tv Bloomberg Markets Asia Bloomberg December 11, 2016 8:00pm-11:01pm EST
♪ 9:00 a.m. in singapore, midday in sydney, 8:00 p.m. in new york city. i am rishaad salamat. am sophie kamaruddin. this is "bloomberg markets: asia." ♪ surging after opec and independent producers agree their first output cuts. japan leads the asia-pacific higher. rishaad: a change of the guard in new zealand, bill english must face the voters. donald trump says the
one china policy should be tied to trade. prices, this historic deal to cut output. oil jumping over 4%. jumping to the highest since july 2015. saudi arabia signaling it is ready to cut output more than agreed, while a non-opec countries including russia agreeing to pump less. sophie: we will have more about that deal in a bit, 30 minutes away from the open in china and hong kong. singapore, taiwan, and malaysia coming online. what is going on in the oil patch? game inhere is only one town, and it is demolishing every other safe haven. gold retreating, bonds falling, all on the account of renewed risk appetite after the meeting
between opec and non-opec members. saudi arabia's surprising the markets, saying it is willing to cut more than pledged. russia and other non-cartel members coming on board as well. stocks, oil energy stocks leading the gains. energy-heavy markets like a straight up, the nikkei 225 getting that double boost, oil majors leading gains, but the impact of a weaker yen, pushing that 116 handle. online, some strength straightheast asia, times index up .3%, and energy heavy market. a quick note about south korea, that in treatment vote go through on friday, some uncertainty the next couple of months as the constitutional court has 100 80 days to decide
whether they will support the proposal. isote from s&p saying it unlikely to weigh on the rating when it comes to south korea, political uncertainty will be fleeting. .1% gain. dollar-yen looking like this, one 16, boosting retail names. oil surging to the highest in 17 months, and that conversely driving further close from gold. a 20th day of contraction when it comes to bullion-backed etf's. that selloff is continuing there. sophie: thanks. opec and the fed driving markets this week. rishaad: let's find out what else is going on. bill english has been named the new prime minister of new zealand. he was elected unopposed after
tubing rivals withdrew, and paula bennett will be his deputy. he succeeds john t and inherits a solidkey and inherits economic platform to campaign on ahead of the general election next year. japan's core machine orders jumped from the previous month with a gain of more than 4%, the first such rise in three months, however still down more than 4.5% from a year earlier. .4% on aprices jumped monthly basis, where analysts had seen a fall. chinaas for decade one policy may change with president-elect donald trump saying nobody can dictate to whom he speaks. the issue surfaced after beijing leader tookter the a phone call from the president of taiwan.
trump has threatened to impose tariffs on imported goods and label china a currency manipulator. he says china will now have to play by the rules. christine lagarde goes on trial as french her time finance minister, accused of failing to prevent a government payout to a corruption-tainted tycoon for mishandling the sale of adidas. 300 millioned dollars, which christine lagarde did not oppose. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. thanks. first word headlines. sophie: opec sealed its first output cuts with independent producers in 15 years as oil ministers agreed to reduce output by 1.2 million barrels a day, saudi arabia willing to cut production more than expected,
promising a cut of 450,000 barrels a day. say the situation is different as we go country by country, but i was pleasantly surprised to see so many countries respond to the invitation by opec and russia to participate in this deal to stabilize markets. most of the countries which joined, and it is important to say they joined voluntarily, some nobody will force them to reduce production, and most of these countries will be taking active measures to reduce production, and that is important. >> we wanted to contribute in as the reality of the transformation of mexico was also accounted for, so this is also part of the process of production decline that we have experienced over the last 10 years, and what we have done is
a managed process of the klein which will stay consistent with our own production targets. in beenlet's bring sharples. non-opec producers agreeing to cut production, and saudi arabia saying something as well. >> opec and non-opec coordinated a production cut, almost 1.8 million barrels a day. was thei statement cherry on top essentially. they said they will cut more than that what they were initially going to come i bullish statement, and prices react. rishaad: it has failed in effect , and there are risks going into this. >> the compliance is the biggest issue. anything about compliance until february or march.
the other thing to look for is how the u.s. responds. fromve weekly data points the drill rig numbers to production numbers, and whether it will incentivize production there. the policy is to try to drain those stockpiles at historic highs rather than push up prices. they are hanging around the mid-50's at the moment, and will probably continue into early next year, but bullish for the market. sophie: thank you. to the federal reserve as it heads into its final meeting of the year, little doubt over what policymakers will do. rishaad: a rate hike fully expected, traders turning their attention to next year. in new york. is it's all about joining the dots on wednesday. >> the dot plots will be important as they wrap up their
a .25 percent interest rate hike is what the markets are expecting. they want to see the latest version of what you are seeing on the screen now. 2017. in september, they were looking for two interest rate increases and. . there were two fed officials who saw no hikes at all, and then you move up the line, 3, 4, maybe five next year. will there be more of a consensus? the fed is meeting after unemployment hit 4.6%, a nine-year low, so they are putting together the steps of economic projections that include those dot plots. inflationsee higher because unemployment has fallen so low? that could mean more rate hikes. if you start with the question
of unemployment, maybe they will say, well, it's going lower, but because there is labor markets slack, we can tolerate that. will day forecast more rate hikes next year? that is the big question, and what could be the market mover on wednesday. sophie: you are saying some potential policy shifts, but will the latest economic reports make a difference between now and 2017? all about momentum. bloomberg intelligence sees moderation in the data. can we look at 4941? consumer sentiment had its biggest two-month gain since january 2012, that yellow line on the bottom. that white line shows a jump five points to 98. survey respondents added that they are more optimistic, the king at the impact of policies coming in the next administration. for the federal reserve, this
question of what donald trump does and how it affects the economy is a source of uncertainty. we will see if that shows up in the fed forecast and policy statement on wednesday. for that.hanks a lot kathleen hays in new york, watching the fed. china setill ahead, for a triple dose of economic data. a preview with morgan stanley. guest saysw an next it is an uncertain time for emerging-market currencies. will the uncertainty continue? we have more with hsbc just ahead. this is bloomberg. ♪
creditor. will share space with the two m group. approval,egulatory but hyundai merchant said it would improve competitiveness. sophie: qantas to start regular nonstop flights between perth in london, a 17 hour direct connection between australia and europe. it will use the boeing dreamliner. allow services from australia to dallas or chicago. rishaad: donald trump warned jobs are at risk if he tries to curb chinese investment. chairman wangda jianlin saying i invested over $10 billion.
sophie: emerging-market currencies paring ahead of the fed meeting, taking pressure from the administration change in america. rishaad: expressed it to boost inflation and trigger rate hikes are i. what is going on here? >> good morning. stillnow, everybody is trying to digest what donald trump means for the u.s. economy and the rest of the world. there is still uncertainty, but we are going with this translation type of trade, which means a lot of the asian economies that have trade links with the u.s. are under pressure. at the same time, some of the commodity-linked currencies are doing better because of this infrastructure demand helping commodities. sophie: with the expectation
that the fed will hike faster next year, what will that mean? >> the fed is projected to hike faster than earlier expect that come up at markets are basically areing in what the fed dots projecting. until and unless we get beyond that, actually some of the higher-yielding currencies will hold up well. rishaad: we just have the yuan, weakening it again. what is this reacting to? moves?he dollar or euro things. post the fixing mechanism has been in line with the broader dollar movement, basically meaning thear-euro, dollar-yen, currencies that are important in the basket. , the basket has
been stable, so this suggests yuan fixing has been not as high as it could otherwise have been. has been leaning against it to cap it below 6.9. sophie: what else is driving that sentiment? >> outflow pressures, impact seasonal two to the idea of the u.s. economy picking up. tryingnese investors are to invest abroad for the first time in many years. naturally they will be looking , and what it going on globally will matter for capital outflows. rishaad: the capital outflows story is the big story at the moment. europe is china's biggest they areartner, but trying to keep a level playing field with the europeans and the , andrather than the u.s.
