in august and the move in december. wasn't a newtself we have had officials say, we are not engaged in competitive currency devaluation. the fact that he said it at all should add clarity for investors. i think his key message is that we are not going to push the currency down to restore exports and competitiveness. we expect volatility along the way. at hisonly take him word, and we will see if he will stick by his word. there is a message coming from china that this is not about devaluation. >> that is what a lot of asset
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managers said -- the fact he said anything at all was a sign of support, and we also saw that in the fixed rates. >> that's to be expected. i should also say, on the exports, even with the yuan weakness, they haven't received much bang for their buck. even if china did want to devalue to improve exports, they would have to go much farther. it's as much about external demand as anything else. this set of data we got on the trade front hits that it does not make too much sense for china to maintain a strong currency. stephen: as you mentioned, with the fixing a rate higher, that should be expected given the dollar weakness. now, what is from going to be the fixing rate? where are they going to hint at the direction they want the currency to go? trade data suggests they like a weaker yuan. >> for sure. ahead of the g-20, china will not want to go into that giving
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their opposition a big stick to beat them with. stephen: the central banks meeting -- >> what do think the key messaging is going to be? if you look at what he said in the interview, he is putting the blame on the fed. he said it is banks with qe that put liquidity into the system to boost speculation, which is coming back to bite china. is trying to say, hold on a second. you guys have played a role. stabilitypect china going into that meeting because they don't want to be left vulnerable. >> that is a fair point. thanks for that. the return of chinese markets following the lunar new year break has been at the top of the agenda for many of our guests. the yuan surge is big news. >> anything that columns
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expectations going forward. china indicates that the pboc is trying to get it under control, and that was a positive. you've got to put it in context. whether it works or not, that's another matter. sean callow told us they were seeing upward pressure on the rmb. >> certainly not matching the extent of the dollar-yen declined but given it a bit more breathing room, but further out, i think the u.s. dollar will recover. we expect the fed to resume hiking interest rates later in the year. that will put renewed upward pressure on the dollar-china. if we are talking about the 675 or higheru, is what we are looking at. china's trade figures
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surprise this morning with exports and imports tumbling, leaving a record trade surplus. rram says the market will take the data with a grain of salt. richard: they were poor in terms of showing declines in exports and imports. i guess the caveat to these numbers is always related to china this time of the year. they don't release many of the january data are they tend to lump it in with the february data. there is so much volatility year-to-year. i think the markets probably won't take it to negatively. >> that's the word on china. other stories making headlines today, hsbc has decided to keep its global headquarters in london. the decision was passed unanimously at a board meeting over the weekend on sunday following 10 months of debate. hsbc has been based in the u.k. for 23 years and says remaining there is the best option for
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customers and shareholders. a report says foxconn would hold butntrolling stake, softbank may take as much as 20%. sharp has asked foxconn for commitment to maintain staff levels after the proposed rescue. alibaba is the fourth biggest shareholder in the coupon site groupon. it purchased 33 million shares for a 5.6% stake as of the 31st of december. alibaba was also buying elsewhere, snapping up stakes in, lyft, and magic leap. ofupon shares have lost 86% their value since going public for years ago. coming up later this hour, a silver lining. why boeing and airbus are
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keeping their bases in china. coming up up, the roller coaster that is japan. we are going to ask of the economic track shows any sign of smoothing out. you are watching "asia edge." ♪
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> these are the stories making headlines around the world. taiwan has ended the search for victims of last week's earthquake. but two of the dead were found in the 17-story golden dragon apartment complex, which the quake.n the developer and architects have been arrested on suspicion of negligent homicide following accusations that corners were cut in construction. china has called on the u.s. to 76 years of hostility towards north korea in the hope of persuading kim
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jong-un to give up nuclear weapons. a u.n. armistice was agreed to in 1953 to end three years of fighting, but the two sides remain technically at war. the head of china's foreign affairs committee says beijing is annoyed about kim's program about more concerned america's response. maritime security in the south china sea is expected to be on the agenda as asian leaders meet president obama in california later. the philippines president intends to press the issue to stress the need for freedom of navigation. arbitrationiled an case, questioning china's right to a string of reefs, but beijing has nine -- declined to participate. is bloomberg news. i am shery ahn. the past two weeks have been interesting times for investors in japan.
