Skip to main content

tv   Bloomberg Markets Asia  Bloomberg  October 25, 2016 9:00pm-10:01pm EDT

9:00 pm
♪ it is 9:00 a.m. in hong kong. i am haidi lun. this is "bloomberg markets: asia." ♪ haidi: the good times are over in korean shipbuilding, thousands of jobs gone, many more to follow. apple takes a hit with its first annual sales decline since 2001. again, from china fell
9:01 pm
but 10 cook remains bullish. jobs in capital will leave the u.k. mixed messages out of china, indicators suggesting there is some pessimism in the big names. a shaky start to trading in asia, a stronger yen weighing on japanese equities, but we will be watching those apple suppliers as training gets underway. we are 30 minutes away from the open, but singapore, taiwan, and malaysia coming on. reaction to the australian cpi number. expecting that to the a data check, but it has become one of the top stories playing out across equities, swaps, bond market, equity markets in sydney.
9:02 pm
the probability the rba will move has been falling. , $.77.dollar watch out for the cross between the aussie dollar and the yen. approaching the moving average. o were talking about these dd. i basically brought the chart up to show you the chances of an rba move down in december. we weren't expecting anything anyway, but there is a steep drop in that rectangle right there. that is dropping now. if you look down the road to
9:03 pm
june next year, we've gone down .rom 38% to 30% high inflation dampening bets that the rba can, should, or will move. have a look at the equity markets in australia, 1.4 percent, every sector down in that market. session lows here with the exception of gold-mining stocks. let's have a look there. 18.ut of have a look at the open in taiwan, malaysia, and singapore joining the fray. you have cyclicals getting sold off in south korea. in japan, pulling back from a five-month high. 200.decline on the asx
9:04 pm
we are watching the suppliers in taiwan for apple. ones are all here in this market. tsmc claims -- they supply all iphones with chips. that can cut either way. earnings haven't been the best. we will be watching those suppliers as trading gets underway and asia. let's get over to first word news. rosalind: the pound rallied after mark carney playdom the impact of stimulus. he hinted policymakers don't want the currency to fall too far. sterling has tumbled 18% year to date.
9:05 pm
the prospect of an imminent fed rate is weighing on his fortunes. prospects of a rate hike this year diminishing due to concerns about inflation. >> the judgment is a judgment about an optimal trade-off, a togment -- there are limits the mpc's willingness to overlook an overshoot inflation. rosalind: morgan stanley says it will move employees capital out of london as a result of greg's it. -- of brexit. he says it will be a headache for the bank and sees nothing good about the vote to leave the european union. gorman says most of the jobs will be shifted to the continent, but new york will gain the most. >> if jobs move out of the
9:06 pm
europe, it will be to the u.s. not be a large-scale determination of operations in the uk, but the assumption that everything will move to another european country is not necessarily the case. economists surveyed by bloomberg expect the boj to keep stimulus unchanged when it meets next week. two out of 43 expect any action. there's a forecast and cuts on negative rates on bank reserves. more than one third think they are done with adding stimulus. most don't see tapering until late next year. claims it has accomplished this year's job target ahead of schedule, creating 10.7 million new positions to september. wasing says the 21 goal reached early thanks to a boom in e-commerce and logistics.
9:07 pm
global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. haidi: thanks for that. a crackdown on china's real estate lending intensifying. the speculative money is finally flowing back into equities? we take a look at chinese shares headed for the biggest monthly gain since march. we are seeing this shift again. >> back into stocks. last year, we saw the boom and bust driven by borrowed cash. the money went into bonds, commodities, and recently into real estate, and now we could be seeing a shift back into stocks. cities, authorities don't want an overheated property sector, so authorities have imposed housing curbs. money, then where
9:08 pm
will they go? they will go into stocks. morgan assetj.p. management is buying mainland shares. we are seeing new home prices drop in october when it comes to beijing, shanghai. during that time, the shanghai composite -- take a look at the index, because we have seen it gain more than 5%. on tuesday, it closed at the highest level since january, even with declines in the yuan. markets are set to open, so we will see what they do today. haidi: how do the prospects are expectations of further yuan weakness play into this? down toffshore yuan is a president of levels, so yes, that has dampened sentiment. seeing this sort of panic we saw earlier when we saw sharp declines in the yuan,
9:09 pm
selloffs in the chinese market, overseas as well, so take a look at the bloomberg. for12 month for volatility the onshore yuan has been falling. still above the level before that august depreciation last year, but steadily falling after that, even after volatility spiked during the panic earlier this year. this suggests investors expect more muted results going forward. fixing in a few minutes as well. homes are not interchangeable with stocks, so they don't think this is where money will flow.