that feeds into the whole dollar feed, and how does that into the emerging markets story? economiesg market have reacted to china's changing dynamics. it became a excepting to the need to depreciate. to the extent that the renminbi near dollar strength, that fear to acceptance mentality will continue. it is only when we get beyond that and the renminbi started to depreciate more that we might get this negative spillover. are saying two pillars on which currencies have been able to gain momentum this year have been knocked out of play with donald trump's win, so setting up for 2017, what could be another pillar they could
lean on? >> for 2017, the business cycle. donald trump inflation theory is gaining momentum, because pmi's have --ked up, that by the u.s. not only will donald trump reboot the economy, and it was picking up before he gets into office, and that might help does not and if it trump protectionism comes in, we get the worst-case scenario. rishaad: which ones will get it most. your underperformers include the renminbi, turkish lira, and the ringgit in malaysia. >> definitely. in asia, the singaporean dollar, the ringgit, the korean won
we'll get hit hard because they are plugged into the chinese production chain, so if there is going to be trade tensions between the u.s. and china, these economies will be hit. these economies are also going to some of their own domestic issues. korean political uncertainty, -- and to a certain extent the renminbi. rishaad: that's what we have at the moment. thank you for that. we didn't get to the preferences thai bhat and the philippine peso. heading closer to that seven handle. sophie: up next, new zealand confirms its new prime minister as john key steps down. we will look at what is expected
sophie: new zealand has a new prime minister, bill english was elected unopposed as the leader of the governing national party. rishaad: he was endorsed by outgoing minister john key. hound different is a bill english government going to be if different at all? over not particularly different is the answer. bill english is the continuity candidate, the finance minister under john key and was anointed by john key as well. such overwhelming numbers that the other two contenders dropped out. much changet expect apart from a reshuffled cabinet before christmas. stephen joyce will be the likely
new finance minister. at the press conference after he was voted the party leader and by extension the prime minister, bill english had nothing particularly radical to say. he did take questions about new zealand on the international stage and said he hoped the country would continue to be an honest broker. >> after all, we are a small country. because of the increasing recognition of our good economy, open to trade, political stability, we are not having to deal with some of the difficult issues other countries are. i think we can have more influence in a positive forward thinking country. one difficult issue to mystically as housing affordability, the cap between the rich and poor is getting wider in new zealand, so we could see that shape up as a potential election issue next year. yet, butothing radical bill english will face an
election and the next 12 months. can he win it? looking goodt's for him. the government is still in or mislead popular, and more popular than the opposition parties combined. it really is looking wishes of election to lose, if you like. historically, it could be difficult. gore has been no government four terms since the 1960's. english's biggest handicap is simply he is not john key, a normatively charismatic and popular. this will level the playing field because there is no one particularly charismatic on the opposition benches gone tobut 2017 has looking like a lock for government to a much more interesting contest. thank you for that,
paul. paul allen there. let's have a look at the oil price. this is the biggest show in town after the deal between opec and non-opec producers to cut output. sophie: it would seem there is momentum towards that 60 handle. we have not seen that in 17 months. rishaad: we will talk to neil beverage about it, saying what will it take for that oil price to edge up to that $60 handle? we have it jumping to the highest level since july 2017, it was non-opec countries including russia green to pump less as well. sophie: we will hear exclusively from vladimir putin's energy minister, alexander novak. this is bloomberg. ♪
sophie: this is "bloomberg markets: asia." i am sophie kamaruddin. .ishaad: i am rishaad salamat having a look at this data dump tomorrow 10:00 a.m. hong kong time. retail sales essentially. sophie: retail sales, factory output, and fixed investment. expecting a 2% rise. retail sales, that dip right there, but expecting an improvement. rishaad: we're looking at what a 10.2 percent year on year rise at the moment, and the previous
month there of course. sophie: factory output another data output point, the blue line, steady at 1.6% for a third straight month. rishaad: it is the first trading day of the week for shanghai and hong kong. i just want to talk about fixing, significantly weaker to kickoff the week. tends to moveore more than the onshore number. 6.9351 is where we are at the moment, but weakness to the tune of 10% so far. let's go down memory lane in terms of where we have come on this chinese currency. 5.6%at that leg weaker, when it comes to the year to date depreciation if you will when it comes to the renminbi. let's take a look at the open,
joining i believe the regional rally that has been boosted the oil story, saudi arabia's what ever it takes moment, russia and other non-opec members on board, crude rising for the highest in 17 months. we are seeing this risk on appetite flowing across equities when it comes to the asian session. the greatest gains from the nikkei 225, getting that double whammy from that weaker yen, 115 handle on the back of the dollar. holding ontodex its gains against emerging-market and asian currencies. , upgreater china open .1%. we had a big data leak last week , but we have the data numbers on domestic activity this week as well. hong kong up by .3%.
we had the intention to not run , then saw on friday that bounce in the hang seng index, now extending those gains. heavy up .25%, energy markets doing nicely and nice buying when it comes to sydney stocks with the oil majors seeing hefty gains in the early session. let's look at the rest of the movers, in that energy space, beach energy up by 3%. crude continues to surge. , thiso have interestingly retreat when it comes to precious metal, gold falling, futures the lowest since february. shrinkingts for 20 straight sessions. australian gold miners on a losing streak. we are seeing funds flowing out of safe havens, government bonds
as well from australia to tokyo. jgb, yieldsear rising the most since february. sophie: thanks. checking in on the markets for us. rishaad: checking in on the first word news headlines. rosalind: south korean president park geun-hye facing new accusations after being impeached. she is said to have colluded with a former aide who tried to force company executives. she loses her immunity after she leaves office from prosecution. the constitutional court has six months to rule on the impeachment decision. india's boardroom drama now sees tata group accusing cyrus mistry of breach of governance and failing to distance himself from companies owned by his family. it comes ahead of extra day meetings at the tata unit, where each are appealing for support.
boeing has agreed a 16 billion dollar deal with iran, the first including, includes multiple aircraft variance. it will force president-elect donald trump to balance diplomatic priorities with american jobs. tension is high with donald trump's criticism of the nuclear deal. officially launched the 2020 olympic games with the groundbreaking ceremony for the centerpiece of the event. the new national stadium will be built on the site of the one used for the 1964 games, expected to be finished by 019.mber 20 i name is $1.5stadium cost billion. global news 24 hours a day
powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. rishaad: cheers. the first word headlines. sophie: 2017 could be a tough one for china builders with developer bonds do next year after regulators caught off a key source of funding. rishaad: beijing's property curb starting to bite, and the weaker yuan taking its toll. maine: what are the hurdles facing developers now? >> the key hurdle is the shanghai stock exchange. of therket has been one main channels for developers, 40% of onshore bonds in the market. since the end of october, that market has raised a higher requirement to issue bonds, so since then, we have not seen any property bonds issued in that market. sophie: the offshore might be
the direction to go. rishaad: overall, it seems to have come at a bad time. could not have come at a worse time because developers have $17 billion of lawns do next year, record, and another $28 billion a year later. the marketscost for over all have been going up. if we look at the yield premium of aaa rated bonds, the highest in 17 months because the central bank wants to curb leverage. sophie: property sales strong this year, so developers should not be facing an immediate liquidity crisis. beens, the market has strong. i a lot of developers are in decent shape. analysts say it is the smaller developers that will be feeling the funding squeeze because bigger ones can or are still allowed to issue bonds in the shanghai stock exchange, so smaller ones will be hit.
the longer the window remained shut, the more it favors the financially stronger developers. sophie: regulations from beijing hitting those small builders, thank you so much. amerco's for decade one china policy could be at risk with president donald trump. sophie: he also says his attitude will depend on securing a better trade deal with beijing. tom mackenzie joins us now. this could be a major shift for washington and beijing. that's right. trump taking aim at a key tenant under pending sino-u.s. ties around the topic of taiwan. in thes a policy crafted 1970's when washington switched its diplomatic relations from taipei to beijing, and the understanding between the three parties what that there was one government that ruled mainland
china and taiwan. what they agree to disagree on was which government that was. it was a bit of diplomatic dancing to ensure a fragile peace that has lasted for four decades. u.s. sales of military hardware to taiwan, and china saying if taiwan was to move from de facto independence to real independence, they may well invade him a but it left trade ties to increased and for taiwan to have unofficial sovereignty. donald trump saying he does not see why the u.s. needs to be bound by this policy when he is looking to set up a new trade deal with china. so those comments are being heard here in beijing loud and clear. abouteople are uncertain them and comes after the controversial phone call donald trump had with taiwan's president, the closest taiwan's president got to official recognition an almost four decades. are peopletually,
getting their knickers in a twist over this? i will tell you why. the u.s. has acknowledged this whole one china situation and has recognized it, so it's not really going off. tom: he would be going off if they would did not acknowledge the one china principle and started to question over who the u.s. was going to recognize that dramatically as china, and the government of china, so that is where the question lies. we have not heard an official response from china, but we have heard it from the state media, the global times: donald trump ignorant and sing there must be pressure on him now. of course there have been mixed messages that they have had to digest in terms of donald trump strong language on china, but he has nominated an ambassador who is seen as a friend of china.