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swingsseeing the wildest in years. david is here to break that down for us. david: a lot of this comes down to the surge in risk aversion from the start of the year. ago,recently, two weeks this aggressive stance coming from the boj, and how much more is it willing and able to reach its objectives? have a look at this. this is the neck a - nikkei vix index. it is up 110% from the start of this year. that is the 40 level. it takes it all the way back to the days following the massive earthquake in 2011. if imax out my chart, that is a 15-year look. this is the global financial crisis. the quake was in 2013. that was another move. these are unprecedented levels
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to some extent. we haven't seen these swings in years. at this in another way. have a look at this. nikkei 225,n the this is a fairly simple chart, but it's not. it measures the daily change on a closing basis of the nikkei 225. you have the 5% limit. down here, negative 5%. this is an index that is not supposed to move this much. we have managed to cross that several times already so far this year here the last time these things happened, you have to go back to 2011, the march 2011 quake, the big dip what happened on the weekend, then going back to the financial crisis. very quickly, have a look at the jgb market. yields hasin the
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moved from 1.5% yields in the 10-year all the way up to zero. you will tend to get these wilder percentage swings. the is where we are at moment. we were low old to sleep, and then bam, there you go. it's interesting times. distortions in the market, the taking rates into negative territory, which takes effect tomorrow. february 16. let's get more on japan from peter lewis, founder of peter lewis consulting. is the expiration date on abenomics expired? peter: it has. if you look at that gdp data, the boj must be hugely disappointed with it. we have seen the biggest monetary experiment in history ever conducted by central bank in terms of the amount of money they pumped into the system, the they were willing
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to drop yields in order to try to stimulate the economy, and yet you look at that data -- we have seen the sixth fall in gdp in six years in japan. when you dig in, the consumer is not spending despite all of that, and the gap between wages and costs is getting even bigger . it's getting even harder for the consumer to spend. you have to really question, what is the limit to what the boj can do in terms of driving rates into negative territory? i think it is a self fulfilling prophecy. i think central banks are causing some of these problems in the volatility across all asset classes. angie: yes, you could say that is absolutely true in terms of providing record liquidity and taking some of that back, but of course, it is also on the heels of what we are seeing in terms of china volatility.
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all of these global headwinds, central banks are trying to manage it down. have they lost credibility? peter: i think they have. central banks are trying to managepeter: the global economy -- angie: that is their job. the global economy is too complex for any central bank to manage it. the forces that drive the world economy, gdp in individual countries, are very complex. for a central bank to think it has the power and the presence to be able to dictate the level of the economy, the level of the currency in this modern day in age, it is beyond them. the tools that they are using to try to do that, which are, in effect, robbing savers in order bail out debtors, that is what they are doing. everyone has traditionally seen japan as a safe haven. when does that stop?
