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tv   Bloomberg Markets Asia  Bloomberg  February 16, 2017 8:00pm-10:01pm EST

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rishaad: hello, it is 9:00 in singapore, midday in sydney, 8:00 on a thursday evening in new york city. i am rishaad somali, from bloomberg's asia headquarters in hong kong. this is "bloomberg markets: asia ." ♪ rishaad: samsung head jay y. lee arrested on embezzlement allegations. we look at the company and its affiliates. president trump claims credit for wall street's records while blasting apart the chaos at the white house.
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and singapore's growth surges, beating december quarter forecast. we will be live there for a check on the vital shipping industry. before we 30 minutes get under way right here in hong kong and china. singapore just coming on. looking at those numbers. we had a complete blowout there. >> let's take a look at how it is reacting to the data probe we had this morning. up about 2/10 of 1%, gdp coming on year.higher up 2%. at movers, uab they are the third biggest lender. bad load provisions rose. lower than and ocbc, forecast profits. we see the nikkei lower for a second day, with property and
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energy leading the drop. toshiba slipping for a fourth day. a single project may be in jeopardy as the u.s. firm says it may be seeking a new contractor. in australia we do have it snapping a two day rise, act by health and material. gold-mining, seems to be gaining confidence. third biggest oil and gas producer falling 1% after better than normal forecasts on sale volumes. narrowsee its net loss to $1 billion from $1.9 billion. samsung, weigh on the index for the drop of three points. the index on course for a second day of declines. take a closer look at what is going on with that story. 8/10 ofic shares down 1%, samsung and at&t taking a
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hit. one of the largest shareholders in samsung electronics. jay y. lee had a 17% stake in cmt -- c and t. jumping as much as 4% earlier they, there are rumors sister will be taking the top job at samson. today, the trump was upgraded to a by no more. they benefited from the growing stream of chinese tourists. we will be keeping an eye and what is going on in the samsung space. rishaad: thank you so much for that, sophie. let's get the first word headlines, let's go to sydney and join haidi lun. good day to you. haidi: singapore's economy surged in the fourth quarter, growing faster than originally estimated. driven by a strong rebound in services. benefited3% as they -- the outlook remains
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uncertain. global demand remains weak and uss threaten trade barriers on countries like china. the singapore government thinks they will have 1% to 3% in 2017. president trump has claimed incredible progress in his first four weeks in office. he took an opportunity to lash out at the media. the president opened up a news conference by looking at records of his earlier accomplishments. trump said the new stories of chaos and his administration, it is in fact the exact opposite. mr. trump: this administration is running like a fine-tuned machine. that i cannotct get my cabinet approved, and they are outstanding people. haidi: the u.s. secretary of state says north korea's violations of human resolutions will bring an even stronger international response. rex tillerson made a statement at the g-20 meeting in germany,
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along with the foreign minister of japan and south korea. they condemned in the strongest terms, north korea's ballistic missile test last sunday. adding deals in china. the vw-owned luxury brand has expanded their network. they want $4 billion in compensation. dealers formed a lobby group, saying they faced losses in 2014. audi recorded their first up in china in more than a quarter century in 2015, losing the top segment withremium mercedes-benz and bmw. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am haidi lun, this is bloomberg. rishaad: samsung's de facto leader jay y. lee is in detention and seoul on allegations of bribery, perjury, and embezzlement. they will do their best to make sure the truth comes out. we are covering this area this is, i think, unprecedented.
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>> is there is a reason there are 15 hours of testimony and grilling yesterday. this is a convoluted story. we can talk with the immediate details and get to the ramifications in the background, which is -- it is all the way up to the president's office, allegedly. bribery, perjury, embezzlement, that is what the special prosecutors came to the seoul district court, asking to remand into custody, with the weaving of potential trial. that would have been unprecedented because normally you would remand someone to custody ahead of charges if he was a flight risk or going to get rid of evidence. those are things the prosecutors and the court outlined as reasons why they decided to arrest him now. he is in jail in seoul. after the prosecutors came up with -- fresh evidence of concealing profits that were little he gained illegally and
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also hiding assets overseas. is involved inee providing as much as $30 million to benefit president park to help facilitate his ascension to the chairmanship, to take over from his father, who is in ailing health. to do that, he needed to win the backing of the powerful national tent -- pension fund. they alleged he paid a number of bribes, including 2 -- including to the close confident of the president. it was given to the daughter, eventually, this close confidant. rishaad: choi soon-sil. the thing is, you did allude to this, there are allegations that go all the way to the top and the president herself has been impeached. >> it is part of this broader
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investigation and broader problem for decades, closing relationships between politics and business. they have been dominating the south korean economy for years. 10, 20% of all business assets in korea are at the top of the pillar, the pyramid. this is a massive group. they are not just smart phone makers, they are chips, displays, they are in pharmaceuticals. billion in revenue. and that is why we care about this. the succession plan is totally in disarray now. if he is going to spend in a 18 months in detention awaiting trial, what will happen to such a player? a crippling heart attack, who was the chairman in 2014. jay y. lee has pretty much been running the conglomerate, the group that we talked about. is it going to be his sister?
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the head of the chip and display unit that brought profitability to the group? there are a lot of questions. rishaad: a lot of unanswered questions. let's head to yuma, arizona. we are going there by webcam. reporter has covered samsung for over a decade. he is also working on a book about the company. what you make of this, jeffrey? this is unprecedented in many ways. it is unusual prosecutors of the court would issue an arrest warrant for jay y. lee. his father had a similar scandal about 10 years ago. despite being brought to trial, for tax evasion, he was never actually arrested. there was no arrest warrant issued for him. just affect the prosecutors decided to bring this forward really speaks to the changing situation and south korea, which they are trying to send a message probably that they will not tolerate this sort of behavior among a company like
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this. also, i think they realize that now, just the level of the scandal that has trapped the president of samsung and others. it exploded and touched so many different facets of korean society. rishaad: would this have happened five years ago? >> i do not think so, to be honest. i do not think an actual arrest warrant would have been issued for a leader of the samsung enter -- empire. this is a company that really has a lot of power, the republic of the samsung, as koreans call their country. in the past, chairman lee, the father of the current heir, when elected he was given a presidential hard and because of his values for the nation. he helps korea do the winter olympics that are coming up soon. and in the past, many of these leaders of these table conglomerates have also been convicted of white-collar crimes and corruption. some mafia-style attacks.