so it remains to be seen whether this is trump strategy at head of a meeting or reckless grandstanding. rishaad: thank you a lot for that. tom mackenzie, our china correspondent in beijing. sophie: saudi arabia signaled its ready to cut oil production more than expected. this came after russia and other non-opec countries promised to reduce output from january. rishaad: russia's energy, alexander novak, said clinical support was critical in getting this deal through. an important role has been played by ministers, the key role should be given to our leadership's. i would like to especially note mr. putin's role here, very supportive of the deal and pushing us forward in understanding the importance and need for the deal to be done. having this political support which i just spoke about, this has significantly helped us to build a very trustful
relationship with our partners from opec and from non-opec countries, especially saudi arabia, with which we now have a partnership together. >> are these non-opec cuts genuine or natural declines? >> i have to say the situation is different as we go country by country, but i was pleasantly surprised to see so many countries respond to the invitation by opec and russia to participate in this deal to stabilize the markets. i would have to say that most of the countries which joined, and it is important to say they is theirluntarily, it own will, and most of these countries will be taking active measures to reduce production, and that is important. >> who will remain to make up the barrel target? >> it is important to understand 600,000 barrels per day was not
the only possible result for us. there will be countries that possibly would join the arrangements. i think that we most likely will number to achieve an higher than the number we spoke about today. another key thing i would like to highlight is the agreement is open for other parties to join. this time, there were 11 countries here, but there may be others willing to join who were unable to participate today. what is important is that the doors have been opened, and now we have a framework to act jointly. >> the saudi oil minister said he's willing to cut more, maybe below 10 million barrels a day. will russia cut more than 300,000? have signedoint, we the deal for six months. this is the first stage, which would last until the end of the
first half. of course there is a framework that allows us to extend the duration of the agreement, but we will be monitoring closely the effect of this agreement, compliance of countries, and whether other cuts or an extension is necessary upon completion of this term. >> when does russia begin their curbing? >> i think the first cuts, the first stage, as early as january. haduld like to say that he discussed this with the companies, so the companies are quite well aware of what they have to do, and considering this is a voluntary step by which these companies are taking because they understand the benefits of this deal and also understand the deal is in place and they have agreed to it. they are preparing for the cuts which will take place starting in january, so as we speak now, they are taking measures. sophie: that was the russian
rishaad: the federal reserve meeting this wednesday may kick start rate increases for the central bank. sophie: our next guest is saying two hikes for 2017 and three the next year. two, then three? >> we expect reflation to pick up in 2017 and inflation in the u.s. closer to the central bank's target of 2%.
at the same time, we expect overall growth to improve because the fiscal stimulus will come through. we expect fiscal deficit to expand by 2.6 percent of gdp over the next two years, and that's what will drive growth and inflation, getting the central bank to hike to bring times in 2017 and three times in 2018. rishaad: this is all about the reflation trade. we have not had any yet and will not get any until next year, possibly towards the end of the year, if it happens at all. i we getting a little bit ahead of ourselves? >> we are expecting the tax cuts to be announced in the second quarter for the corporate sector, 1% of gdp. and income tax reduction in the last quarter, another 1.2% of go expansione this beginning to happen in 2017
itself, so it is not as if it is waiting until 2018. sophie: in this situation, what case whenhe bearer it comes to 2017? >> the way the fiscal stimulus is coming through in the u.s. is at a time when the unemployment rate is quite low, wage growth is picking up, so the concern is if the stimulus drives inflation faster than what we are expecting, you could get a central bank response jump here than what we are building in currently, and that could be the one that brings in the risk for global financial markets, particularly emerging markets. arphie: part of your be case is market dynamics, but what could be the potential headwind? >> sorry, i lost you in between. sophie: with what is going on case for 2017,
and factor is global trade what could be the potential headwind between bigger players? beene trade has generally weaker in this cycle related to gdp growth. if you get more protectionism measures, that could further affect the trade dynamics, so therefore we are building that in our bear case too. rishaad: what about the impact when it comes to emerging-market currencies? we see how they have been whittled down. what are they pricing and at the moment, that is the thing? >> the big difference between now and what we saw in 2013 is that emerging markets have significantly higher real interest rates, so the most important variable we look when the fed is hiking interest rates is what is the real rate spread between emerging markets and the u.s. currently the spread of top 10
in emerging markets is around 350 basis points real rate spread. we think this is a significant buffer that allows emerging markets to do well even while the have fed -- the fed is hiking. while we see some tightening in emerging-market conditions, we expect recovery and growth from largely led by commodity producing emerging markets, so emerging markets should be able to withstand the macro debility conditions have improved, and the real rate spread is quite meaningful. around for atick second we just have these images coming through, new zealand's ruling national party confirmed bill english will be the 39th prime minister. this follows the surprise move by john key to resign and leave politics. sophie: a transition at play here, but given that there is
much to be decided with new zealand policies there, we will see what else he has to say. rishaad: absolutely. that is wellington at the moment, the n new zealand. back to you for a second, what are your favorite place when it does come to the fx space? we have seen damage to some of them. is there more to go or do they represent a buying opportunity now? is that the dollar will continue to rise, and it will continue to rise more so against the emerging-market currencies that have low yields, the japanese yen will depreciate meaningfully against the dollar, and the currencies which will be able to hold up better on a relative basis are currencies with higher real yields. r and thed be in
indonesian currency. at the same time, we're concerned about the japanese yen and the korean won, because they have low real yields. those are the ones that will be facing a lot of pressure. sophie: what could put the currency space to the test in your view? >> sorry, i could not hear your question. sophie: what else could put the currency space to the task given some of the scenarios you have painted for us here? >> sorry, i'm not able to hear you. sophie: that's all right. rishaad: don't worry. we are out of time. thank you so much for coming on the show this morning. all right, up next, the political scandal and south korea rumbling on after following president parks impeachment. we will look at what should happen next. this is bloomberg. ♪
thousands ofeds of people rallied once again on the streets of seoul, korea, keeping up pressure on authorities to .emove president park geun-hye south korea's constitutional court has six months to improve the decision to impeach her -- to approve the decision to impeach her. >> many people and south korea has lawmakers impeach president the first changes they want to see. they have come out to make their ,oices heard, holding candles calling for an into the murky ties between business and government. for young people, it is particularly important. >> the younger generation has housing problems and others. the underyment among
30 is high at twice the national rate it in february, it hit 12.5%. add to that high housing costs, and it is no wonder and people say they can't afford to get married or have children. older generations have seen the country in themselves advance, the younger koreans have found it difficult to progress. they are aiming their anger at president park geun-hye. reform will take time. the instability and government needs to be dealt with if we are ever to get reform momentum. >> the many young south koreans think us changes are not happening fast enough. right, well, let's look at what we have coming up. investors like what they see following that opec deal, the oil price at the highest level
rishaad: right, almost 10:00 a.m. here in hong kong. 1:00 p.m. in sydney, 9:00 p.m. on the eastern seaboard of the united states. i am rishaad salamat. sophie: i am sophie kamaruddin. this is "bloomberg markets: asia." ♪ rishaad: oil surges after opec and independent producers agreed their first output cuts in 15 years. sophie: decades of diplomacy may be upset with donald trump sang the one china policy should be tied to trade. rishaad: bill english elected
unopposed as new zealand's prime minister, but must face the voters in 12 months. sophie: boeing signs a historic deal with iran, the first since before the islamic revolution. rishaad: it's all about oil price, isn't it really? higher given the opec conversation over the weekend, non-opec and opec members playing ball. rishaad: absolutely. we have been gaining 20% since that november 20 announcement out of opec, and those gains continue today, the first production cuts in eight years for the group itself, and non-opec in russia joining as well. sophie: the question is whether the momentum can continue. we are eyeing that 60 level potentially, but whether opec will commit is the question. we will be talking about oil and 12 minutes. sophie: trading in indonesia is
getting underway. we are seeing asian stocks at six week highs today, so continuing that strong rally. i want to show you the oil and is where thes this action is today, i solid moves in crude, lifting the regional producers today. australia,s in froms up by 4%, good gains oil search and woodside petroleum, woodside at the highest level since october last year, but gains right across the board. a tro china up by over 2%. -- petrochina china up by over 2%. we are seeing that rally lift most of the markets today, this of dollar strength story lifting the nikkei with that weaker yen, up 1.3% on friday. we saw the topix reverse 2016's
losses, both of those trading at highs we have not seen for a year, and some solid movement not only in the energy players, but those export stocks as well. in hong kong, things looking thanks to that rally in the energy price. some weakness coming through in china today, so one-week spot, down by .5%. the shanghai composite has been trading in bull market territory, analysts saying it is due for a cell down. we have been watching bonds, yields rising, bonds being sold off today along with gold. 10 year note on the australian seeing yields rise significantly there. have a look there, up by three basis points to 2.85%. in south korea, for basis point gain. a lot of money going into the
dollar and equities, and these safe haven assets are very much sold off. rishaad: thank you very much indeed for that. sophie: as juliette mention, opec has seen its first output cuts from independent producers and 15 years to oil ministers agreed to reduce output by 1.2 million barrels a day, and saudi arabia signaled it is ready to cut production more than expected, promising a reduction of 450,000 barrels a day. russia and other nations pledge to cut production from january. say that the situation is different as we go country by country, but i was pleasantly surprised to see some many countries respond to the invitation by opec in russia to participate in this deal to stabilize markets. i would have to say that most of the countries that joined, and it is important to say they joined voluntarily, so no one
will force them to reduce production, and most of these countries would be taking active measures to reduce production, and that is very important. >> we wanted to contribute in as much as reality of the transformation of mexico was also accounted for, so this is also part of the process of production declined that we have experienced over the last 10 years, and what we have done is a managed process of declined that is consistent with our own production targets. rishaad: right, well, let's bring in been sharples, non-opec producers agreed to cut production, saudi arabia with a separate announcement. this coordination if it does work out, i don't ever recall it actually. >> the good news kids rolling on for the oil markets. if you are a producer, great
news. we had opec agreeing with russia to cut output, and now additional non-opec producers coming on board. on top of that, saudi arabia saying they may cut production below 10 million barrels a day. you are seeing those prices react, 5%. sophie: it is a bullish statement, but is their conviction, commitment, what is the risk to the deal? the big issueis for opec. the saudi arabian oil minister recently saying they have a tendency to cheat. compliance, we won't find out until february or march, then we have the u.s. and how it reacts to these cuts, whether they see an opening. it is certainly a floor around that $50, $55 a barrel range. if you are a producer, great news. sophie: will prices rise with strong momentum here?