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peter: ipeter: am surprised that people still see the yen as a safe haven currency. surpluses itve the used to have. in many ways, the yen shouldn't be the safe haven currency that it used to be. nevertheless, there are not many large tradable, liquid currencies around the world that you can go to in times of trouble, and the irony is, the three strongest currencies over the last two weeks have been the euro, the yen, and the swiss franc come all of which have negative rates. angie: they are all in negative territory. let's see what the pboc is up to as china resumes trading after the lunar new year. we will get you back in and about 20 minutes. coming up next, first half loss and more write-downs for australia's largest college company. ceo on howurizon's
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he plans to cut costs after the short break. ♪
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angie: let's check in on aurizon shares in sydney. it is down more than 11%. this is the lowest level since october of 2012. this is australia's largest rail freight operator. it is in the red after posting a loss in the first half and more write-downs. join us on the line from brisbane is ceo lance hawk ridge. thank you for joining us. it is a challenging year. it has been a challenging year for commodities. where does it go from here? stable froms, it's a volume point of view. however, we are focused on the continuing cost efficiency drive in the company to control the .hings that we can control
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if you look back since privatization five years ago, we 20% more times with 40% fewer train sets and 30% fewer people. cost and efficiency is the name of the game. as we look forward, we have reinforced that our goal is to even margin of 30% in the business by 2018. angie: i want to ask you about the iron ore project. is this effectively dead, this project? lance: there is no doubt that in the current supply and demand and price environment, there is no prospect of that project proceeding in the short to medium term. we have therefore taken the on pairing the
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assets associated with that project. angie: what are you going to do with the stake? your exclusivity to be the infrastructure provider expires in april. is that pretty much over? are you going to remove yourself? lance: we will continue to talk to the partners about preservation of optionality with respect to what is, from a a soundpoint of view, prospect, but from a commercial, economic point of view, as i observed a moment ago, there is no prospect of anything in the immediate future. angie: when you were talking about the project, iron or was at $100. now it is around $43.30. at what price point would you need to see to get back in? lance: that's part of the work
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that was going on with the project, because it is a function of what the capital cost would be, what the operating cost would be, shipping costs, etc. what is clear is that where the price is, at the moment, there is no reasonable prospect no matter what we do for the immediate future. angie: very quickly, what about the credit rating risk from moody's? it's hardly surprising in a context where customers are being downgraded, and some 70% being putour business in risk corridor's, that that would be there evaluation. for us, it's about delivering consistently all the time for our customers. it's about the cost efficiency
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program and delivering that 30% margin. angie: thank you so much for joining us from brisbane. we are looking forward to the afternoons business in tokyo. stay with "asia edge." we are going to have the latest after this break. ♪
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angie: you are watching "asia edge." exports fell 6.6% from a year earlier in china. trade surplus of more than $63 billion. that is the biggest on record for china. depreciation has yet to boost the competitiveness of chinese industry. more doubts about abenomics.
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the economy shrank more than expected in the fourth quarter with weak private consumption. soared on the expectation of more boj action. australia's biggest rail freight operator slumped. ore.lump in coal and iron aurizon said full-year revenue targets are likely to be met. markets still doing their own thing, playing catch-up in terms of coming back from that one week long holiday. we have a terrible selloff across asia globally last week. we are seeing declines when it comes to shanghai.
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stocksons from mainland are still high, compared -- are still premium, evenat a in relation to hong kong. that premium is sitting at about 50%, the highest since 2009. we are also seeing margin traders unwinding their bets to a certain extent as well. we are seeing a recovery rally led by tokyo. the nikkei 225 up by over 5%. doing even better than that. strong gains coming through from the aussie markets as well when
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it comes to some of these resources. we are seeing brent come down a little bit, but that is because of -- that is on the back of that 11% surge. staying -- we are still with cutst play out coming out of opec. we are seeing gains. these are all hong kong listed. cnooc surging. let's take a look at the financials in tokyo because these have borne the brunt of the selloff. we had the bank of japan , going for negative interest rates. the lender's in japan have been sold off quite aggressively. .itsubishi usga is down
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these two have been down about 25% since the end of last month. we are seeing gains when it comes to the currency sensitive stocks in japan. weektrength we saw last seeming to lose momentum. that is giving some to the exporters. angie: thank you. after months of discussion and debate, hsbc has decided to stay put. the bank is keeping its global headquarters in london, but says asia is at the heart of its strategy. >> it was headquartered here for a while. it looks like a bit of a win for the u.k., not so much for hong kong. the statement did say the board decision was unanimous.