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there was one incident in which a chairman of another company was involved. a lot of these instances, they have actually gotten presidential pardons. there are allegations this goes all the way to the top. that would not come as a surprise to you, would it? >> no, it would not come as a surprise. it is hard to pinpoint behind who is behind this thing. samsung has a layered bureaucracy. there are a lot of people who work on family succession planning, the financial side of things, the asset they hold. a lot of this, it is hard to tell the prosecutors that probably have a good case by now, but it is hard to tell for certain whether the heir, jay y. pulling theone strings and approving things, or if it is someone below him. there were a couple other figures that were looked into. thee was park sang-jin,
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president of the company. powerfulthe most non-family member in the samsung rue. he is a former ceo of samsung electronics who worked in the tv industry. he rose very quickly to basically be a mentor to jay y. lee. he helped him rise to the position, a regent, you could say. doesn't this go ultimately to the close relationship between the state? is this not a warning to these family-run conglomerates, which they say dominate south korea? the south korean conglomerates have an enormous amount of centralized power. i was looking at an economic model put out by a professor university recently. he discussed how if samsung electronics had declined 70%, could not sell a certain phone
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model, like nokia in the past, that could potentially bring down the samsung life insurance, which owns parts of samsung electronics. this would potentially enjoy the life insurance industry in korea, which would cause unemployment to rise sharply and create an economic crisis for the country. that is a worst-case scenario. the best beef to the level of power that this company has over the economy. rishaad: what about samsung itself? what is the likely impact of jay y. lee being detained for 18 months, what effect does it have on the company? geoffrey: for my research i do not think that will have an effect on the day-to-day business operations. jay y. lee is not your typical ceo. he does not actually sit down .nd say, make the product he does not injured near the product itself like steve jobs would do. he builds relationships.
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samsung's biggest strength and industry is that it is a relationship company. it supplies components to apple and other hardware companies around the world. if you need an lcd display or a , a chip set samsung is one of the few companies that with its vertical integration, can push it out at such a lightning speed you can get a out fast.quality app that is why their relationships with these companies are good. jay y. lee built relationships with them. he meets with people like tim cook and eric schmidt at google. the company itself can really run on those relationships, regardless of whether he is there or not. rishaad: thank you so much for joining us there from arizona. samsung for a decade there, giving his reaction and his take on they unprecedented events taking place in south korea, where the heir-apparent to samsung have
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been arrested and detained. we will be live in singapore to look at the state of the shipping industry. declared officially bankrupt. and, the chinese forecast, why there is a risk of overheating. ♪
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rishaad: 17 minutes into the trading day, a glorious morning in singapore. 3/10 of 1%, better-than-expected gdp numbers fomenting the gain. there in sydney, down. the kate 225 losing a bit. just 12 minutes ago before we get to the trading day here in hong kong. shanghai comes en suite, as well, the chinese economy perhaps overheating. even as growth slows to 6.5%. that is what our next guest is
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thinking. rated the most accurate chinese forecaster for three state -- straight years. he joins us from china now. you believe donald trump may capitalize chinese economic reforms. how does that work? i think china has been relatively slow in terms of the pace of reform over the past several years. -- iff the reason is president trump is able to proceed with his reform proposals, in terms of legalizing free industry and reducing the burden for secondary industry, there will for the government to respond to that, which need .o be singular and not a result of what happens
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in other countries, to potentially accelerate the rate of reform over here. i do not think we are talking about immediate change this year. this is a special year, politically. but after the reshuffle, which will happen later this year, going into next year and next several years, i think it may happen. what should be the priority, and what are the them to that may cause force these authorities in china into a corner? i think one of the obvious linkages is the investment channel, if china does not do anything in terms of reducing the burden. not just in terms of corporate tax, but the other burdens that companies face. for example, regulatory burdens. the price of these companies have to pay for central where fair, etc.
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more companies will move abroad, fuel companies will come to china and not put pressures on china's activity growth down the road. when you look at what is happening there, is one of the reasons you have in your research, it is about interest rate hikes. if we get more of an acceleration in rate hikes, it could have a fairly detrimental effect on the chinese economy. how so, and what would happen? song yu: it is not necessarily so. the chinese economy is -- overheating. the natural thing for china to do is to raise its interest rate, as well. two years ago or one year ago, that was hard to do. the chinese economy was on the verge of deflation. tend to push the economy further into deflation. if the economy is at risk of inflation already, up rate hike
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is not something you should do anyways. my concern is that we have not adjusted interest rates sufficiently. and therefore, if you look at the growth of credit supply in january, for example, it was a very large amount. despite the fact that banks are trying to control the amount that is extended. that indicates a credit demand softbanktrong, giving supply credit is very strong. the current interest rate is not at the right level. rishaad: thank you so much for from goldmanong yu sachs. just ahead, reignited rivalry, hong kong, singapore, baghdad, competing for ipos. we will have the details next. ♪
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rishaad: you are back with bloomberg. the rivalry between china and singapore is heating up. --is because of the ipo benjamin robertson is with me now. tell me what is going on here, first of all. >> hong kong and the shanghai exchanges compete for ipos. it has become clear that new economies, tech stocks, prefer a geo class system. they are gravitating more towards new york. rishaad: that is what we had with alibaba, why they did not come here. there were nuances with that. >> the hong kong exchange at the classanted to introduce shares to alibaba. there was a debate they did not inanywhere, a confrontation
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2015, it did not happen. the regulators did not like it. they're looking to revise at this issue. yesterday, singapore announced a public consultation on it. gavepore is prime minister their blessing. they are the ones were currently, winning. it is a much more shallow markets in hong kong. benjamin: it is, but it could be a game changer if they had geo class shares -- dual-class shares. they raised more than aspirations, they were likely to see dual-class shares introduce. rishaad: exactly. who gains? benjamin: institutional investors have shares, they prefer a one share, one vote regime. dual-class shares concentrates
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control into the hands of a minority of stockholders. it makes it harder for investors to have their say and be heard. they worry about that. those are the main opponents and they have regulators that oppose it. rishaad: thank you, going through this race between hong kong and singapore, once again in the ipo space. a quick look at what is coming up, we have singapore, the economy there in the fourth quarter. the latest growth numbers come of their gdp just came out a couple hours ago. we have the details on that. likearket opening, looks we will be negative. at the hong kong and shanghai exchanges start off their trading day. the free market, a slight decline. only 1/10 of 1%. dearth ofent, a people wanting to take a risk on the final trading day of the week to read it was mixed in the