>> they will probably rise, but how far will be dictated by the producer response. we will have weekly data from rig count numbers to production numbers, so that will probably put a cap on any runs around that $60 a barrel. we talk about sometimes, you buy at $40, so that $50, you could do that range trade for much of the year. it could go into a higher range and the swing producers become u.s. shale. , you'reu are a bear probably getting out of those bets quickly, but the focus is on the u.s., especially that long lead time into february and march and we can see whether opec are doing anything. it is almost of phase where the market is waiting and watching. you only have that one data point out of the u.s., so that will do take prices for the next couple of months. bloomberg energy
reporter been sharples. rishaad: right, let's find out what's happening with the first word news headlines. english hasll formally become the new prime minister of new zealand. after elected unopposed two rivals with injury and will have paula bennett as his deputy. english succeeds john key, who unexpectedly stepped down last week. japan's core machine orders jumped more than expected in october than the previous month with a gain of more than 4%. that is the first in three months. however, they were still down more than 5.5% from a year earlier. reducer prices jumped .4% on a monthly basis, where analysts had seen a slight fall. the bank for international settlements says china has helped to prop up global
lending. turnovert report says has approximately doubled every three years over the past decade and a half, and more is being used for financial services instead of trade. bis says chinese banks of the tent largest in the world. christine lagarde goes on trial related to her time as french finance minister, accused of preventing a government pay out to a corruption-tainted tycoon over crédit lyonnais. he was awarded $300 million, which christine lagarde did not oppose. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. sophie: thanks. trumpent-elect donald says he is close to naming his secretary of state, dropping hints it could be the exxon ceo.
a source says he has not formally offered the job, but is likely to do so. tiller's and faces opposition for his ties to president vladimir putin. rishaad: americas for decades be putna policy may to the test with donald trump saying no one can tell him what to do. our china correspondent tom mackenzie, it could be a major shift, could it not, between washington and beijing? tom: potentially, and it is donald trump showing is not a fan of diplomatic niceties. for thechina policy agreement as diplomatic protocol the 1970's, and there was an understanding that there was a one china that
included the mainland and taiwan, and they agreed to disagree over which government was leading that. donald trump does not believe that the u.s. should be bound by this protocol when it is looking to improve its trade ties with china, something he has complained about this or firstly. ont his statements follow from is that controversial call he took from the president of taiwan, which was the closest the taiwanese leader has come to official recognition in washington, and of course it raises concern about where the u.s.-sino ties go from here under trump in the white house. sophie: trump certainly unconventional when it comes to diplomatic tact. how is china likely to react? no official comment, but editorials in state run newspapers like the global times said the one china policy is not negotiable and that trump is proving his ignorance and should
the taught something of a lesson. that is in the state media. we do know that trump has been quite vocal about slapping tariffs on exports and labeling china a currency minute there. he also accused china of building up military bases in the south china sea and said china had not done enough to rein in north korea, so he has been vocal on this. china has been listening to my but on the other side he wants to appoint to china as an ambassador, the iowa governor terry branston, seen something as a china friend. he has known president xi jinping for quite some time. so what they are trying to work out is whether this is a thought through strategy that trump will take to the negotiating table to win over concessions, or whether it is grandstanding from trump to play to his face. rishaad: tom mackenzie joining
us there from beijing. ousted head tata's taking another swing at cyrus mistry at an emergency general meeting. we will be live in mumbai. sophie: plus, the proof is in the pudding. our next guest says we will have to wait and see on whether oil producers stick to their word on output cuts. this is bloomberg. ♪
u.s.rrangement needs regulatory approval, but hyundai merchant said it would improve its competitiveness. sophie: president-elect donald trump is being warned that jobs are at risk if he tries to curb chinese investment. dalian wanda chairman wang jianlin said "i have invested $10 billion in the u.s., employed over 20,000 people. if something goes wrong, these people might be out of a job." japanese brewer looking abroad to keep up. this as brewers face a shrinking population. is buying anheuser-busch inbev.
sophie: oil is searching after opec seals its output cuts, the first and 15 years, this as saudi arabia signals they could cut output further. we have had the likes of mexico, kazakhstan get on board with these cuts. what does this mean for you when you are looking to the details? means is we will move into a deficit in terms of supply in 2017. at the moment, we have a market that is coming back into balance. with one point 2 million barrels coming off the market from opec, and another 600,000 from non-opec countries, that will push us into deficit in the first half of 2017. they will start to drain those high inventory levels we have seen build up over the last 12 months. rishaad: we were talking about
deficit, but that assumes of course reasonable compliance. you go on to say this level of coordination is unprecedented. the first part of the question. >> on compliance, if you look back at opec's history, the levels of compliance -- rishaad: sketchy, i was going to say. sophie: -- if you look at where these cuts are coming from, 70% comes from saudi, the gulf states, and russia, and those countries are very committed to this deal, so what we will not , but a100% compliance relatively high level, and there is enough slack built into the cuts to cope with certain levels of noncompliance under the agreement. from whate markets happened over the weekend, but this can be looked at in isolation, u.s. shale for example. while compliance is
one part of the risk, the other is how u.s. shale producers will respond, and there will be a response. what is theat marginal cost of shale oil in the u.s., once you get into the 60's and 50's, you can really start ringing a lot of rigs back, so we will see a response, but it will be delayed 6-9 months, given the time it takes to get rig's back into the field. the u.s. can grow by 500,000 barrels a day, which will off set these cuts. it will not match the 1.8 billion taken off the market and the 1.2 million and demand growth next year. saudi's whois the have been inspired it all. is it a tacit recognition that their original policies failed? >> yeah, what we have seen is a
complete shift in the mindset of opec. over the last two years, effectively the saudi's have been trying to bring back balance into the market and squeeze out some of the marginal non-opec players. on one hand, they have brought balance back to the market. we have seen a 40% drop in capital expenditure, the buying demand back in balance, but we have not squeezed out these marginal producers. saudi is saying we are going to have to share of the market with inle, but we are no longer the game of market maximization. we are in the game of price maximization. myhaad: that is underscoring question. it is a change of policy, a change of targets. the market share idea has gone by the wayside. >> it is really about price maximization now. i don't think they have completely failed in the since the market has come back into balance, but they have not
caused as much pain as they hoped to inflict on these non-opec producers. sophie: what other variables should we consider in this picture here given that we have a deal that table and we have not yet seen it will be followed through. >> compliance, shale, and the other thing is that as prices start to increase, we are going to see pressure, downward pressure, on demand growth. if you look at the last two years, we have seen strong global demand growth for oil as low prices have spurred on buyers, in particular china, india, to buy a lot more oil. as we get back to $60 a barrel and higher, you will see more downward pressure on demand growth, and i would expect demand growth to be slower in 2017 than 2015 and 2016. rishaad: what are the
implications longer-term? what is the comfort zone when it comes to the price? the near term, i think prices go back up to $60 2018.ear, $70 in of course you have the aramco ipo potentially in 2018. rishaad: potentially. >> the saudi's were want to ensure a favorable commodity price environment for that. i think we will see a cyclical recovery and prices over the next couple of years as the market tightens. i don't think were going back to $100 a barrel, certainly not for a long time. rishaad: we will probably not see that ever again, maybe. yeah, well, it will not be for a long, long time because
shale has fundamentally changed the dynamic, but i think we will see a cyclical recovery until we reached this new equilibrium for opec and shale. rishaad: thank you very much indeed. always a pleasure to see you. sophie: just ahead, uncertain times. we have been asking younger citizens how they see the political future after the crisis. here what they have to say next. this is bloomberg. ♪
rishaad: you are back with "bloomberg markets." people rowling on the streets of seoul, korea, keeping up pressure to remove president park geun-hye. the constitutional court has six months to improve the decision -- approved the decision to impeach her. we've been speaking to young koreans about their futures. >> for many people, the move to
impeach park geun-hye is the first up in the changes they want to see in the country. again, andome out they want to make their voices and want to shut light on the murky ties between business and government. for young people, it is difficult to find work. >> the younger generation has housing and workplace problems. i came here to show my opinion on this and the hope of a cleaner society. >> unemployment is twice the national rate it in february, it hit 12.5%. add to that housing costs, and it is no wonder young people say they cannot afford to get married or have children. older generations have seen the country and themselves advance, younger koreans have found it difficult to progress. they are aiming their anger at park geun-hye and the establishment she symbolizes.
