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tv   Asia Edge  Bloomberg  June 5, 2016 11:00pm-12:01am EDT

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the china-u.s. dialogue. also coming up, challenges for the engine that powers the factory of the world. a special series on china with a look at manufacturing powerhouse. juliette: keep an eye on the payroll the u.s. numbers disastrous. asian markets being sold off. really led by japan, down by over 1%. bit of a breather after last week, posting their best five-day gains since march. a 4% chance the fed will list this month. that hasn't investors flocking to safe havens.
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i will have more on the market movers shortly. angie: president she jinping says china and united states should talk more often to build trust. he also said the pacific should not be a battlefield for competing views. we have our china correspondent standing by live. a mainly positive message from the president? >> not too much detail, you do not expect too much detail at events like this and opening addresses. the tone, the words about cooperation, greater can medication between the two sides when it comes -- communication between the two sides when it comes to the issues in the south china sea. a dialing down of some of the bellicose rhetoric you hear in
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some of the state media. it comes after some close calls jetsy between two chinese that intercepted a u.s. spy plane. building a great wall of isolation. president xi thanked peace and --said peace >> the vast pacific should be a stage for inclusive cooperation, not an arena for competition. >> john kerry also addressed some of the key political issues. both sides pointing to some of the successes.
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successes, john kerry pointed to the very tough sanctions on north korea. he pointed to the success the partnership between the china -- between china and u.s. had about bringing iran to the table regarding their nuclear program. the economy in focus, another area of tension they hope to iron out over the next two days. angie: what about the u.s.? what are the u.s. priorities? tom: when we sat down with jack lew for that exclusive interview yesterday with the u.s. secretary -- treasury secretary, he outlined some of the priorities. the top of the priority list used to be the exchange rate. it has moved down. u.s. secretary jack lew saying
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he wants to get a clearer view on where this reformed agenda is going. and the reason the jury is out, these decisions are not always made by economic policy advisors. these decisions are highly political decisions in any country and we have less of a sense of whether there is a commitment to follow through. tom: the treasury secretary also looking for clarity. supply-side reforms were a key priority and the government will continue to push through. jack lew and the u.s. want to know how far these reforms are going to be enacted and how efficient they are going to be. they are concerned about the
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overcapacity and aluminum and steel. they want more access for u.s. companies in china, those are the things the u.s. will be pushing for. angie: they are wrapping up things behind you. no doubt these talks continue to go on. watching is are wildly outperforming the market. jumped by the daily limit on its return to trading. what is this about? haidi: this stock has been halted since february 24. it resumed trading today. chinese shares can go up or down by 10% and that is the daily limit. it is the largest among all entertainment companies across all of asia. a lot has happened since the
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stock was suspended. this complex reorganization of the film assets. isending on whether -- he one of asia's richest men. he is still making entertainment business. his bread and butter is property and he has gone way beyond that. -- wanda mediang , wanda pictures, the filmmaking unit. toda cinema is expected acquire both of these units and become the most dominant player in the filmmaking industry in china. this reshuffling is $5.7 billion
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deal. cleared regulators and still needs shareholders approval. angie: what does this reshuffling mean? it iste: it is -- haidi: a universe. he is such an ambitious man. he is focused on entertainment, tourism, filmmaking. very descriptive. they are co-investing into a number of hollywood films, starting with the ninja turtles movie. he wants to build the group into
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a $200 billion business by 2020. ambitious. he has also been reshuffling the commercial property business. take it back to the mainland. where the valuations are much, much higher. angie: thank you for that. noble group has suffered its biggest intraday decline in almost year. and analyst told clients there would be limited clarity until the dust finally settles. noble is moving to raise half $1 billion and the ceo quit last week. don't forget about the chairman. he will step down within the year.
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executive is being investigated for alleged bribery. the ipo was scheduled for today. a new date is set to be set. the inquiry is a setback for an ipo. chinese retail giant is expected to announce later today that it inter milan. italian media has reported that suning, valuing the deal -- millions of dollars. we are seeing pressure on equities right here in asia after data from the u.s. on
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friday showed american employers took on the fewest workers in six years. that is dramatically reducing the chances of a rate hike by the fact next month. -- by the fed next month. we've been asking our guest their take. >> the challenge for the fed, are we at full employment and is that translate into wage inflation? the markets are telling you, the quality of jobs are not very good. people dropped out of the labor force. almost no chance of a rate hike in june. very little chance in july. sees the fedbb backing off a hike for the time being. >> the realities that this will take the june hike off the table. some people will be disappointed from that.
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>> does it reaffirm the global outlook? >> it is a very volatile series. it actual price element of still in line with expectations. the fed will probably back off in june. we are looking at four to 5% probability. we will see -- i think janet yellen is speaking this evening. angie: the poor jobs data might not be an accurate reading of the u.s. economy. >> it could be a one-off. it does not add up. if you look at other economic sync withdoes not the u.s. jobs numbers.