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potential andwth also pointed to the uk's legal system and immense experience in handling complex international affairs. this is according to the statement. it is counting on asia to drive growth, even though those asia driven profits are falling partly because china is slowing teachinghsbc is still a lot of its wagon -- pitching -- hitching a lot of its wagon to asia to move forward. it has a review of its headquarter location every three years. it has complained in the past about regulatory issues. in april, they said, we will take a closer look at reviewing where we will be globally located. it looks for issues like
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taxation. regulation issues. this has made some kind of impact on the decision-making. moving, $1.5 of billion. strong-armed regulators. shares rising 3.5% today. the singapore airshow has heard warnings that some carriers may delay deliveries. expect chineseus airlines to spend a trillion dollars on planes during the next two decades. we have has linda on me at the at the haslinda amin show for us. they are confident despite the slowdown? >> totally. it is not just -- expected to
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accelerate. take a look at the numbers. it is expected to order more in two decades. 980 $8 billion worth, which is double the value of singapore's gdp. we are expecting phenomenal growth. to meet the demand, the government will build 66 new airports. it is looking pretty good. of the to the chief international transport association and he says the trend will continue. china,travel to and from the economy is reshaping itself and consumers are spending a bit more. we are not seeing china being a big factor at the moment. >> is the aviation sector better
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placed now than before? is cheap oil masking some of the issues? >> we need to keep it in perspective. it is still just a profit of $10 a passenger. southeast asia airlines making profits about five dollars a passenger. a lot of the impacts of the in theil, less felt aviation industry than people think. hedgedf airlines have their fuel exposure. you page in order to's -- you hedge in order to smooth out operations. fuel is paid for in dollars.
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.t has not been a bonanza >> what assumptions are you making about oil? assumptions of the market. we do not make our own assumptions. back in december, oil was about $50 a barrel. now it is about $30. have seen some improvement on the upside. financial markets have been very skittish. >> if you are thinking you will be paying much less for your tickets, did not hold your breath. it will not happen anytime soon. coming up, we will also be speaking to the ceo of malaysia airlines. the carrier has been restructuring and we will talk about how that is going. tuned forare staying that. central banks in the headlines today.
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korean markets are signaling an imminent interest rate cut. three-yearn sovereign debt has dropped below 1.5%. in six slump the most years. most economists we spoke with see it staying on course. on australiaetting to ease. a bloomberg survey says there is a 24% chance they will lower the benchmark in march. some say the rba may act if the aussie dollar strengthens considerably. president obama is taking another step forward in his private to asia. pivot to asia.
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let's get more from david tweed. more of a pivot to the u.s.? david: the culmination of obama's pivot to asia. the fact that asean is responding is good. the other interesting thing is the fact the u.s. is -- they are talking about the rebalance. they thought if they were going to pivot, it would mean they would take their attention away from some of the other areas, like the middle east and europe and new ukraine. they are talking about -- and ukraine. can'tonomic component there is the military component -- component and there is also the military component.
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all the new u.s. hardware which is being developed is hitting toward asia -- heading toward asia. it, if batman had a ship, this would be it. you can see it on the screen right now. it is all flat services like that. when it comes up on the radar, it shows up as a small boat. it does not look enormous's, but this is bigger than any of the destroyers. angie: or you could just get a drone. this is to flex its muscle for the country which is not in the room -- china. elephant that is
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absent. levels, youn two have the economic level. china is the biggest asean trading partner. the united states is still the biggest investor. it is bigger than china, japan combined. i keep on saying asean countries. you will see the beginning of the loans which will come from the aiib. that is kicking off this year and that will provide more competition to the u.s. meetingood there is a
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from the u.s. perspective. coming up, a record trade surplus, slumping imports, and a stronger yuan. we will take a look at the reaction to china's latest data. ♪
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>> united nations says casualties from fire in afghanistan hit a record last year. more than 11,000 people were killed or wounded. security has deteriorated as the taliban expense control. india is disappointed with america's decision to sell nuclear capable fighters to
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pakistan. theington has confirmed $700 million deal. formerre claims the volkswagen chief was told about the omissions -- emissions test. the company could not provide an explanation for elevated nitrogen oxide levels and u.s. regulators would probably investigate. powered by over 2400 journalists, this is bloomberg news. angie: welcome back. we have peter lewis. i started the last segment asking if you -- if there was an expiration date on japan. is there something similar with china? is there an expiration date?