reform will take time. the instability in government needs to be dealt with if we are ever to get any reform momentum. >> the many young south koreans say those changes are not happening fast enough. markets trading here in the asia-pacific, let's check in , hong kong, hang seng down .4%, reversing gains. 225, a fifth day higher above the 19,000 level. adding todown .1%, the decline. also in the red for the taiwan and singapore indexes. it is apparently all see if but we will
>> it is 10:29 a.m. in hong kong, a 11:29 a.m. in tokyo. oil surging after opec and independent producers agreed to reduce output by 1.2 million barrels a day. saudi arabia signaled it is ready to cut more than expected, promising a reduction of 450,000 barrels a day. russia and non-opec nations pledged to lower production by 558,000 girls a day from january, the first global production curb in 15 years. -- 550 8000 barrels a day from january, the first global production curb in 15 years.
america has for decade one china policy may change with president-elect donald trump saying nobody can dictate to whom he talks. it surfaced after beijing protested over the phone call from the taiwanese leader. trump threatened to brand china a currency manipulator and impose tariffs on imported goods. last week, he said china will now have to play by the rules. india's boardroom drama sees tata group accusing cyrus mistry of breach of governance and failing to distance himself from business holdings. and thestry conglomerate are each appealing for support. tata's market value has fallen $16 billion since cyrus mistry was toppled. they'll strain government has approved construction of a second international airport for sydney, due to become
operational in the middle of the next decade, a single runway facility catering 10 million passengers a deer. the site has been your marked for an airport since the 1980's and will face opposition from local residents. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. sophie: this is "bloomberg markets: asia" i am sophie kamaruddin. rishaad: i am rishaad salamat. let's get straight to market action. juliette: let's start with hyundai engineering, up 6% in seoul, korea after a note dismissing how concerns and korea's market should show positive growth in housing in 2017. that forined through
builders in seoul, korea. gree electrical appliances down 3%. applying stocks have become the most actively traded in the past week since we have seen the hong kong-shenzhen link come online. it has been one of the stocks trading the most on that new link. having a look at the overall market picture, the nikkei going , up .7%.nch break you do have energy players rallying and dollar strength story, but worth noting the trading atthe topix
2016 highs. we are awaiting this data dump out of china, expected to show strong gains in retail and investment study. the shanghai composite down .8% at the moment, but remember, a lot of people have said this market is overbought it also, a dip out of the hang seng. not seeing theo movement you're seeing in energy players help out the hang seng today. .nergy stocks ok in australia elsewhere, fairly mixed, giving up gains from earlier in the session. rishaad: thank you very much indeed. right, new zealand getting a new prime minister with bill english elected unopposed as leader of the governing national party. sophie: the former finance minister was endorsed by outgoing minister john key. allen in over to paul sydney. how different might be his government? not tremendously. he got that endorsement from the
outgoing prime minister, john key, and had support of the party room, which is saw his opponents drop out early. bill english is likely to offer continuity. will have a cabinet before christmas, so that will be the first sign of any change. even then, he is expected to go with a safe pair of hands for finance minister. he did not make any radical departures when he got the top job. he said he hoped the country would continue what he called being on honest broker. here is what he had to say. >> after all we are a small country. because of the international recognition of our good economy, open to trade, political stability, we are not having to deal with some of the issues other countries are. we can have a bit more influence
has a positive for thinking country. most trickys the issue bill -- will face, housing affordability. -- bill anguish will face, housing affordability. it may be a central election issue in 2017. sophie: there you have it. as you said, some things to look ahead to four building wishes administration. can he win the election in 2017? >> odds are that he will. the government is still polling well, and better than the opposition parties combined. it is ill english is election to lose. election toish's use. -- toulouse. this is a government that will be a government going for its
fourth term in 2017, and there has not been a government that lasted four term since the 1960's. change leaders tend to lose the next election in new zealand, so perhaps his biggest handicap is that he is not john t. john key was in normal sleep popular -- enormously popular and charismatic. it will be an interesting election indeed. rishaad: thank you very much indeed for that. paul allen for us in sydney. sophie: saudi arabia has signaled it is ready to cut production more than expected, coming after russia and non-opec countries promised to reduce output. energy minister alexander noveck said they are already taking steps. >> in the first stage of the task, as early as january. i would like to say we have discussed this with the
companies, so they are quite aware of what they have to do. considering this is a voluntary step these companies are taking, because they understand the benefits of this deal, and the deal is there in place and they have agreed to it, so they are already preparing for the cuts which will take place starting in january. as we speak now, they are taking measures. >> how does that materialize? will each company get a percentage of what they need to cut? >> i would like to stress once again that companies have agreed voluntarily to this, and considering this, they are aware of all the terms. they have said they will join, and this was confirmed by my recent eating with the company heads are saying they will join the agreement reached by the ministers today and do what is necessary, so the production cuts would be split proportionally between the companies.
we would also create at production monitoring committee internally for the russian federation, which would do as the name implies, monitoring compliance with companies. they will monitor the implementation and have methods of communications with the companies. i cannot stress this enough, companies are basically on a basis are correcting their production and investment. torosneft sold $2 billion qataris.and the what do you see them bringing to the table? >> we are positive on this deal. , and isone as planned
indeed one of the biggest deals in russia and globally over the recent times, so we few this as a very positive sign, bringing foreign investment into russia and foreign capital. >> what is a healthy oil price for russia? what are you targeting? todaynsidering this deal got done only because of non-opec members led by you and russia, with russia ever join opec? far as prices are concerned, we try to stay away from forecasting prices, because obviously it is the market which decides them, and it is quite unpredictable. the current price level is fully satisfactory to us. russia, as you will know, is not a member of opec and does not have plans to join the cartel, but russia is willing to enhance his cooperation with opec country, and today's deal and
everything preceding it lays a solid foundation for cooperation in the future. sophie: that was the russian energy minister alexander novak speaking exclusively to bloomberg. the imf chief, christine lagarde facing a special tribunal monday to answer negligence charges from her time is french prime finance minister. the trial of christine lagarde starts today in paris. the imf director is accused of negligence in an arbitration case with a french is this tycoon. the case dates back to 2008 when she was french finance minister under president nicolas sarkozy. he had accused the state owned bank of defrauding him when he
bought a stake in adidas in 1993. the french state ended up paying him 400 million euros in compensation, arbitration signed off by christine lagarde. if found guilty of negligence, christine lagarde could face up to one year in jail and a 15,000 euro fine, but lawyers outside the case have told bloomberg it is unlikely she will get jail time. her lawyer is expected to ask for the tribunal to be postponed . there is another investigation ,han involve six people including the ceo of the mobile company orange. lagarde hashristine denied any wrongdoing. the board of the imf is supporting her.
last february, she was named for a second term of five years as managing director. under french law, she is presumed innocent until the verdict. her job at the imf is not on the line right now, but it will depend on the verdict of the trials. up next, shareholders have their say on india's board in the -- this is bloomberg. ♪
cyrus mistry of now? the latest accusedons, tata has cyrus mistry of breach of corporate governance, of not being able to -- here.: compliance issues how has cyrus mistry been responding? >> cyrus mistry is denying it. there are a lot of denials. among the other allegations that tata said, not having enough of
tata sons board members on the board. a series of names and a host of where tatacompanies sons have been on the board of these companies. sophie: thank you for the latest on the tata courtroom battle. rishaad: a quick check of the latest business flash headlines peered southeast asia was largest ride hailing app, grab, has investment as it moves beyond cars. the size of the investment has not been released. grab operating across six countries and offering motorbike hailing services in indonesia, thailand, and vietnam. start regular to nonstop flights between perth
and london, the first direct connection ever flown between australia and europe. qantas will use the boeing dreamliner. the carrier will receive its first lanes next year, and hopes they may allow direct services from australia to dallas or chicago. rishaad: a $16 billion deal with iran, the first one since 1979. and includes multiple boeing planes to be delivered over 10 years from 2018. it is boeing's first deal with iran since before the islamic revolution. tensions already high with trump critical of the iran nuclear deal. there are two major deals in the works as we enter a new trading week. one is an agreement between boeing and iran, and the other is in the media space.
su keenan has more. >> according to those close to the matter, talks for a $14.1 billion deal took place through the weekend and will continue as the principles try to nail down final details. rupert, the billionaire media baron and his son locked lend said to be closely involved in buy 61% which fox would of sky, the u.k. pay-tv empire he does not already own. many close to murdoch says it has always been a question of when, not if, when he would have total control of sky tv. according toion those involved, whether to make bid or a scheme of arrangement, which involves the u.k. courts and has the benefit resting shares
away from unwilling shareholders. fox is said to be weighing this type of structure. again, if you look at the stock chart of fox, while it has been many inessure that media have encountered this year, it has been on the upward climb the back half of the year. liming 27% on friday when a negotiated deal was announced. of the dealization expected in the coming days. meanwhile, $16.6 billion for boeing to sell planes to iran's national carrier came together and could face questions in washington. there are those who say the deal will force congress and donald trump to balance the dramatic priorities over job growth. the deal involves 80 jets will support 100,000 jobs and reopens
a market where boeing has not to iran and over 40 years. the first of every to take place in 2018. boeing shares have been rising steadily since the february trough. boeing says it cannot compete with airbus if it is not allowed to sell planes places like iran and china. it will certainly be a shot in the arm for boeing's business. rishaad: up next, easing tensions, the decision not to seek a second term, allowing hong kong to bridge its differences. ♪
this is "bloomberg markets: asia." i am rishaad salamat. sophie: i am sophie kamaruddin. will not seek a second term in office. who is going to run in his place? decision to step down or not to run for a second term has opened it up wide. there were some people who were considered not to run against an , so his chief deputy could potentially step up. on saturday that she would reconsider her position to retire.