9:10 pm
they predicted last year's boom and bust. economists see less chance of monetary easing, which fueled the stock rally and turnover in the main exchanges is tepid right now. only a limited amount of types of assets money can go into, so back-and-forth. thank you so much. buildingkorean ship industry on the rocks after what has been a terrible year. global fleet overcapacity and dwindling demand that mean jobs are coming under threat. that haveking 20,000 gone this year so far, and there are fears that twice as many could soon follow. our asia industry reporter is following the story. gainingthese job losses at such an alarming pace? you have to realize that shipyards have backlogs, orders
9:11 pm
back and theyars are now working on it. these projects, depending on the size, will employ the between 2000-4000 people in one project, so once these are delivered and there aren't other projects coming after that, the shipyards don't need these people anymore. with excess capacity, so the oil price slumping and where it is now and uncertainty on where prices will recover or when, the oil majors are also cutting jobs, cutting back spending, delaying projects -- it is spelling bad news for the shipyards as well. haidi: why is korean shipbuilding in particular -- we know this is a global issue -- why are they in the spotlight? >> the spotlight came in last year when we realized that a lot of these projects -- offshore
9:12 pm
projects, that is -- that were ordered from oil majors were being delayed, and because of the delays, there were cost overruns, so a lot of these shipyards had to factor that into earnings, which is why we saw massive losses from the top three shipyards last year. a lot of that has come off this year with some of the delays being delivered and projects being worked on, so this year is turning out to be ok for them because the cash flow has improved, but the bigger problem will probably be next year. into myhat takes me next question, what is the next year looking like, the outlook for next year? that we don't is know where oil prices will go, which means it is still uncertain when oil companies will start investing, and that means probably fewer orders for shipyards. we have already seen orders fall this year. world's number one and
9:13 pm
number two shipbuilders have one very few orders, so with the dearth of orders going into next year, there is a lot of concerns that the shipyards may not have that many jobs to do, so that means they will have to start slimming down more next year as a lot of those backlogs will be delivered, so it will be a tough year for them until things start to recover. right, still ahead, bullish on china, apple remains positive despite waning demand for its smartphones. we would discuss earnings later in the show. out next guest says inflation is the new risk that investors should be watching out for. ubs wealth management joins us next. this is bloomberg. ♪
9:14 pm
9:15 pm
is 9:15 a.m. in
9:16 pm
singapore, a muggy day in the lion city, 15 minutes into the session, and it is down along with the rest of the region by .7%. we are seeing steep losses in australia despite inflation numbers coming in more than expected. the aussie dollar stronger for a third straight session. all g 10d against currencies. by .2 5%, 225 off five-month lows on the back of a stronger yen weighing on exporters. korean stocks down by 1%. watching those apple suppliers after the not-exactly-rosy forecast overnight a quick check of the latest business flash headlines. deutsche bank considering not paying bonuses in cash to boost capital and investor confidence. executives have discuss handing out shares instead of cash
9:17 pm
rewards. that will replace money with deutsche bank stock. agenda whenon the the supervisory board meets on wednesday, although no final decision is expected. arabia facessaudi deeper and more painful job cuts after iraq joined the line of producers unwilling to reduce output. and nigeriad no, and that everyone out because they are recovering from violent disruptions to operations. ofether, more than a third the cuts are outside the deal agreed last month. russia is also reluctant to cut. yft says it is not for sale and has more than enough capital to break even. the president says it will triple the number of rides this year compared to last year, 17 million this month alone, and every ride is profitable. lyft will continue to work with
9:18 pm
didi chuxing, and didi chuxing recent deal with uber does not change the relationship it >> we never made an investment in china. we never spend any money. i believe was this was a different environment with different regulatory situations, and we are happy we made that decision. i think what often is not talked about is that deal came out right after there were regulatory announcements in china. are are still good partners with local players. we believe you have to understand the local dynamic and local users, so if we go overseas, there is a good chance we will collaborate, and there is a good chance we will compete. we will see. haidi: the outlook for global inflation is on the turn. my next guest says inflation is
9:19 pm
now the new risk. with me now is paul donovan at ubs wealth management in london. early to talk about inflationary pressures? clearly this excludes markets like japan. already there. almost every inflation measure in the night it states is at or above its 20 year average of the moment. headline rate has been kept down, but that is just oil prices. most prices in america are a 20 yearsing with average. japan has an inflation problem as well. the proem in japan is consumers believe inflation is roaring ahead. so that is changing their behavior. the perception of inflation is coming through in the global economy.