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u.s., dow had a fresh record. we have records all through the week. we came back, steps away from that as you saw and s&p 500 and nasdaq are down. we see asian stocks in the red. ♪
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[ alarm clock beeping ] weather. ♪ [ laughter ] cartoons. wait for it. [ cat screech ] [ laughter ] ♪ [ screaming ] [ laughter ] make everyday awesome with the power of xfinity x1... hi grandma! and the fastest internet. [ girl screaming ] [ laughter ] rishaad: you are back with
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"bloomberg markets: asia," i am rishaad salaam it -- salamit. this is growing up the fastest rate we have seen in five years. shipping going on in south korea, well it liquidated, a supply war going there. they predict they could have $666 million. , big korea, jay y. lee story there, reverberating across the country. he is held in prison after being arrested for embezzlement and
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corruption. the reflation trade when it comes to the markets, certainly having a bit of a pullback. it is the start of the trump trumpurning into the dump. the singapore market is down. the market is up because of those gdp numbers. we are just about to get to the start of the trading day here in hong kong. and over there in shanghai. let's see what is going on. on what youing up mention. we have the nikkei 225 lower by 0.5%. taken overs overnight. samsung falling over six points today, dragging the index. open inook at the china, marginally lower. we did have the pboc raising the yuan, fixing for the fourth day. streak sinceongest august 2016. it is up six spots. the hang seng, marginally lower. hong kong stocks trading at an
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18 month high. take a look at some overseer today, tensions up, 9/10 of 1%. alibabave reports that said to be interested in retail assets, that stock raising the highest since april 2015. we have galaxy on the decline today. take a look at the can seen -- casino state. macau casino stocks flashing warning signs similar to what preceded the 2014 crash. investors misread china's anticorruption campaign. casinos are rebounding on hopes that mass gamblers and tourists will rebound. -- the operators have dropped to the lowest since 2014. uob is warning the market is to bullish.
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they are putting pressure on ngm china. on thursday.ropped this after they posted underwhelming results as it grapples with the two-year slump in macau. casino shares falling across the board. rishaad: thank you. we are headed to sydney to get the haidi lun. she has the latest first word headlines. man who led samsung since 2014 remains behind bars on allegations of bribery, embezzlement, and perjury. jay y. lee is being held at a detention center in seoul after report prosecutors had a warrant for his arrest. they are examining he may have provided $38 million to a close friend of president park geun-hye. samsung says it will ensure that the truth comes out in his trial. brokerages are lining up for japan's second share, in over a year. morganes including j.p.
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and morgan stanley have applied to lead the offering. the most forward global coordinators have a three-pronged ipo in november 2015. that was the company's biggest privatization deal in over 30 years. to capture investors despite giving investors less control than any other social media company. they are offering 200 million shares in its ipo between $14 and $16. $18.5alues snap at million. a higher valuation up to $35 billion for keeping control of the company. the so-called islamic state said the carried out a suicide bombing in southern pakistan that killed at least 75 people. it is the country's deadliest attack in more than two years. the sunni militant group said the news agency has targeted the
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shiites. they've that security forces would track down the perpetrators. global news 24 hour the day, powered by more than 2600 journalists and analysts in more than 120 countries. i am haidi lun. this is bloomberg. rishaad: singapore's economy grew at a faster pace in the fourth quarter than initially estimated. comparedn that period to 2.5%, which is what the economists were thinking. market join us. the projected rate for this year remains 1% and 3%. one of the challenges facing singapore? goyar singapore, it is the ,- it is the oil and gas central to the singapore economy. major banks have been warning during the reports this week, it is an important feature.
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it does not look like it will get that much better in the next few months. the singapore government has been warning that the marine sector is also very troubling. oil and gas continues to be a drag on the singapore economy. rishaad: if there is to be a surprise, where might it come from? >> probably from china. the chinese economy is growing well, that is important for singapore. it is important for the whole of asia. it is important the united states avoids a trade war, that would be good for everybody. if we see continued improvement in china, singapore surely will ride with that as well. rishaad: thank you very much. analysis, it marks is on our daily markets live blog. that is what it looks like. you can access it on your tablet.
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we have had a fed vice chair telling bloomberg television today the u.s. economy looks almost ready for multiple rate hikes this year. we also spoke to that economics and policy editor. dennis locke are telling you he could be persuaded to vote for a march hike. did you twist his arm on the? too much not take arm-twisting. i asked where he saw the economy, this notion of a march hike. he said his view remains it is probably just two interest rate increases, he could be persuaded to three. he does not see that much growth, but a stronger economy. especially in the next couple days. retail sales report we just saw, tell me the economy is on the path i expected, or a little stronger.
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>> i had to ask dennis lockhart if the march meeting is alive -- live. a lot of people read it janet yellen's two days of testimony and said she sounded more hawkish, she may be going for a march hike. i thought dennis lockhart would say i am not there yet, but here is what he said. >> i think she kept all options open. she kept the march meeting live, which i think is the right posture at this moment. >> one thing that is important whenraders and investors, i asked dennis lockhart about a may move, he said as a matter of fact, we do not have a press conference. if we really need to come up we can collate press conference. we can say we are going to do it. therefore, the fed could move in may, according to dennis lockhart. markets have been betting that.
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see the odds of the march hike, still about one in three. the odds of the may hike about 58.7, it was over 60 24 hours ago. i thought these traders betting on this were betting on the moon. but he said it could be an eventuality. they may not have a need to move in may, but they could. rishaad: there was that jump in boostedn yesterday, it those bets you are just alluding to. wasn't next? -- was it mixed? >> multifamily apartments were stronger. of interesting report today, philadelphia -- the business activity index, a manufacturing gauge because there are a lot of factories in that region. highest levels
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since january 1984, that is more than 30 years. let's see what it looks like on the chart. the blue line is what you want to focus on. it is the one that is showing us -- actually, the white line. that has the big move, the current index. if you look to the future, the blue line is edged up. bottom line, it is signaling people are optimistic. bloomberg intelligence says they do not think it is sustainable because so far, trump optimism is about expectations. you have not seen real changes in the real economy yet. but if i am answering these surveys, i guess i am pretty optimistic. and i believe trump is going to come through. rishaad: the federal reserve vice chair also spoke. was he as specific as lockhart rate height rakes -- hikes?