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you have april consumer spending at the strongest pace since 2009. a lot of indicators pointing that the economy is doing quite ok. angie: let's see how this is all playing out this morning. jobstte: before those numbers came through on friday, we were expecting that we would see a rate hike from the fed. if not june, july. those hopes are now being crushed. the regional index is lower to kickstart the trading week with every sector in the red. the only areas we are seeing support and basic materials and utilities. seeing weakness coming through across the board. the chance of a rate hike in july only around 27%, down from around 50% prior to those jobs
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numbers. dragging on the regional index and some weakness coming through in china and in hong kong today. tune --s off to the wanda cinema hitting that 10% daily limit. this is the picture of those gold players in australia. noble group had fallen quite significantly in singapore. -- it will seize coverage of the stock -- cease coverage of the stock. we have seen the yuan retreat to its lowest level since 2014. down for tense of 1% -- down 1%.-tenths of angie: we will have a special
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report later in the program. disappointing jobs data out of chance of a the rate hike in the next month on the table? ♪
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>> these are the stories making headlines around the world. the pound has fallen after the most recent full suggest more britain's favor leaving the european union. a survey found 45% of those would choose to leave. another poll had a majority in favor of a so-called brexit. .he race has tightened government might have a
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bigger problem than slowing growth. the nation's jobless rate maybe three times initial estimates. tripled tot has 12.9%. the world biggest -- has raised prices on most of its delivery to asia and the u.s. saudi arabia has said -- crude is valued at 60%. news.s bloomberg banks are set to decide on key interest rates this week. will any of them move ahead of
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the fed's decision? joining us is johanna chua. reports a very bad jobs on friday. 20,000 even below the lowest estimate by the bloomberg -- >> it is shocking. the three-month trailing average is still about 116,000. still, it is a big miss. in june for a fed hike is off the table. even july is probably off the table. we have to see how the data pans out over the next couple of months. angie: currency fluctuation in this region today, especially the yen. how does this predicate the moves -- >> it goes beyond currency. it has to do with domestic fundamentals. we have australia and india on
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tuesday. korea and new zealand on thursday. the market is most divided on new zealand. some people are calling for a cut. angie: because of the currency strength we are seeing in the kiwi as well. at this juncture, for australia and new zealand and even korea and india, it is not like we are not expecting any further rate cut. given what is happening with the fed and rate hikes off the table, always a chance that the central banks could move ahead. in cases like india, very unlikely. korea will probably wait until july. even australia, some of the data has not been bad and in his been -- and it has been ok.
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we have to see how things pan out. -- this have to ask you is a man under pressure. not getting a sense there is much support. do you think this political pressure is going to end up being a bad one? >> it is hard to please everybody, especially in the case of india. we have a lot of divergence. the market loves them. -- loves him. at the moment, it is too soon to say what will happen in september. it is not like modi has come out and said anything. this is a political decision, ultimately. given the importance of stability, i would like to think
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that would factor in into the decision of whether to renew his term. our base case is that he still survives in september. angie: has any of your strategy shifted now that we have the fed likely on hold? >> even prior to that, we were saying, in asia, the dollar strength story had run out of steam. last week, we were recommending going tactical he bullish the bullish -- tactically the malaysian ringgit. it has already been up 1% versus the dollar since friday. the question is, how long can this be sustained? if the data weakness of the u.s. is a one-off, that is one thing. but if people start worrying that the data will take a turn
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for the worse so that equities take a hit, that will have repercussions. short-term, constructive for asia currencies. angie: coming up, the philippines was the destination for millions stolen in one of the biggest heists in modern history. we will see what manila is doing to tackle money laundering and digital crime. ♪
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angie: welcome back. the philippines raising digital security after one of the biggest heist in modern history. let's go live to our southeast asia correspondent. : it entails regulation.
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bet is unregulated will now monitored. digital currencies, placing scrutiny.r tighter it all has to do with rapidly advancing technology. these are all risks -- hackers are more sophisticated. even highly fortified security systems are bound to be breached . making the strategy more about response, not just prevention. cyber attacks -- steps can be taken to mitigate the effects. angie: can the philippine central bank push through and implement the changes? linda: it has to ensure
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the measures are implemented. it does not have a choice. the philippines is the most exposed country in southeast asia to threat. the countries in this part of the world have seen more frequent attacks compared with the global average. the philippines starting to expand the cyber security unit. it allows it to have a separate surveillance team. no one can take cyber security for granted anymore. angie: nope. it is the 21st century, a brand-new age. in on the let's start in sydney.