9:20 pm
haidi: obviously that is shaking off the deflationary mindset that is perusing to be difficult in japan. -- proving to be difficult in japan. >> they think their wages are going down, so they have a deflationary wage mindset and an inflationary price mindset, and that is the critical problem. standardink your real of living would drop by 5% next year, you will be reluctant to go out and buy a new car or poorly money, and so that is really the problem. the boj talk about inflation expectations and that they want to raise inflation expectations, what they hopefully mean is we want to raise wage inflation expectations. price inflation expectations, that will make things worth -- worse in japan. haidi: we do have fixing for the , and someg in
9:21 pm
unprecedented weakness when it comes to the offshore yuan on the back of yesterday's fixing. maneuverings, what does it tell you about what the bank of china is doing or is it a reaction to the dollar strength run-up that we have seen? >> china has a number of problems. they are trying to control the domestic economy through the use of credit. if you're trying to do that, that gives you less room to maneuver on the currency. you can't do both realistically at the same time. china has been saying for some time that we are not just about the dollar. we export to europe, asia. we are more than the dollar. haidi: the basket. >> exactly. we don't know what the basket it is that the chinese are falling because it is a secret, but nevertheless there is an issue that when you get a stronger dollar against the euro, china
9:22 pm
has to manage that balance of currencies they are trading against. -- theone of your posts market is getting it wrong when it comes to populism. what are the lessons learned from the brexit vote as we go into november 8? big problem i think for financial markets because what we are finding now is globally over the last few years it has become very apparent that there is a group in society that has been left behind by economic growth over the last 20 years. grown, andlity has this group that has been left behind is generally lower lkilled, older, often rura rather than urban. this group is voting for populism, and the establishment. your average foreign exchange is not the same sort of person as your average donald trump supportive.
9:23 pm
exchangeage foreign dealer is young, urban, international, some educated. if you look at your average donald trump supporter, they are lower income, tend to be rural, motivates thehich populism supporters are not the same thing that motivates international investors, so you get this divorce of opinion. that is not to say the populace will win. what i'm saying is the markets will underestimate the risk of populism. we have this with the u.k., the italian referendum coming up, very important election in france in the second quarter of the year, in germany in first quarter of next year, so this is potentially an ongoing story. haidi: we will have to leave it there, but fascinating stuff. take the polls with a grain of salt third i think traders are gun shy at the moment. thank you so much for that. up next, the aussie dollar jumping after that inflation
9:24 pm
number comes in, but when it move the needle when it comes to what the rba does? we will go live to sydney for some analysis. this is bloomberg. ♪
9:25 pm
9:26 pm
this is "bloomberg markets: asia." i am haidi lun. this is what were looking at in terms of hong kong futures. we are setting up for a lower open, tracking the rest of the region. he we stocks down by over 1%, the new zealand dollar looking like that. elsewhere, pretty steep losses given that we did have the stronger yen. australia looking like this. dollar continuing to strengthen for a third straight session after a strong performance overnight. the nikkei 225 coming off
9:27 pm
session lows, but that stronger yen weighing. the malaysian prime minister may consider a ban on foreign donations to floyd -- avoid a repeat of the 1mdb scandal. this is bloomberg. ♪
9:28 pm
9:29 pm
haidi: this is "bloomberg markets: asia." i haidi lun. shanghai and hong kong markets joe's opening. let's get over to david with reaction so far. david: right, a down day. have a look at how we are doing. bids on theave premarket, but look across the region. australia in focus. it was not supposed to be, then you had inflation surprising to the upside. it is worth noting that it is moving the markets, equities pulling back, a big spike in the
9:30 pm
aussie dollar, not just against the u.s. dollar. the aussie-yen cross, a spike in yields, and the odds of a rate cut from the rba falling to virtually nothing here come up 4% or 5% for the next meeting. not that we were expecting them to cut, but that will push that along here. there we go. .7%, and shanghai down .1%. when you look at the markets in china, you have these property curbs in place, the weakening renminbi, so there's a lot of speculation on where that money can go. bed tryingunder the to get out of china. j.p. morgan and fidelity international saying it is good time to buy h-shares. when you look at the metal space
9:31 pm
, an absolute surgeon price. there we go. urge inbsolute searc price. there we go. that is priced in renminbi. . few names before i go these three are out with earnings later on, just a preview of the big names throughout the course of this trading day. haidi: let's get over to first word news. rosalind: the aussie dollar surged after consumer prices jumped.