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>> he said yes, we will have hikes this year. he did not comment on the number of hikes. it is interesting he stopped -- rising,bout inflation wage inflation. >> wage growth has started happening. the rate of increase of wages has gone up. we are looking at numbers between 2.5 and three, which is not far off where we thought it would be. >> a somewhat different view from the president of the minneapolis fed, his current view, why he thinks inflation is in check. he said the wage indicators have gone up and stalled out. if you look at the long-term trend you can see the wage improvement. yellen's lieutenant, standing in line and supporting everything she has said the last few days. rishaad: thank you so much for that, joining us from new york with the fed in mind.
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everything must go. bankrupt, paring the selloff all of its assets. one analyst said they may struggle to get value for its fleet. ♪
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rishaad: a quick check of the latest business headlines. a consultant to asia's largest software services company meeting on monday to discuss its first ever stock buyback. with the cash pile of $6.5 million, they think the tcs may spend money on repurchases. bending more than $3 billion to buy back shares. the first woman to chair saudi arabia, the largest stock exchange in the middle east. the exchanges said in a statement thursday, she is
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expected to keep her position at ncb capital. this is significant, where the female unemployment rate is 34% and women are not allowed to drive. an executive says it will take years to return to the growth rate targeted by his red assessors. we have the revised forecast. companyd's biggest food -- trying to trim its factory network. >> we have reaffirmed our cost-saving target of more than 200 basis points by the year 2020. this will be mainly from non-customer cost like administration. also, our plant network, which needs to be optimized. rishaad: it was once south korea's largest shipping company, but hanjin is now officially bankrupt. we are standing by with a
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shipping expert that believes the what was market the bottom of the sector. how will the industry move on from here, or has it already? >> it has already moved on. there has been consolidation and you are seeing a fed rates rising. that is an indication that the industry has moved on. that puts things in perspective. on hanjine comment back in 2013, good to have you with us. before we get on to how the industry is consolidating, why hanjin? this is the world's number seven. >> it was unexpected, it came at a time -- it was a debt situation. the union costs were pretty high, the company could not sustain it. >> the worst is over? >> of the hanjin bankruptcy did
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mark the bottom. the supply came under control. >> you had a lot of positives of from hanjin's bankruptcy. they picked up the slack from hanjin. how well are they doing? numbers, look at the they certainly mention that, picking up the slack from hanjin . we saw the bigger carriers at capacity withdrawing from the market. the bigger carriers are still benefiting. >> is it sustainable going forward when you look at the global economy? now withbig question trump, and a possible trade war between the u.s. and china. shipping feeds off of a globalization to read as we have these taxes and chinese currency importation, these
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duties, shipping will have an impact. it will suffer. we are seeing the economy do -- all of this has a demand. but that is with the caveat. >> give us a sense of the kind of recovery you can see in the shipping industry. the shipping industry has not made any money. but over the last six to nine months, we have seen consolidations. there is still capacity out there. but the fact is, the industry has frontloaded capacity to read and they need to absorb that capacity. to close atting it $1.9 billion this year. consolidation, the top three in japan. anymore consolidation expected?
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>> yes. the bigger guys have already -- there are still some targets. there are smaller players left out there. we have heard things about taiwan combining. but most of it is behind us. i would say 80%. >> will the smaller players eventually be wiped out? >> we do not see further bankruptcies. these guys will be pushed out, but they will be quiet. it came as a big shock to the system. then it became a moving supply chain problem to the dealers.
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>> when we talk about shipping, we have to touch on the shipyards. they are struggling because of the ships have dwindled. how much fluidity is there for the shipyard? >> they have already frontloaded their capacity. and 2016.ed in 2015 the shipyards will continue to stuff her -- will continue to suffer for the next three to five years. moment, -- >> how much more pain will they go through? you look at your capital, they have laid off tens of thousands of workers already and they expect to do more. >> we are talking about a rate hike, and that is a big point. industry, they are expecting the demand to stay in the market. shipyards, we have
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talked about what is happening there. in china almost 30% of these shipyards are merging. recover, --l recover. >> the pain will continue for two to three years before a recovery? some optimistic guys who will see the shipyard prices and jump in. >> thank you. we are seeing consolidation, but better days. we are not sure when they will come. rishaad: thank you so much. tries to raise doubts about his early days in the white house by returning to what got him there. in essence, being donald trump. the details on that 77 minute long news conference. ♪
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rishaad: a quick check of the latest business headlines. goldman sachs sees strong credit expansion in china, giving a boost to global metal prices. jumpedna's old economy by $160 billion in january. industrial commodities have enjoyed a rebound over the last year. this has improved demand from china's property and infrastructure sectors. they are posted record outputs, down to chinese demand. -- brazilian miner producing beating estimates of 90 million. copper and nickel production is vale isl-time high and shifting production to deposits
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in northeast brazil. the uob.fter a drop in income degree step 500 tonight -- $522 million in december. president trump has called his administration a fine-tuned machine during this news conference on his first four weeks in the white house, it was over 70 form minutes long. he defended his positions on russia and immigration. we have this from new york. it has a lot of people scratching their heads. >> combative, grievance-filled, and tents. that is what donald trump's press conference is now being called.
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he started by blasting the media as fake news again, and took questions that were very heavy on russia. reporters challenged him on whether his advisers during his campaign were in fact in touch with russia. he said "not that i know of." and then this. mr. trump: i have nothing to do with russia, no deals, no anything. >> he said michael flynn did not do anything wrong, talking with russia's ambassador about sanctions. not tell vice president mike pence all the facts. another issue of import to international viewers, that immigration travel ban. mr. trump says he will issue a new band next week that is narrower in scope after a san francisco appeals court blocked his first band. mr. trump: we are tailoring down the position, we have the best lawyers working on it. new executive order is being tailored to the decision we have down from the court. >> a new bank a target people who have never been to the u.s.. the argument is that they do not
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have standing for any protections under the u.s. constitution. spoke to a range of other issues, including border security and what he now calls a great wall with mexico. he also said iran was america's top sponsor of terror, it is a mess. and he said, i am really not a bad person. one more thing, it is important to note what trump did not say. many on wall street and main street were hoping for clarity on tax reform and tax cuts. financial deregulation, and obamacare. linesy paid those a few but did take credit for stocks being at all-time highs and keeping jobs and investments from leaving the country. ramy inocencio, bloomberg news, new york. up next, looking at hits and misses. we are in the thick of the australian earnings season. we hearing a lot from the banks there. a lot of companies have still to report. we will get a flavor of what has been going on with that earnings season and the stock performance
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we have seen so far when it comes to sydney. and we asked george for his takeaways. this is bloomberg. ♪
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♪ almost 10:00 a.m. in singapore, 1:00 p.m. in sydney, and 9:00 thursday evening in new york. i am rishaad salamat from bloomberg's asian headquarters in hong kong. this is "bloomberg markets: asia." ♪ rishaad: some songs head jay y. lee behind bars, accused of bribery and embezzlement. what next for the smartphone maker and partners? domestic business, boosting cash earnings.