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is that even the right question to ask? >> it has been a bad day. the trade data, in some ways, is confirming to slow down in global trade we were seeing other data confirm. data out of china reconfirms the really is a global slowdown in trade. hole,oc is in a real not very many options left for the yuan. the most likely one, the one most needed is a gentle devaluation of the currency. saw 2%, is that gentle enough? policy was its preferred last year.
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it was interesting the pboc governor was out today before the markets reopened. if we do not have that controlled devaluation, the economy clearly needs some interest rates cuts. the alternative is the pboc continues intervening in the market, spending large chunks of its foreign exchange reserves. >> do we actually need triple our cops? cuts? the pboc is going to have to make a choice between either it has a weaker currency or it tolerates higher outflows or it cuts rates. tri-lemma.
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all of the not have things that it wants at the same time. try to have a controlled devaluation of the currency. ultimately, you cannot defy the economic fundamentals. the fundamentals are crying out for a devaluation. >> what are we seeing in the markets? is there a sense that the selloff has been overdone? concerns over the european banking sector has been overstated. problem of the banks, not a balance sheet problem. it is a profitability problem. the central banks are talking about there is no limits as to how low they will take interest rates.
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>> is it not more a function of other tools. we keep talking about central banks, there is a growing consensus that monetary policy has run its course. there is only so much you can do. otherup to politicians or policymakers to put in that extra push. >> it is, absolutely. onn you rely so much monetary policy, governments do not have to take the difficult decisions in terms of restructuring that they really need to take. they can hide from that. we have seen that in japan, this famous third arrow has never happened. happen ast have to long as the boj is there. >> traders are betting that willal banks in australia
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do more. >> this is a race to the bottom. eventually, you cannot all devalue at the same time. yes, maybe there are a few central banks left that can do a bit more. >> that is what happened. ?eld everyone else follow -- he one currency >> where do you see it going? >> you could easily see over the next few months a 10% devaluation in the yuan. i do not prescribe to the sharp declines that some people are calling for, but there is no doubt the currency is overvalued compared to where the economy is. when the pboc comes out and says there is no need for any further devaluation, they are clearly talking from a position of being
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frightened of what the consequences might be. >> how do you dig yourself out of this whole? -- out of this hole? would --no way i >> it is going to be very difficult despite his huge majority. there are still many things he could do to inform the labor market, to help in terms of getting workers in from overseas to improve the demographics. defense issues, that has been his big priority recently, as opposed to focusing on economic issues. when the yen is surging, the dollar strength is no longer. what position should you take? gold does not have to -- you
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do not have to pay gold interest. >> certainly. bullish on gold, that has been a winning play this year. peter, always good to see you. coming up next, lebron james has onn crowned nba's big earner social media. we will have the details. ♪
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calls himself king james. lebron james is king when it comes to social media clout. >> he is the nba's top social media ambassador.
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digital value is worth more than $15 million. lin. followed by jeremy between them a rating zero and 10 and puts together how many followers they have, how many times they treweet. they rate it against other people in their sport. athletes.24,000 angie: it makes sense that it would track the when he asked -- players.t
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the first professional sports leagues to pass one million. it includes facebook, twitter, and instagram. king james tops that as well. he has topped all nba players. in terms of teams, the cleveland cavaliers, does not even come close. angie: thank you so much for that. king james, king of social media. "dead ball" has hit -- dead pool has it a box office record. $135 million over the weekend. tv forth bloomberg
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singapore airshow. we continue our coverage with malaysia airlines ceo. he will be with us after the headlines. ♪
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announcer: on today's special paid presentation for cindy crawford's new meaningful beauty ultra, you'll discover the secrets to not only aging gracefully, but beautifully while looking your best every step of the way. cindy: my philosophy on aging is the same as my philosophy on living, which is do it well and take care of yourself. it's about celebrating where you are and being the best you you can be in that moment. it's not aging, you are living.


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