9:32 pm
.7%, driven uped by fruit and electricity prices. that will likely see the rba leave interest rates on hold. philip lowe has signaled a willingness to tolerate sluggish inflation given economic growth and unemployment are in solid shape. the vast majority of economists surveyed expect the boj to keep stimulus on change when it meets next week. two out of 43 analys expect action, forecasting a cut and negative rates on some commercial bank reserves. more than one third think the boj governor is done with adding stimulus. most don't see tapering until late next year. apple shares fell in extended trading as the company reported sliding prices for iphones and forecast lower profitability.
9:33 pm
apple saw its first annual sales declined since 2001, but says it is confident of a return to growth. logisticsr singapore operator cwt could be delayed as it weighs changes to the deal structure. the owner is still deciding which entity will make the offer. conglomerate is a shareholder in at least 10 listed companies. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. haidi: thanks. the aussie dollar gaining on the back of that stronger than expected cpi number. all allen has more on this. a pretty strong print.
9:34 pm
take us through the details on that. it was a significant be, .7% for the third quarter. the market was expecting .5%, and a significant improvement on the second quarter with .4%. ofin, beating the estimate 1.1% with 1.3%. wereeally profound impacts felt on the aussie dollar as it climbed .4% on the release of these numbers. that is because everybody is looking at the rba as it meets on tuesday. the prious two cuts this year have come after week inflation reads, so now we have a good one , so the odds of the reserve bank moving on tuesday just got a whole lot less, particularly when you consider the governor philip lowe has been saying we utters.""inflation no
9:35 pm
ratenk the chances of a cut now are 5.9%. probably won't see any more easing in 2016. haidi: probably more action on the racecourse when the rba meets. it has taken the wind out of the austrian stock market today. the early indicators for china's economy and october seen mixed, and that could reflect the tussle between resilient domestic demand and fresh challenges from financial policies to limit risks. malcom scott is with me now. what readings are we looking at and what did they tell us? earlyvate indicators, readings on the economy, giving us a mixed picture. some of them stable, some of them off. the standard chartered confidence index a fraction higher, as did a satellite manufacturing reading suggesting
9:36 pm
manufacturing is holding up even with tepid demand. the readings of larger firms confidence fell ck to a five-month low. we had this index of sales managers also edging lower. there was a big slump in the steel index, however the weeklong holiday at the start of the month may account for most of that. haidi: everyone is looking at the property market aspect. talkinghad policymakers about how much contribution the real estate market has had to this recover. it is undeniable, so how do we expect those curbs to play out? >> the broader monetary policy situation has changed. and most recent bloomberg survey of economists show they no longer anticipate further cuts to the one-year benchmark deposit and lending rate. that is all the way through to the end of next year. early surveys had expected a cut
9:37 pm
this quarter or next quarter. saying monetary policy largely on hold, although liquidity is expected to be kept ample. part of policy now seems to be in curbing financial risks, not stimulating the economy. growth is fairly stable. the property curbs are a more concerted effort to reform the economy and rain in some depth risks. todi: we will get back reforms and cutting capacity finally. malaysia, where the country is considering a ban on foreign political donations that would potentially repeat a repeat -- potentially avoid a repeat of the funding schedule -- scandal with 1mdb. let's get to our southeast asia
9:38 pm
correspondent in singapore. and looking at this campaign-finance overhaul right now? haslinda: it is trying to ensure that 1mdb doesn't repeat. changes are happening. changes are being recommended by ,ommittee set up by najib banning foreign political donations, but allowing unlimited donations from malaysian citizens, also compulsory disclosure of those who donate. the committee chairman says the current laws governing political activities are very lacks, especially those relating to financing. the push to overhaul campaign-finance laws has gained momentum. it started in 2008 when najib lost its two thirds majority for the first time in five decades because it is unregulated. money politics have become
9:39 pm