she said she would retire at the end of her term at the end of june. it pretty much fits three criteria that beijing would like to see. she has the attila the to do the job. she has been a civil servant, and she has been loyal to beijing. quite popular and hong kong, and popularity will be important given the fact she was the most unpopular chief executive that hong kong has ever seen. did he stand down? it was a bolt out of the blue, wasn't it? not feel i was totally surprised because there have been a lot of things running against him. claimed that it is because of family reasons, and it is true he has a troubled daughter who has been hospitalized for a month, but at the same time, it was under his
watch that we saw the .egislative council lose votes there has been criticism of his handling of the whole separatist issue here, people saying he blew up that issue by fanning oxygen into its flames. he did become unpopular. beijing does not want to see hong kong, maybe beijing does not want to see hong kong ruled by someone quite so unpopular and perceived as caring out beijing's instructions in a pretty heavy-handed way. sophie: this would be chance for a new candidate who could perhaps change that sentiment? >> there are several main candidates who could step forward. one will potentially announces candidacy today. we have the election of the voting committee, the committee that will select the chief executive in march. rishaad: what do we know about
him? financialhe secretary, pretty popular amongst the people in hong kong. he has the tycoons in hong kong on his side. we don't know how beijing perceives him. disadvantage a when it goes forward. we would probably need to hear -- he will first have to resign his position, and the final expected to put her candidacy in sometime this week. then of course there is judge oo, who through his candidacy in the ring in october. rishaad: right, i head on bloomberg markets, angie and haidi will update us. haidi: it is called shock and all in the oil world as the
saudi oil minister basically says we will cut production more deeper than already promised. global the point where markets may finally recover? weevil asked that question of our guest. -- we will ask of that question of our guest. know when tells donald trump hootie canning can't talk to, that from donald trump himself. the implication of his new policy stance, telling china ones policy may be your policy, and finally tencent coming to a theater near you. we explain it all. that and much more on the next hour of "bloomberg markets: asia" ♪
it is a limit :00 and senate. >> we are in the middle of the trading day, will come to "bloomberg markets asia." ♪ as producers agree that landmarks supply cuts. it is the first global production in 15 years. a decade of diplomacy may be upset with donald trump saying that one china policy should be tied to try. ill english as the new prime minister of doing -- of using
the -- of new zealand. you could say that saudi arabia is writing a new script for opec. basically coming out and laying the floor down for recovering oil markets. they are laughing up this morning. a lot of the markets. take a look at this. trade has been dominating sentiment. if you take a look at some of the gains we have seen across the cost -- across markets. take a look at japan, we are not a tense above. we are doing very well there. we have the yen markedly weaker. that is helping out sentiment as well. you can see a retreat from safe havens. we have japanese. the 20 year and a 30 year is
falling the most since february. we are seeing outflows from gold etf. futures are following the most. somethingo seeing across chinese markets. they are ahead of a very big day. we have domestic activity indicators coming in from china as well as credits, new loans, they are really going to give us an indication of whether destabilization is rebalancing. we see the economic recovery. how much of that is still being driven by those leverage taps. japanese equities continue to be the big winner. tokyo equities are out on the cusp of wiping out all of the losses for the year. aboutnt and center, it is that oil storm. we had the talk between opec and non-opec members over the week. saudi arabia was coming out and
surprising everyone with its whatever it takes moment saying they would commit to further cuts than what they had agreed to earlier. they are looking up by about 5%. written bid up even further. about a quarter of 1% at the moment. let's go over to first word news. >> they gained more than 4%. rise in threerst months. however, they were still done within 5.5% from earlier. they jumped 24.1% in november. analysts have seen it fall. trumpent-elect donald says that he is very close to damage his secretary of state. it could be the exxon mobil ceo. he has not yet formally offered the job but he is likely to do so. for his opposition
decades long ties to russian president vladimir putin. india's boardroom drama now sees himself failing to this -- distance himself from companies. mystery and the conglomerate are each appealing for the fault. their market value has fallen one than $16 billion on -- october 24. director goes on trial. she is accused of failing to prevent a government payout to the tycoon. over his claim for mishandling the 1990 sale. awarded $300 million.
she did not oppose. local news -- global news, i am rosalind chin, this is bloomberg. >> crude has surged to its highest since 2015. saudi arabia says that it would turn the tap even tighter. let's bring in our very own energy reporter. take us through what happened in india over the week. collaboration between opec and non-opec. the first cuts in 15 years. that is quite a story. you have saudi arabia saying they are prepared to cut. that is putting much the cherry on the top for the still. it is very bullish for the it is just adding to that momentum that they would see it through. >> we are seeing that this is a one-way trade.
i would actually going to see a substantial rebalancing when it comes to these markets? >> the complaint is the biggest issue here. opec has a tendency to cheat. only see that coming into february or march. we'll have a better idea. we also got the response to whether they would see in opportunity to come back into the market. that will probably cap prices. they are around that $50 mark for the bti. there is positive momentum there, we just have a bit of time yet. almost a holding pattern for the old market to see where it goes from here. >> we were chatting just before this, what you think saudi arabia is trying to achieve here? >> it is not necessarily higher prices, more start -- stability perhaps. alone, it ist u.s. well above its five-year average. it is an opportunity to cut some
excess in the market. we can get them down to a more normal rate than what we had seen previously. then markets can stabilize, prices can stabilize rather than that the fluctuation that we see all year. the stability of the market and to go forward. also, putting on the positive momentum. >> not to be cynical or anything but why would all practices do that? >> there could be a contingent therefore saudi arabia. >> they keeper breaking it down. bloomberg west indiana for the landmark decision, we spoke to some of the key players involved. take a look. >> i was very pleasantly surprised to see so many countries responded to the invitation by opec and russia to participate and review and stabilize. i would have to say that most
countries that joined voluntarily, nobody is going to force them to reduce production, it is of their own will. most of these countries will be taking active measures to reduce reduction and that is very important. >> we wanted to contribute in as that the transformation of mexico was also accounted for. processalso part of the than wection decline had experience with over the last 10 years. is that it isone consistent. >> there will be real cots. -- cuts. countries are committed. >> that was the word on oil from vienna.a, let's -- th
the broader markets are giving back gains. hashat opec rally dissipated a little bit. you are seeing the overall region index now. that is in the red. it had its best weekly gain in september. compositionshai trading here. there is a little bit of weightlessness coming through. look at the oil and gas sector. still playing very heavily. most of them are rising today. it was led by producers in australia. incrediblyll doing well. you also have big players in hong kong. up byut petrol and china 1%. you could see gains coming from
indexes in japan. over all, that is giving some support to some markets particularly in australia. we are seeing weakness come through in the china markets. the shanghai composite is continuing to be held down. they are coming through some time. of themxpecting a few to come through. we are expecting investment to be fairly steady. we have also seen stocks here in hong kong turned into the red as well despite positive start. they are really lifted by the energy players. some of the energy players are in the red and retail stocks are coming under pressure there. byy are still well supported the dollar strength, yen weakness. hascan see that australia become a negative as i have been speaking in late trade. it seems like that energy fueled rally is not even enough to keep that later market higher. you are seeing some weakness
coming through from gold players today. it isworth noting that the weakest performer on the regional index. its out forey cut -- output. seeing.the bond you are yields are significantly higher. particularly in australia and south korea. they are up 2.85%. south korea is a flight -- up by 2.4%. we are seeing some weakness in equities and the stories being sold off as well. look at that grow today. decades, put one china policy to the test. from said that nobody could tell him who to talk to. that followed his phone call with the taiwanese president. he said that his attitude will depend on securing better trade deals with beijing.
that one china policy may be china's but not america's. unless he can make a deal. we have our china correspondent tom mackenzie joining us now. this could be a major shift for both washington and beijing. tom: they certainly cut, he is taking aim at a start -- at a certain tenets of the u.s. policy. it came about in the 1970's when washington switched to diplomatic relations to -- from taiwan to beijing. there is one china that includes the mainland and taiwan. partners. diplomatic they effectively sign up to it. what this has allowed is a space in a fragile peace over the last 40 years. they have improved between the mainland and taiwan. taiwan has enjoyed de facto independence.
trump says he does not want to be bound by this policy. of course, it follows on from this very controversial phone call that you took from taiwan's president. it is the closest that any taiwanese leader has come from official recognition in washington. >> this is how china is likely going to react here? tom: there has been no official statement so far. the global times describing trump as an ignorant child when it comes to u.s. ties. one china policy is not up for negotiation and calling for beijing to put some obstacles in place when trump takes over in the white house to show him that china won't be bullied and pushed around. of the official stance, after that phone call with the president of taiwan,
the chinese were quite cautious theiried to downplay reaction and really in their fire at the taiwanese leader rather than donald. when faced with a president-elect who is on one side nominating for ambassador of china, someone who is a friend to the country, the iowa governor who has had a long-standing relationship with hittingt xi jinping, them and lambasting them over paris, taxes and the u.n., north korea-south china sea. so he has to define what is -- his true intentions are. he could have hitting her. hit a nerve here. this hour, the silver screen ambitions that this internet company wants to break in the movie business.