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macau casino stocks flash warning signs as the odds lengthen on a big gaming come back. straight to the market action. not much of a lead out of new york. shares in asia sliding from tokyo to sydney and the seoul, korea, yen strength putting pressure on the nikkei 225, down .5%. the kospi, that drag in samsung weighing on the index, down .2%. we do have chinese stocks surging of the daily limit on their first trading day in shenzhen and shanghai. about 44% there. elsewhere, weakness in hong kong. some movers, casino stocks galaxy entertainment, on the
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decline, flashing warning signs that the market may be too bullish on the sector. given our focus on samsung today, take a look at the share price, falling deeper following the friday arrest of jay y. lee. i want to show you this interesting chart. it is a chart comparing the kospi's performance in blue to how it would perform if most stocks were not included. a dramatic difference, the white line languishing over that perio d. muchad: thank you very indeed. right, as sophie was mentioning, we are looking at samsung. it is instructive. he is facing charges of bribery,
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investment, perjury. extent of thethe reach in south korea. as one of your guests said this , the republic of samsung. the kospi has more than 700 constituents. samsung's waiting is 20%. ng is 20%. $230is a conglomerate with billion in revenue spanning many different industries, not just smart phones, chips, displays, hotels, luxury fashion, biopharmaceuticals. rishaad: it has to be one of the biggest companies in the world. together as aggregate, it must be at the top. >> jay y. lee was being groomed to take over from his father.
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basicallyfe has been being groomed for this, and his job was to build relationships really, and built this conglomerate, then transform it beyond what his grandfather and father did, modernize it, right? question as hein sits behind bars in a south korean jail awaiting what will likely be a trial, maybe as far as 18 months down the road, on charges of bribery and perjury. rishaad: he is seen as a flight risk, but he could get rid of some of the evidence. >> that is what a spokesperson said. that is one reason why they did not necessarily grant the arrest warrant on january 19. they did not see enough evidence to do so because usually you reman somebody to custody because they are a flight risk and would do something detrimental to the case. spokesperson said
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there was a chance jay y. lee could destroy evidence or even be a flight risk. something, this is all the midst the impeachment of park geun-hye. >> we could talk for an hour about this, if not more. in his ascension to become chairman of the samsung group. allegedly trying to consolidate the units and his power to pave his way to the top position, and in doing so, curry favor with the powerful national pension board. that, the special prosecutor alleges he paid ofbes to a confident president park to curry favor. this is part of the scandal that has led to the impeachment and stripping of power of president park, the spaghetti bowl of
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politics and business and the interconnectivity that is in question right now. rishaad: all right, thank you very much indeed. get you to sydney now, haidi lun is there with first word news headlines. singapore's economy surged in the fourth quarter, growing faster than estimated, true than by a strong rebound in manufacturing and financial services. jumped 12.3% at singapore benefits from a recovery and chinese demand. the outlook remains uncertain as global demand remains weak and trade barriers have then impose on countries like china. they are forecasting expansion of 1% to 3% for 2017. toshiba shares plunging after mitsubishi has ruled out a rescue of it struggling to get a reactor business.
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the technology used by mitsubishi is completely different and would change -- any change would violate its relationships with other companies. the nikkei says toshiba has asked to continue tempora compensation cuts in 2017 as an emergency measure. president trump has claimed what he calls incredible progress in his first four weeks in office and took the opportunity to lash out at the media. the president open the news conference by pointing to stock market records as evidence of his accomplishments. inmp says stories of chaos his administration is in fact the opposite. >> this administration is running like a fine tuned machine. despite the fact that i can't get my cabinet approved. they are outstanding people. the u.s. secretary of state says north korea's pilot asian's of yuan resolutions will
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bring an even stronger international response. rex tillerson made the statement in germany all along with the foreign ministers of japan and south korea, condemning in the strongest terms north korea's ballistic missile test last thursday. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. rishaad: nice one. let's tell you about a new feature. it is an interactive television function that you can find a tv if you are a bloomberg subscriber. there we go. you can watch us live, see previous interviews. you can become part of the conversation and send us instant messages during our shows. that is for bloomberg subscribers only. check it out. tv . the way,ill on singapore's growth surging,
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beating forecast. we are therefore a check on its fifo shipping industry. our next guest is saying iron ore producers are currently in a sweet spot, but can it last. ♪
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anz and focuss in after the bank reported a surge in cash profit in the first quarter. let's get to paul allen in sydney. this looks like a good set of numbers from anz. unlike some of them, they are doing so under reasonably challenging conditions. a similar result from commonwealth bank during this reporting season as well. $1.54 billion for the quarter, so not a full set of results. of 31 percent.
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this was boosted by anz retail and institutional businesses. chain elliott saying there is still -- shane elliott staying there is still a great deal to do. revisions charges fell to $282 million, anz feeling upbeat on that front. rishaad: now a lot of companies out with numbers as well. let's look at some toes and andehaven, both -- santos whitehaven, both benefiting from this commodity rebound. whitehaven comparing favorably with last year. a huge improvement there am a boosted by coal prices, revenues up 43%, whitehaven signaling better to come saying the second
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half will be higher than the first half. still no dividend. , atehaven off a little today lot of gains priced in on thursday. as for santos, $63 million, now pricing in u.s. dollars. the net loss narrowing to $1 billion for the full year, down from $1.9 billion, mainly due to a write-down they took in august on the gladstone lng plant. the ceo saying there is pleasing progress but more to be done. he said in december that santos may look at selling a package of long corporate assets -- non-core assets as a part of profit restructuring. rishaad: thank you very much indeed. australian earnings season two will look at that, the fed, let's get to our next guest. contango asset management, george, great to see you.