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climb seeing equities higher. hong kong is trading lower. ♪
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angie: japan's driving over treat in asian stocks -- a retreat in asian stocks. financials are the big losers in tokyo today. gold miners surging in sydney. u.s. employers are taking on the fewest workers in six years. cinema, the 10% limit after resuming trading. seeking to inject legendary entertainment and other from related businesses into the company.
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asianghest among all entertainment companies. xisident sh jinping -- those are the headlines from bloomberg news. latest from the markets right now. it makes today. -- a mixed day. juliette: we have seen quite a lot of negativity coming through from japan. it has just come back online from its lunch break. still down to the tune of 1%. it really is a story of dollar
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weakness. that payroll number, very much disappointing. the expectations of a fed rate hike this month or next very low. we are seeing a little bit of weakness coming through in china and here in hong kong. have a look at the casinos, they are leading the hang seng lower. they have been downgraded today. some weakness coming through. taiwan a little weaker. moveslia, some solid coming through. investors flock to that safe haven. not just the yen rising, but also gold. tense of 1%up by a -- 8/10 of 1%. fallen in alds has
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still yet to a record low, down 2.2%, on the back of the fed expectations. quite a negative start to the trading week across asia. angie: delayed the ipo of its hotel unit. a senior executive became caught up in a bribery investigation. has been the biggest share a cell of the year. -- share sell of the year. >> last year, we have brothers fighting overpower. biggest ipo in korean history, you have the korean prosecutors, a bribery investigation of the company and
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one of the executives. koreandamaging is this to the ipo? >> it is difficult to say. itself is notion tong to -- it is not going hurt the valuation of the company. angie: what if they are found guilty? >> it is premature. we have to wait a bit more to see what will happen next. angie: the drama continues. thank you so much. plans to raise $10 billion in
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selling the company's stake in alibaba. the money will be used to pay down debt and it should afford more flexibility on future investments. country hass -- the one of the lowest debt to gdp ratios in asia. s&p has held off saying indonesia needs to cut deficits and implement fuel subsidy changes. the status may change over the next year if jakarta pushes ahead with reforms. beijing has reiterated its claims to most of the south china sea. addressing a meeting of defense , talking ofngapore
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common development and security throughout the region. ignore an upcoming arbitration ruling. hinted that the u.s. should keep out of the area. even after a 40% plunge on the shanghai composite, valuations still tower over other markets. we have yvonne man checking in on the story. is it still too early to jump back in? >> may be so. if they do not see a bull market anytime soon and it is because of the government intervention we have seen that is elevated the stock prices. profits continue to shrink. we have seen a 13% decline in
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earnings in the past year. the biggest risk is the investor psychology. since the 40% plunge since june -- since january, we were main pretty low, below that 3000 psychological line in the sand. compare the valuations to the rest of the world, china still looks pretty expensive, three times more than any other major market. at 59.e ratio that is still higher than u.s. tech shares at the height of boom. that is hong kong, you can see the disparity, plenty to be worried about. close to that five-year low. the clearest indicator to see this disconnect is -- we are
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seeing 34% premium for the domestic markets to the international market here in hong kong. 34%, is actually still smaller in some respects because they include bank stocks, for example, to have a much greater waiting. ing.eight look at the equity markets. equal weighted average, look at that. well above 93%. smaller companies could be as much as 600%. these valuations are far from falling closer to earth. angie: not everyone is concerned about these valuations, right? catalyst, we are
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ofking at the prospects mainland equities. that is going to be a boost and sentiment. government intervention, an idea that they will be coming to the rescue, the limit to the downside. to prop up the market, $77 billion right now in mainland equities. angie: two i. -- thank you. are facing biges challenges. this week, we will be looking at three of them. if china is the factory of the gdong is the engine
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that powers it. we have tom mackenzie reporting. a city with a population equal to london. high wages and reduce demand has forced many two/capacity -- to slash capacity. this road is lined with half closed factories. the garment factory down there. this was an electrical parts supplier. this goes all the way down to the end of the road. slice.ea is just a small some workers are still cling to their jobs, but the future looks bleak. these workers did not want to show their faces on camera. some have been harassed by the
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police for speaking out. >> the boss has not given us a word of explanation. if he leaves, we are worried we will not get everything we are owed. factory where the people we were just speaking to work. it employs fewer than 200. they tell us the taiwanese boss is refusing to tell them if their jobs are safe. an hours drive east, you get to a compact modern city surrounded by lush hills. factoriestomated churning out high-tech products. they are even paying factory owners to replace workers with robots. robots to replace
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humans will help individual companies to be more competitive in the market. overall, it will cost some workers to be laid off. replaced workers were with robots last year. -- it was his risks in a province afflicted by rising social tensions. tomorrow, stay tuned for part two of tom's report on the challenges facing china. economic data showing signs of stabilization in china but will the trend continue for the rest of the year? we will discuss that and a whole lot more in our group chat. ♪
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>> these are the stories making headlines around the world. india will be looking to send ties with the u.s. modi will visit washington. biggestd open the hydroelectric dam and will discuss media power when he is in switzerland. he will make a speech on capitol hill before finishing his global tour in mexico. frankfurt airport has been sold to an unidentified buyer in china. the civil aviation development known to have been in talks. the reports do not mention the successful bidder.