♪ ie: this is bloomberg markets asia, i'm angie lau. >> this is the first since 1979. there are variants to be delivered over 10 years until 2018. it is boeing's first deal since iran. president donald trump to balance the nomadic priorities with his policies. fromey have one investment honda as it moves be on cars. the investment has not been released but grabbers are
already partnering with tokyo century and capital land in singapore. he gravitates across six points country -- six countries currently. another japanese brewer is looking to work abroad. they are targeting north americans and southeast asian rivals to keep up with both of them. they face a domestic market weakened by tracking populations. and the brooklyn brewery on the biggest beer company. >> let's get back to our top story. struck by opec and independent producers. as talk more about this. this is the chairman and ceo of capital lake international. a giver being on with us. is this a game changer that markets, the auto markets have
been looking for? longthink the market has tried to get this balance between cheaper oil prices and the individual consumer and higher oil prices and what they mean for general rmb around the world. my opinion has a was been that higher oil prices is what the market needs in response because the mess spending you get with higher oil prices throughout the whole world. ?> is not what they don't want that invite all those u.s. producers that have been waiting on the sidelines to jump back in. lacks i think the global market understands that the shale business is here to stay. evenusly technology gets better so they can lower for these producers. i think the number that is that tipping point where they become a lot more productive and obviously add to the oil supply, however, i think the market understands that this is not something that kills the market.
a lot of who we see in the last the is rightsizing them in phenomenon. >> the market is comfortable i think. anothere going to get -- what are you going to be looking out for? those numbers that come through this week, this is the recovery that this leverage. >> if you look at last week's number, if you look at employment for once, you have this contraction. no more using in the employment market, it means that we probably met some sort of level when we can stop seeing job growth disappear in china and stabilizes. the other thing is that as you look at, to the future, what i begun to be somatic is something that we have been talking for four years about this balance of fiscal monetary and infrastructure spending that
the whole world seems to now want more and more of because trump is an office and this is a page that trouble be taking out of the china book. the frontrunner does not get much response for something and then trump comes in with this huge fiscal reform and no one even knows what he will do. he has inflated markets around the world. i think that plays back into the key strategy of china and actually allows visibility into what they have been a couple she over the last two years. -- the that somatic medically, it is very strong. >> it is sustainable things to this growing debt pile that is very tenuous here. >> it is but if you have seen that there is a new mandate in china that says if you are going to raise capital, within the market. the equity market can take off the debt burden from a lot of these companies. maybe it takes a little bit of off.ebt pressure
i don't think it is sustainable. i think it is something that it is over play. this is a western, thematic that has been there since the china play. there are problems, no doubt about it but i don't think it is something that will bring the system down by any means. >> that they will change as the government to 2017? does it become the counterbalance? >> that is a great question. that is the most key question that exists right now in finance. it is that the fed will be put into the place where the fed belongs. the fed and no disrespect to them is a bunch of economists run don't want countries -- countries. they are meant to be a couple mentoring body that six next to the government and helps the government move monetary policies. >> let's get back to that when we get you back in for the group discussion. coming up, new zealand's prime minister, we are going to talk
>> this is bloomberg markets asia, i am angie lau. --the english was elected bill english was elected unopposed by the party. over to paul allen in sydney. how different is a bill english government going to be? >> he was attacked. he ended up being the only candidate in the party votes. unsurprisingly, he got the job. he has been to the governor general shortly after the party voted. they give the official sign off. he is now the prime minister. there were no bombshells, as you would expect. as for new zealand, international standing, yields
at the country continue to be seen as what he saw as an honest broker. it is what he had to say. >> the are a small country, because of the increasing international recognition, we have a good economy open to trade. clinical stability, not having to deal with some of the difficult issues. as a we can each have a bit more influence and move forward as a positive thinking country. of any change,gn we'll see from bill english is when he announces his cabinet lineup. it could be this week, definitely before business. that het our first look will take to the election next your. angie? they are facing an election in the next 12 months. do they know her, to have any indication of have his chances are looking at winning it? >> on paper they look terrific. the government was running very high in the polls.
more combined support for all of the opposition parties. historically it has always been different if -- difficult for new zealand governments to win. that is what billy was will try to do. it hasn't happened since the 1960's. lose.sually go on to perhaps his biggest handicap is was he is not john key who an popular. he is somewhat less charismatic. one thing is for sure is that the 2017 election got buried interesting without john on the scene. let's take a look at how markets are faring. we have given away a lot of the gains early on in the session. cindy is now down by a 10th of 1%. >> the impeachment of friday of
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private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. ♪ it is 11:29 a.m., and 12:29 p.m. in tokyo. i am rosalind chin. oil surging after opec and independent producers agreed to reduce output by 1.2 million barrels a day. saudi arabia signaled it is ready to cut more than expected, promising a cut of 450,000 barrels a day. opec nationson- will reduce production by 558,000 barrels a day. one chinaor decades policy may change, donald trump saying no when can dictate to
who he speaks. comes after beijing protested at donald trump taking a phone call from the president of taiwan. donald trump has threatened to label china a currency manipulator and imposed tariffs. the south korean president park geun-hye facing new accusations after being impeached. she is said to have colluded with a former aide to force-out a company executive. she loses her immunity from prosecution when she leaves office. a constitutional court has six months to rule on the impeachment decision. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. all right, there is one story dominating the news, the oil patch. that's right. let's check in on markets right now.
rally, we saweled it kicked things off strong the first trading day here in asia. now it is dissipating. what is going on? juliette: we are still seeing into producers quite strong, but markets have turned away from that surprised deal between opec and non-opec members and move towards more fundamentals. we have the child a data dump this week, quite a bit of weakness on the shanghai composite. it is down by 2%. market has been overbought, and also weakness in hong kong, down by over 1%. you are seeing energy producers ,ell supported, petrochina sinopec, and insurance stocks looking quite good. the philippines, a market coming under significant pressure, down 1.4%.
this is a market weighed down by dollar strength, the dollar rallying significantly ahead of the fed meeting this week, a done deal that the fed will be hiking rates. strength went into some of these emerging-market currencies and affecting emerging markets as well. the nikkei coming back after its lunch break, up by .6%. it was up by 1.3% earlier in the session. the fluctuation with yen-dollar, and energy players well supported. in late trade, australia's market in the red. you would think this would be a market well supported by the rally in energy stocks. santos still looking good, and selloff in the gold players today. some other movers we are keeping an eye on, look at korean builders. there has been a note saying it anynlikely that there is
housing concerns and korea. hyundai engineering up almost 7%. cover more in sydney up 43% over a takeover offer from zürich insurance. just having a quick look at currencies, dollar-yen stronger, fairly to the dollar, unchanged at 115.26. the won down by .3% at the moment. thanks. saudi arabia has signaled it is already ready to cut oil production, more than expected, and the surprise came after russia and other non-opec countries promised to reduce output in january. >> that's right.