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let's start off with your take on the earnings the season so far, particularly these banks. australia, debts lower than expected, therefore looking healthy and ok, but the issue will be the following, unable to maintain net interest margins. that will be under pressure, and targets are still double digits, some of the highest in the world, higher than the rest of the banks, but they will have businesses selling off in the single digits, wealth management, insurance, non-core will be spun off because the r.o.e. is not high enough. the banks are doing the best they can. the growth upside though will be limited where there have been conditioning local investors. in general, good performance, quality control, low bad debt,
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dividends healthy. it is just they are unable to maintain the net interest margins as they have been having quite a robust rate for decades down under. rishaad: that is it. not interest margins are key to profitability, so likely the fed will raise rates multiple times this year, that could of course out of the reserve bank of australia and steepen the yield curve, so maybe you should not be looking at too much at those net-net interest margins being compressed. here, it isanks different than north america. the recovery of the big four banks will not be in line with the steepening of the yield curve like north american thanks. higher interest rates will help, but aussie cash rates will be staying flat until this time next year, but the big four banks, they did not fall as much in 2008-2009 versus the rest the
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world, and they will not rally as much as well, but they will of pressure for margins. are spinning off businesses treat insurance business is being sold to japanese firms, wealth management being sold. they will continue to be spun out so they can maintain their core business, and that is maintained the interest margin all things being equal going forward, and that is the aussie bank story. the big four banks control a lot of it down under. rishaad: let's move to the other two companies, santos and whitehaven. rebound inn to this commodity prices. you have a big call saying there is a structural rally, structural tailwind in place for commodities for the next year. where is that optimism coming from? >> that is true.
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as a disclaimer, we have taken profit and the stole whitehaven and bought santos at a lower level this year. the premise is we have global , globalntum upwards upgrade story from the central banks in the developed world, emerging markets recovering from lower base effects from the previous couple of years, upgrades,with gdp earnings upgrades, the end of stimulus in china, this is why we have commodities and metals rallying well. volatile, weot as believe they hold current levels, which earnings for big producers like bhp and rio tinto is accretive to eps one year forward, so you have to sell these on time. that is next year. vale are recovering their debt.
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i would still buy south32. they are accretive to earnings in a strong way. rishaad: i want to get your view on what has been happening with the rally globally, particularly the u.s.. fundamentalis the point, or are we now at that inflection point and it is time to think again?/ >> it can last a markets will be higher by year end, but there will be corrections in the interim. toknow there are upgrades dps from tax cuts, upgrades to dps because gdp is accelerated. we don't know to what degree. there is upside by the year in. quality earnings, companies with expanding earnings, rate of change, current conditions, focus on
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that, take some profit and get some gold as a hedge. rishaad: i was just coming to gold. and has been creeping up, that is always a sign people are getting nervous. because youervous have sectors like utilities on , they are in structural decline. that is not the place to be. you are buying future earnings expensively and you are uncomfortable, therefore gold accumulated for a lot of people making a lot of sense. did that i can relation of gold from that selloff late last year. you get out of utilities and telcos, but you need to deploy risks. risk-reward possible, health care, technology. rishaad: great talking to you. a break, butke coming up, stanley fischer telling bloomberg that the fed
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is on track for multiple rate increases. we will hear exclusively from the fed vice chairman. ♪
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rishaad: stanley fischer has told bloomberg the fed is on track for multiple rate increases, upgrading their 2017 outlook and most recent projections, forecasting three hikes for the year. decliningce chairman to say whether he sees 2-3. he said economic indicators were heading in the right direction. >> it was very complicated when the inflation rate was negative and very low. inflationtarget of 2% , and we are heading in that direction, and so it is not making life more complicated at the moment. very high inflation, which we would do what we have to prevent
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could complicate the situation, but we are not there by any means. >> how do you define high inflation? i look at dennis lockhart who will join us on bloomberg today, numbers, sticky inflation, the dallas inflation, the cleveland inflation, what is the statistic that begins to suggest high inflation? 2%.ur target is obviously you don't hit it exactly. you hope to be close to it, but at 2%, we are as worried about being below as above, and you know it is something if you are not alose to 2%, it is problem. if it is significantly above, you begin to worry and you begin to act. >> part of our relationship over has been i really don't talk to you about the parlor game, but i unfortunately have to today.
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i believe there is an ides of march meeting in march. we saw goldman sachs change their probabilities of what the fed will do, not specifically what will you do at the march newing, but does this inflation dynamics changed the cadence of 2-3 rate increases as we go to the end of the year? >> i don't want to give you numbers on 2-3, but this is consistent with what we have thought should be happening we woulde now, that is be moving closer to the 2% inflation rate and that the labor market would continue to strengthen. if those two things happen, we will be on the path that we more or less expected. >> so important is the idea of theng through the year for fed within the politics of washington, as i am sure you are
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aware, washington is in turmoil. my colleague was saying how the fed acts of differently as you go towards year end. this year end of 2017, i would suggest is different than any other year and you have seen. maybe chair yellen will leave. to thee a political mix pressures you face in meetings later this year? take, makey do not political decisions p or do we take into account what is happening in the economy, what people think about, and what might happen to policy, but we are not going to make decisions , what basis of what the pressures we are getting politically. we have targets. we are aiming to get the targets. >> are we still ultra-accommodative? you own that phrase. >> i think we are in the land of
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accommodative. i'm not sure about altra. e. ultr a. >> is it about technology, automation, the efficiency of economy, what is our why? is that we don't have a good story at the moment, whether it is measurement, there is a measurement factor, but it is hard to measure as you are looking at the comfort you have in your home and so forth. we are looking at why it has declined, the education of the workforce, but we don't have a single factor to say that is it. fix got to we have to do a lot of things to try to get productivity to go cup. there.: stanley fischer
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a quick check of business flash headlines, southeast asia's third biggest saying profit fell after a drop in noninterest income, you nine did overseas bank seeing earnings decreasing the 500 $22 million in the last three months of last year. a slight beat, but a 6% all from a year ago. at ceo seeing loan growth mid single digits this year. brokerages lining up for japan post second share offering. several big names, including nomura, goldman, j.p. morgan, set to leave the offering. the country's biggest privatization deal and almost 30 years. is investor over?iasm this rebound in macau casinos, is a misplaced?