pretty pervasive in malaysia. that determines who gets elected. reforms havert of been rejected before, so are we looking at a good chance this time? there is no certainty they will be pushed through, but there are more reasons now to think that there needs to be a regulatory framework. the committee's recommendations will be presented to parliament for a cross-party debate. if they are accepted, government-linked operations would be barred from making campaign donations as well. politicians and political parties would also have to submit detailed expenditure reports to an independent controller, so we have to wait and see if the changes get pushed through. coming up next, under pressure, apple posts its first sales decline in 15 years. we will get a detailed breakdown
9:40 pm
on those results in here from tim cook. this is bloomberg. ♪
9:41 pm
9:42 pm
haidi: a quick check of the latest business flash headlines. surging as ala consolidation in the soft drink industry intensifies competition. coca-cola west agreed in april to combine the coca-cola east to supply 86% of coca-cola products sold in japan. at heathroway airport has been given the greenlight, although it is not clear how it will be funded or how long it will take. the thrill is best placed to ease the growing demand for london travel. the project would cost the
9:43 pm
equivalent of $20 billion and be the first runway built in southern britain since world war ii. >> we will deliver it affordably. we have already shown how we can so that thereans is no increase in passenger charges. theill keep working with airlines to meet the government's targets, flat charges from now on. an estranged in company have slumped after four people were killed when one of its rights malfunction. the park will remain close while the investigations are carried out. two men into women died in an incident, three from the same family. dreamworld accounts for about 28% of ardent's earnings. reporting after losses and expected weaker profitability over the holiday.
9:44 pm
it was the first annual sales declined since 2001, and revenue fell in china for a third straight quarter. the big headline is apple seeing its first annual sales declined since 2001. headline is that they do expect a return to growth in the next quarter, forecasting a beat for the toiday quarter, $76 billion $70 billion in sales, which means they are expecting a strong response to the new iphone. asked the cfo about the impact of the samsung recall of the note 7 smartphone and what impact they expect to see at apple. difficult to is tell to be honest because we are in a situation where we are supply constrained. everything we produce, we can sell right now, so it is difficult to identify what
9:45 pm
different factors are driving this. another thing to point out is that in china specifically, revenue decline 30% year-over-year, a significant decline. he told me that he prefers to look at emerging markets over the longer term, and that over the longer term, they expect to see in improving situation in china. tim cook did comment on the earnings call, saying that in china specifically that they are looking at a new normal. take a listen. >> we are very bullish on china. we continue to see a middle-class that is booming. there might be some sort of new normal in the economy, but a new normal there is still a good growth rate. >> he was also asked about india in particular. he says india he believes represents a huge opportunity, but it will be several years
9:46 pm
before that opportunity is as it has been in china. he talked about for the first time, acknowledged and apple's interesting cars. inthe car's face is an area general where it is a lot of technology that will either or will be able to revolutionize the car experience, and so it is interesting from that point of view. but nothing certainly to announce today. bloomberg has reported that apple's car plans have shifted dramatically. there has been restructuring and people have left the car division. bloomberg has reported that apple is focusing more on the car platform as opposed to a physical car, so the real focus next quarter will be on that iphone once again. it continues to make up the bulk
9:47 pm
of the revenue for this company, so over the holiday quarter, we will watch for any impact from the samsung recall and google's new pixel smartphones hitting the market. i'm emily chang in san francisco. haidi: let's get some analysis on this. great to have you. even the cfo of apple telling us that he could not really identify the factors that contributed to the shortfall. what is the story here? is this just the new normal? >> i think it is. when we look at the numbers over everyst three quarters, single year over year quarterly shipment has been down from last year. we are pretty much seeing a lot of maturing markets. happens, you are relying on people to replace their phones, and unless there is a compelling reason to
9:48 pm
upgrade your hardware, the growth will slow down. up until this point, apple has relied on hitting new markets, with theers, and iphone 6 they had a new screen size, which is what had this huge bump up in china, but things have slowed because there is nothing super new. even with the iphone 7 coming out, there are people talking about what will be in the iphone eight. puzzling because we talk about this rebalancing towards domestic demand, towards strengthened the chinese and the like,g and that does not seem to be playing out. domestic competition or is there a market that is reaching separation -- saturation? we have seen the