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the vehicle is a copy of the land rover. similar door panels. powered by over 2400 journalists around the world, this is bloomberg news. angie: welcome back. joining me now, we have johanna chua. we talked about the fed. let's bring in china. no doubt there is a sigh of relief that there is no move coming out of the fed likely in june or july. >> that eases it.
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>> where does it go from there? we will get a hike eventually. not as bad -- bad is the wrong word. >> we used to have been even more bearish forecast. even dollar relative to asia, if you look at the dollar index forecast, dollar stabilization -- that is a bit of pressure off of the asian currencies. >> you like the malaysian ringgit. -- korea is closed today. we saw that with the malaysian ringgit. it is also good for duration
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where the fed rate hike seems to have been put off for now. that will help bond markets like india, even thailand. >> we have talked about the yen. these capital outflows are not going to be as bad? -- in china, the domestic fundamentals are pushing capital outflows. i do not think that has dramatically changed. some of the data coming out of china, it has stabilized. the negative surprises have dissipated. i think the shock story is no longer there. the longer-term story has not changed. the buildup of leverage and unsustainable risks will create pressure going forward. >> you talked about oil being
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$65 by the end of the year. how does that play into the china story? correct. the end of the year 2017 forecast. >> i am a long-term guy. we view that oil prices have already bottomed. that was not sustainable from a supply demand. like growtht is not has been great. emerging markets can to be a lot more energy intensive. we also are forecasting -- last year was 3.5. this year, 3.6. the big pieces are russia and brazil. if anything, -- it is not a
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great story. it is not as sad as it used to be. that provides a bit of a floor. most of asia, energy importing. pricesf times, commodity are correlated with capital flows. wheret is an environment commodity prices are bottoming, issueschina has specific outside of this. stories we need to watch in china. i do not know when it is going to happen, but a lot about -- lot of talk about bond inclusion. portfolio.t of that >> it is more of a sentiment
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boost. more symbolic. >> the actual flow is very small. it will take a while. it is the sentiment. >> that would open the door? >> we have to be realistic that there are some domestic challenges that we need to factor in. i would not say the currency and outflow pressure is finished. but i think things are abating. let's not forget the dollar was quite strong in may. that suggests capital flows may temporarye are factors. i do not think the fed story is over.
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there is a lot of talk -- it is probably more economic nature. jack lew has made statements about how china has to be a lot transparent and communication. -- transparent in communication. -- china's comedic nation has become a lot more protectable -- communication has become a lot more protectable. people can model it now. that helps at the margin improved sentiment. i'm sure they will talk about openness, etc., but it will be interesting. is the last meeting before obama. johanna chua, citigroup,
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global markets asia. ♪
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angie: nestle is betting on e-commerce to give sales a booth in china. nestle has launched, new products for sale, never sold before in china. they are sold on alibaba's platform. these products are not available in the shop, only online. this is part of the boost to engage online shoppers and e-commerce. the managing director has said
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e-commerce in china has triple digit growth rate, which is pretty incredible. it is already more profitable than it sales in brick-and-mortar. they are making a comeback with these online sales. nestle -- in china, the growth has been great. sales have increased 6% and that was last year. angie: it really seems that china is the only bright spot. slowing economies surrounding this picture. >> it means consumers are not shopping so much and it has been hard for nestle to increase prices around the world. reliance onduce its
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packaged foods. under a little bit of pressure to reduce long-term sales targets, a growth of about 5-6 percent. region, because of a recall in india, those are now back for sale again. hopefully, that will help that region. angie: any of those products online chocolate? >> yes. angie: thank you for that. we have bloomberg markets middle east coming up this hour.
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of course, the markets are going to get their teeth into the dollar, into bonds, and to oil. yesterday, we had a bit of a sitdown. the chair of the department of economic development. we will hear a full explanation of what he thinks is going on in the oil market. the price of $60 is ideally where he would like to get that price. the worst is behind abu dhabi. they will see growth at around 5% next year. we also have our chief economist who will break down the pmis from the bank. you do not want to miss that. angie: manus cranny, looking
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forward to it. that is it for us on "asia edge." we will hand it off to bloomberg markets middle ea
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manus: crude is on the rise and for adding -- and trading under. >> i think a range of 55-60 could happen. abi is a hugea --


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