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whatll be talking about that is when we return. this is bloomberg. ♪
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1029 a.m. in hong kong, a 1129 in seoul, korea. the man who has led samsung since 2014 remains behind bars on allegations of bribery, embezzlement, and perjury. jay y. lee is being held after a court approved a prosecutors warrant for his arrest. they are examining if he was involved in providing as much as $35 million to friends of president park. luxury brand has overextended its network and they want 4 billion dollars in compensation.
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dealers claim they have been facing losses. audi reported its first annual sales drop in more than a quarter century in 2015, losing its top spot in the premium car segment to mercedes-benz and bmw. the maker of snap hoping to capture investors despite giving investors must control than any other social media company. it is offering $200 million -- 200 milliones nonvoting shares between $14 and $16 a share. the company exchange higher by wages earlier of $35 billion for keeping control of the company. state saided islamic it carried out a suicide bombing in southern pakistan that killed at least 75 people. it is the deadliest attack in more than two years. targeted at it had shiite gathering. the prime minister about the security forces would track down
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the perpetrators. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. rishaad: right, let's check in market wise, seeing the japanese lunch break in place. here is sophie. nikkei 225 lower by .6% going into that lunch break. looking at some of the movers, toshiba in forecast, lower for a fourth day, still feeling the heavy rulingshi out a rescue of its ailing nuclear operations. you can see the drop in the share price, now almost 10% lower. this comes on top of reports that toshiba will be delaying the sale of its chip unit. this, a third of the $30 billion memory chip market, toshibaamsung,
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second. company climbing for a second day as shares of rival samsung fall following the s jay y. lee.sung' with speculation that his sister his no more upgrading that stock on the tailwinds of chinese tourism benefits. a deeper loss for samsung life in the fourth quarter, korea's against life insurance company, shares down almost 1% as it grapples over a lack of profit growth. thank you for that. singapore's economy grew at a faster rate in the fourth
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quarter than initially thought. 2.9 percent compared with that thinking amongst economists of 2.5%. us the breakdown here. >> we have put these numbers in context. ew 12% in the fourth quarter. this is impressive and more than expected. it surprised the government as well. the thing with singapore is that this is not a small economy exposed to what happens overseas, so it is typical to see ups and downs in singapore. year on yeart the comparison from the first quarter last year, it is up 2.9 percent, good, but not great. not as eye-catching as i would think. , isaad: the point being this growth sustainable?
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how sustainable is it? >> the government is saying that paceould not expect this to be sustained. the government is saying there are parts of the economy that are doing well, the parts connected to china, manufacturing, electronics, semiconductors, feeding this chinese machine. other parts of the economy are still having some trouble. we have the marine and offshore industries in singapore, which depends on oil refining, oil prices, oil storage, and this side of the economy is still having trouble. we have oil prices which are not at high levels. they are better than they were a year ago, so we will see some weakness there. the domestic economy is not
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doing that great. boost from is a big exports, and as we know, trade right now is not the safest bet in the world. nobody knows what will happen with the u.s. policy, so that is still up and in the air. rishaad: thank you. one of south korea's biggest shipping firms, but a court has in shippingd hanj bankrupt. is who you talk to a bit earlier on, tell me something, the industry has moved on from this, but there is a long way to go, isn't there? haslinda: well, there is a long way to go, but what is important is that this is the wake-up call. if we look at the container shipping industry, it has been struggling for years, operating
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and losses. the biggest container shipping line,y, maersk underscores the struggles of the industry as a whole. what needs to happen is consolidation. that has happened somewhat. we are seeing maersk being interested in another shipping company. we have seen the top three shipping lines and japan merging. it needs to happen even more, simply because there are 5000 container ships in the world, and 600 owner groups, so eventually you will see the demise of the smaller operators. rishaad: has there been any impact on singapore? it is one of the world's busiest ports, the second-biggest? the second busiest container port in the world after
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shanghai. shipping is important to singapore's economy. if you look at contribution to gdp, 8% to 10%. to another location that will be bigger and able to operate even more boxes to do now it is operating about 33 another to go around the world five times per that is the extent of singapore shipping contribution. when it moves, you can expect that contribution to go up more. demise, some people are saying it is the start of a recovery in the shipping industry and that will benefit singapore. trade, there are signs that trade is picking up, and that will only bode well for countries like singapore. rishaad: thank you so much for that. right, let's move to macau,
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casino stocks, revenue rising, but the last time investors were as optimistic as this was 2014, and as history shows us, that did not end well. we have a look at what is going on here. >> we have seen the macau gaming sector have a huge rally since last january, up 60%, so there is enthusiasm in the space. we can see where bullish contracts become more expensive, short interest falling to multiyear lows, analysts ratings have come down or disappeared, and ratings are higher than the 2014 peak. indeed, when people are as optimistic as this last time, it did not end well, did it? time, people are optimistic for a reason, revenue recovering come a numbers rising for chinese new year, but last
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we saw the signal the strong was 2014 when we saw the sector plunge quite a bit over the next two years, dragged down by china's anticorruption campaign. me something here, the point is these recoveries have been against weak metrics. as they get washed out, is that when the problems start? analysts,re some bullish analysts, who say this is justified because of the revenue recovery, and mainland investors might be interested to buy to the hong kong-shanghai stock link, but some analysts say investors have gotten ahead of themselves and there is concern in the business. last night, we saw the parent company of mgm china report earnings that this is estimates. we had a plunge there in the macau business.