9:49 pm
overall china smartphone market slow a lot over the last year to year and a half, so apple is being affected by that. it is not a surprise because other manufacturing's are facing -- manufactures are facing the same thing. the onene 7 plus is that has higher demand than supply, and when you look at the china market, the larger screen phones have always been quite popular, so it is a possibility that factored into it. given the other surprise the crisis plaguing samsung, where expecting apple to have more of a tailwind on the back of that. does that surprise you that the note 7 crisis is not impacting apple beneficiary -- beneficially? probably see the impact more in the final quarter
9:50 pm
of the year with the holidays coming up. we expect there will be some switchers who will take a look at that samsung brand. when the first samsung recall happen, the impact was not going to be anything more than a short-term thing, but when they had to recall the replacement devices, that is the bigger impact we will see, and that did not happen quite so early, so the real impact will be q4 to watch. rishaad: this is a question that came up repeatedly, where is the next source of growth expansion going to come from for this company? >> you heard that india was mentioned, and when i looked at our own data, in the second quarter, india is apple's ninth it ist global market, but like tim cook said going to take a long time for them to get there. top fivehink about the
9:51 pm
markets, which each ship over one million a quarter, and it india, it is less than one million a quarter, it will take some time, but the indian market is growing quickly and we are starting to see more growth, not just in the super, super low end, but coming up into slightly higher price points. their andto reach close the gap is going to take is not lot more, but it inconceivable that over the next 3-5 years that india will become quite a big source of revenue for apple. rishaad: finally, i just want to talk about this average sales $619 from $670. is it because the larger sizes consumer tastes switching to the smaller size handsets? se, which brought prices down further, you will
9:52 pm
also see that as apple has become more popular across the globe, a lot of countries where ,here are no operator subsidies they are not necessarily buying the most expensive phone right off the bat. newer adopters might be buying older phones, which will be cheaper. it muchhink about larger base of users, the newer ones are buying the cheaper ones, basically. haidi: all right, we will have to leave it there. great to have those insights. certainly investors will be doing some soul-searching given that the stock has gained 22% over the past three months before the earnings release. coming up, new zealand has some of the fastest growth in the developed world and is also the easiest place to do business. why the world bank is so impressed, next. this is bloomberg. ♪
9:53 pm
9:54 pm
9:55 pm
haidi: the world bank says there is a new number one in town when it comes to doing business. new zealand ending singapore's decade at the top. why is new zealand at the top of these rankings? >> they were the number two formerly, sonata huge jump singapore has been sitting at the top for 10 years. new zealand has one of e fastest growing economies in the developed world, but the fewest numbers of procedures to start a business and the shortest time to fulfill them. the world bank says it also has strong legal rights. , it has become easier to deal with construction permits, but harder to deal with credit.
9:56 pm
it is also the first time the world bank has taken into account gender factors in some of these indicators. haidi: to be fair, not a lot of change in the top 10. >> a lot of countries are the same as 10 years ago. the biggest move is macedonia, -- 92 from 9210 years ago 10,ears ago to number pushing up finland. the report says research has is mostly to do with lower levels of income equality. top 10, brunei and indonesia making the biggest moves. haidi: macedonia, we did not knows that -- know that.
9:57 pm
up next, commonwealth bank of australia giving us a debrief on the inflation and what it means for what the rba does next. this is bloomberg. ♪
9:58 pm
9:59 pm
10:00 pm
♪ announcer: from our studios in new york city, this is "charlie rose." charlie: glenn beck is here, one of the country's most outspoken conservative media people. his self-titled show on fox news ran until 2011, when he founded blaze tv, a subscription-based online streaming network. his syndicated radio show can be heard on over 400 stations nationwide. he left the republican party in 2015 after accusing it of being insufficiently conservative. he has been an outspoken critic of donald trump. we will talk about that and more. i'm pleased to have glenn beck


info Stream Only

Uploaded by TV Archive on