an eventful weekend in the oil patch. in this exclusive, russia's energy minister alex novak said support was crucial in getting that deal through. although an important role has been played by the ministers, but the key role should be given to our leaderships. i would like to especially note mr. putin's role here, who has been pushing us towards understanding the importance and need. having this political support, which i just spoke about, it has significantly helped us to build a very trustful relationship and our partners from opec from non-opec countries, especially with saudi arabia, with which we now have a path together. >> are these non-opec cuts genuine or declines? >> the situation is different as we go country by country, but i
was pleasantly surprised to see so many countries respond to the invitation by opec and russia to participate in this deal to help stabilize markets. most of the countries which enjoined, and it is important to say they joined voluntarily, so nobody has been forced to reduce production. it is their own will. most of these countries will be taking active measures to reduce production, and that is important. >> what about the remainder, who will make up the remainder to get to the 600,000 barrels a day target? >> 600,000 barrels per day was not the only possible result for us. that will be countries would possibly join the arrangements, and i think we will most likely be able to achieve a production decline harden the 550 we spoke about today. another key thing i would like
to highlight is the agreement is open for other parties to join. this time, there were 11 countries here, but there may be others willing to join but unable to be here today. what is important is that the doors are open and now we have a framework to act jointly. >> the saudi oil minister said he is willing to cut more, maybe below 10 million barrels a day. will russia cut more than 300,000? >> at this point, we have signed the deal for six months. this is the first stage which would last until the end of the first half. there is a framework that allows us to extend the duration of the agreement, but we will be monitoring closely the effect of this agreement on the market, compliance of countries, and make a decision whether cuts or extension is necessary upon completion of this term. >> linda's russia begin their curbing? when does russia begin
their curbing? >> the first stage of the cuts you will be able to see in early january. we have already discussed this with the companies, so companies are quite well aware of what they have to do, and considering this is a voluntary step by which these companies are taking, because they understand all the benefits of this deal, and they also understand the deal is in place and they have agreed to it, and considering this, they are already preparing for the cuts which will take place starting in january, so as we speak now, they are taking measures and implement plans. that was the russian energy minister alexander novak speaking inclusively -- exclusively to bloomberg in vienna. >> tencent wants to flip the script and make its own movies. asia's largest internet
company working with top talent for the screen. why are they hunting for more acquisitions? >> they not only want to write the check, but the script for hollywood movies. into hollywood is one way to expedite their plans. they are completing with alibaba and wanda in this field. time, china could overtake the u.s. as the world's largest locks office market. very openid they are to all kinds of acquisitions, whether production houses or theyive side of companies, are all open to that as long as the companies complement their resources and the pricing is right. >> they don't want to just play producer. they want to dictate the scripps , the stars, and what we will see on screen, so hollywood is known for their blog dusters. what would china's version of
indiana jones look like? some are starting to see of this within the chinese market, where they are creating content for the local audience. indiana jones, that is an online ,ovel called the tibetan code and they have been trying to adapt it for the big screen for a global audience, about to ibet, mysterious, treasury hunters, so they see this as intellectual property with some potential. they need a great production team, and it depends on what kind of team they can come up with, so that will decide whether they cater to a global audience or for the chinese market. >> how receptive does the market likely to be given the recent political developments, the trump rhetoric going back-and-forth. times rightense now, and we are seeing u.s. lawmakers that the u.s. needs to be more critical of chinese companies, these takeovers of
american companies in the u.s. tencent is part of a group of companies already investing into the u.s., into studios, and if the rhetoric keeps intensifying, then inevitably all these companies could run into problems if they want to do more investments in the u.s. >> all right, we will be watching. up, markets seem certain , bute fed rate hike anxiety rising over the trump presidency. we will go all in on that, next. this is bloomberg. ♪
of a $14 billion to consolidate the murdoch tv empire. rupert murdoch and his son are involved in discussions to buy 61% of sky it does not already own. fox wants a final deal by wednesday this week. >> donald trump is being warned that jobs are at risk if he tries to curb chinese investments. chairman wang jianlin said the following. wang jianlin is set to become the world's largest theater owner once the deal is done. lookingmerchant marine like this after announcing he will join the world's biggest shipping alliance on a limited basis as it tries to expand operations after being taken
over by its creditor. sharempany says it will vessel space with members of the two-m group. the arrangement needs u.s. regulatory approval, but hyundai merchant said it would improve its competitiveness. reserve heads into its final meeting with little doubt of what it will do. >> have we ever been so certain going into a meeting of the fed? expected,e is fully as policymakers are signaling. let's get over to kathleen hays in new york for more. plots will be big on wednesday as the fed wraps up its two-day meeting, a 25 basis hike isterest what markets are pricing in. what they want to see is the latest version of what you're seeing on the screen now, 2017
in september, the fed officials were looking for two rate increases next year there are seven. there were two officials who saw as wee hikes at all, but move up the line, 3, 4, 5 who saw a rate hikes next year. will there be more consensus? this is the question now. the fed is meeting after unemployment hits and nine year low at 4.6%. a summary of economic productions includes those dot plots, will we see some changes? inflation?ee higher unemployment has fallen so low, so that could mean more rate hikes. if you start with the question of unemployment, maybe they will say it is going lower but because of labor markets lack, we can tolerate that. will they forecast more rate hikes next year?
that is that the question, and that is what could be the market mover on wednesday. >> that is kathleen hays from new york. >> let's see if we can get some consensus here. ,oining us now is our guest 100% market certainty. it is there any sliver that we could be wrong here? so. don't think the fed has been looking for 100% to raise rates for three years now. they got it. it is only one time. the issue is what happens next year. donaldue is really does trump this huge fiscal reform ,rogram and they'll the fed out and by that i mean they can't get out of the box they are in right now. they get their wish in december to raise, and hopefully a big fiscal reform will bring on the need for tightening to counterbalance the deflationary effect. no one knows.
the market seems to think this is what will happen, but trump said very little. >> do think it will happen? >> for trump to get what he wants and bring jobs back, that will require a big infrastructure spend. i think the fiscal reform will bring on a deflationary effect that w he will need to counteract with this fed tightening. i think they get sidelined during the year. >> some people are worried we could see a slowdown in the first half of next year before legislation and stimulus kicks in. >> that is the real fear. on paper, the fiscal reform gives the ability for the fed to do what they want to do. said, theike we markets had this huge rally on nothing. i am hard-pressed to find anyone who can say why they are buying stocks right now. >> you say speculation leads to
disappointment all the time. reset. minimum, a i think that's what we are starting to see today. everyone is buying everything, and then they say why am i buying this. i think we get a move down into the beginning of january. markets become more rational and take a deep breath, and then we start to listen to what donald trump will do with policy coming out, and something more concrete than speculation. >> you were saying this trump happens,rgess, if this it has the potential to positively reframe what the pboc has been doing. >> it does. we have talked about this fiscal balance, monetary policy, infrastructure spending. china has been doing that in a positive manner for the past two years. i believe the world will now look at it because this is the trump idea, but it is not really
a new idea whatsoever. it is called responsible government. that's what it comes down to. sayn your notes, you bullish china, do you mean equity markets? >> yes. >> if were seeing china rebalancing, doesn't that mean authorities will pull back on easing as they are doing already? >> sure, i don't think they need to ease right now. i think they are in a position where they can move, tighten repo, but they don't have to go directly -- >> wouldn't that pull the equity markets down? >> i don't think so. this is a thematic trade. the theme has been anti-china, right? now we know trump and his twitter account will make sure that china is in play every day. i think he gets a new focus. go past seven to the dollar? >> i don't think they need to or
have to. the strong dollar has given them every reason to let the renminbi depreciate. they spent a record amount of money defending the currency. if you wanted the currency to weaken, you would not have spent that money, so that is a strong sign people are not paying attention to. i think you get this huge move into the equity markets about issuing new capital. they will move away from debt issuance into equity, and it will play back into the markets. some will say a huge amount of equity issuance is negative for the market. it is negative for the market, but -- >> that's on the assumption that these retail mom-and-pop businesses will buy into that equity-four-debt story. you think about what an investment thematic looks like, price matters. people become rational. new highse s&p to
every day on the same speculation that will be driving china as well, i think you get some asset allocations. i think the asset allocations stay in equities, but it moves to china. >> retail investors are going into commodities. why should they go into equities? >> retail investors are chasing momentum. you went from stock market last year to property market, now to commodities. this is a vicious cycle. >> money has to go somewhere. -- and it is staying in the country, which is important right now. capital flight has always been the risk. you have a stable job market right now from the numbers. affordability of housing coming back into, people talking about it. people start to feel comfortable win jobs and homes matter, and i think that gives a positive backdrop to the equity play in
china, and i think the momentum -- because by retail investors. it will be caused by an asset allocation, and the retail investors will chase like they always do. >> thank you. >> coming up, we take a look at the contenders for hong kong's chief executive post after cy leung's not to seek reelection. this is bloomberg. ♪
be. there are a lot of people out there who would not have run because he wasg the incumbent chief executive. on saturday, we heard from his chief deputy that she will reconsider her plans to retire at the end of june and she might run, so that is one. tsang chun-wah, the financial secretary is another. ip is a lawmaker responsible for trying to push through national security legislation unpopular 10 years ago. she did well and hong kong campions, but the pandemic think that if she were to be elected as chief executive, she could be just as unpopular as cy leung was, and he was the most unpopular chief executive since
the handover. he spoke for a little while on friday. what were the reasons he gave for choosing not to seek reelection? >> we know he has a troubled daughter. he talked about pressures from his family. he was seen visiting a hospital in the new territories. it could have something to do with it, although others are looking at it and saying cy leung did not have it when it comes to the criteria that beijing wants. , and ire three criteria think they are right, loyalty to beijing. all of them have got that. second is competence to do the job. most of these people have been civil servants for a long time. popularity among hong kong people. they do want someone to come into hong kong and try to heal some of the risks we have seen in hong kong, particularly after in aftermath of the protest
2014. >> taking the pulse of hong kong people as a result of cy leung's announcement, it is almost, ok, cy leung is gone, but who is next? well, whomever is going to take on that role is going to have a difficult time because they are stuck having to execute beijing's policy. >> thanks. >> bloomberg markets middle east is coming up. tracy. >> good morning. we are all oil all the time on bloomberg markets middle east, which means we will be talking about that historic opec production deal and the historic deal with non-opec members. will that bring the oil markets back into balance? will talk about the world's best-performing stock market this year, pakistani stocks.