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we will see how that goes. rishaad: thank you very much indeed. coming up, president trump's the 75 minute defense of his administrations first 27 days. the details are coming your way next. ♪
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rishaad: president donald trump has called the administration a fine tuned machine during a snap news conference. over 75 minutes, he attacked the actionse, defended his on russia, border security, and immigration. remy innocence you sent us this from new york. ramy: combative, grievance-filled, intense, that is what donald trump's press conference is now being called. he started by blasting the media as fake news, then took reporter questions heavy on russia. reporters challenged him on
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whether they were in touch with russia. he said "not that i know of." and then this. >> i have no deals there. dide added that mike flynn not do anything wrong, talking with russia's ambassador about sanctions. he just did not tell vice president mike hence all the facts. immigration travel ban, mr. trump says he will issue a new band next week that is narrower in scope. now tore tailoring it the decision. we have some of the best lawyers in the country working on it, and the new executive order is being tailored to the decision we got down from the court. a new band could target people who have never been to the u.s. stuck to a range
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of issues, border security and what he now calls a great wall with mexico. he also said iran is the top sponsor of terror, the middle east is a mess, and on a personal note said, "i am really not a bad person." and mainall street street were hoping for clarity cutsx reform and tax and deregulation and obamacare. stockstake credit for being at all-time highs and keeping jobs and investments from leaving the country. let's have a quick check of the business flash headlines. vale record are in or output, the reason? china and growing demand there. 92.5razilian miner produce metric tons of iron ore in the fourth quarter. estimates had been 90 million. copper and nickel production at all-time highs, vale shifting focus to new higher great the
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posits in brazil's north. goldman sachs seeing a strong credit expansion in china, giving a boost to global metal prices. china's old economy jumped by $160 billion in january. industrial commodities had a good year because of improved demand from china's property and infrastructure sectors. chair thewoman to saudi arabian stock exchange in the middle east. she is the chief executive of n bc capital. sources telling bloomberg that she is expected to keep her position. the appointment is a significant one. female unemployment is more than 34%, and women are not allowed to drive. the mission to find the 600
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tons of nuclear fuel that melted down six years ago in japan's fukushima power plant is leaving a trail of abandoned robots. the most recent mission did not even last one day. is inian energy editor tokyo. it has been almost six years, long?s taking tepco so been almostt has six years, and tepco has focused on limiting groundwater contamination. to a large extent, they have done that. a lot of people would say the site has stabilized at least, but going forward, they are entering the next phase, to identify where the melted fuel is and create a plan to extract it. is inlikely the fuel
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these reactor containment vessels, but no one knows it's fate, melted into the floor, through the floor, whether it is scattered around the walls. radio activity levels are so high that humans cannot enter there, so you have companies like toshiba and hitachi building robots they are trying to put into these containment vessels to take photos of where they think the fuel is an measure the radioactivity level so they can develop a plan to eventually extract it. we are the next phase moving into, to identify where the 600 tons of melted fuel and debris is an figure out a plan to extract it. wehaad: the thing is here, heard in the introduction that these robots searching for the fuel keep on breaking down. why? well, as you can imagine, they are going into these reactor containment vessels with a lot of
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radiation. they can't have much circuitry because that will melt because of the radiation, but disappointingly, the three main robots come of the three robots that have tried so far, there is a scorpion like robot by toshiba, and a snakelike robot by attaching the size of a human arm. they have run into mechanical difficulties. there is a lot of debris they have to navigate. one robot got stuck in a gap and could not get out of that. one had a mobility issue and they could not move it anymore, so there are a lot of challenges getting these robots in their, and they are special robots because of the high levels of radioactivity, but they will continue to send them into the reactor containment vessels to identify where the fuel is an measure radioactivity. once they do that, they will
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have to come up with new robots to go in and extracted the fuel. rishaad: thank you for joining us. coming up, treading carefully, the front runner to be hong sayss next chief executive it she will avoid moves that could trigger fresh unrest on the streets. we will hear from her next. ♪
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withad: you are back
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bloomberg markets. i am rishaad salamat. top tech consultancy will meet atamonday -- top consultancy will meet on monday. some are betting they will spend $1.1 billion on repurchases. software companies bowing to pressure. executiveew chief says it would take years to return to the growth rates targeted by his predecessor. mark schneider revising down the company's earnings forecast. in fact, these are forecast that nestlé has been holding onto for more than a decade. it will trim its factory network. >> we have free of formed -- reaffirmed our cost savings targets by two basis points by 2020, mainly from noncustomer facing structural costs,
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but-office administration, also basically our network, which needs to be optimized. beijing'sight now, executive saysf she wants all options on the table when it comes to property prices. carrie lam telling bloomberg that there needs to be a rational debate that includes community consultation. hong kong remains the world's most expensive housing market, demand outstripping supply since 2011. ms. lam: i want to put all the options for supply on the table, and we will analyze for each of these options, the pros and the cons and the likely yield from each and every option, so that the community hopefully through a rational debate can come to a consensus. rishaad: bryan curtis interviewed carrie lam and is with me now. the point is, how does she
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differ herself from her rivals? it is difficult for her, because all the candidates have a lot of experience in hong kong. she can say she was the chief secretary. she had a lot of expense and has done the tough jobs and then around a while. she says she loves hong kong and leaves she can tackle this, but there is not a lot of difference. rishaad: let's get to policy here. what did she have to say about electoral reform and perhaps some national security legislation too? given what has been happening with the booksellers and the chinese bill in there. >> she thinks the hong kong public is not quite ready. at first, we thought that meant not during the first term, so we
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pressed her on that and she came back and said not necessarily. but we need tot, develop mutual trust between the hong kong people and the leadership, and she said it is not at the moment, but can be had, and she is the one to get it. rishaad: she has been trailing her main rival there john tsang. she was seen as the front runner, but her popularity has waned. >> i asked her whether it was a poisoned chalice having the support of beijing. all of a sudden your popularity drops and the opposition wants to block everything you do. if the opposition supports you, then you may not get the support from beijing, so it is a metal some problem p let's listen to what she had to say about that kind of support. ms. lam: to me, this is not just electionn targeting
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committee members, but i do want very much to get a popular mandate from the people of hong kong, in other words, people of hong kong welcome my candidacy and want me to become the next chief executive. >> very extraordinary to say i don't know what i have done wrong. i am slipping in the polls. rishaad: how does she seem though? >> i felt she was lower key than i remember. i had extensive dealings with her before. i cap asking where ways the fire and brimstone? she said come i have it. i have the passion. rishaad: that's it. does she really wanted? that is the question. ahn updating us on the stories of the day. shery: hanjin shipping, it is official. it has been declared bankrupt. they decided liquidation would bring more by then running the
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value -- company. theme will have to see auction the few remaining vessels. we will discuss that. also, jay y. lee being arrested on bribery allegations. we will discuss with tony mitchell, the author of samsung electronics and the struggle for the leadership of the electronics industry. what does this mean for south korea? we will also talk about china's stock markets with a strategist for morgan stanley. jonathan gardner overweight on china. he put the call in in november, so we will ask him why in #btv -- this is "bloomberg markets: asia." ♪
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♪ announcer: from our studios in new york city, this is "charlie rose." >> good evening. i am john micklethwait filling in for charlie rose. donald trump's national security advisor, michael flynn, resigned on monday night after reports revealed he had misled the vice president about his communication with russia's ambassador. we are joined by mario calvo platero, the us editor of the italian newspaper il sole 24. platero, the us editor of the


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