important focus for u.s. investors as well. haidi: that's right. a lot of focus on what yellen has to say, the seemingly disconnect when it comes to not changing the growth and inflation forecast, but changing faster when it comes to the rates. pboc,an stronger from the sex straight session of declines when it comes to that bloomberg dollar index of play as well. injecting funds for the seven day reverse repo rate. the big story has been in the money market rate. we had some job and difficulty for smaller lenders missing debt repayments on the interbank markets, that essentially forcing the pboc to step in and inject funds here it is interesting to see this dynamic of trying to manage this tightening without having too much of a direction. shanghai and hong kong markets coming online now. quite nice pop on the

hang seng, higher by a quarter of a percent, now holding higher by 2/10 of 1% after that 1.1% drop during yesterday session. the shanghai composite up by .1% after that .5% drop coming through yesterday. we are all focused on what is happening with tencent. let's look at how it opened up to those results came through. a lot of gains in its spending if we can have a look at the share prices as they open. tencent is down by 1.6%. not a single cell recommendation on the stock. it is spending on payments and ure users. l income was higher, but below estimates. stronger, it's profit climbing.

it had a 6% climb in earnings. an emotional press conference we had also yesterday from li keqiang as he came through with those numbers --li ka-shing as he came through with those numbers. restoredve more calm to wall street after that big sell down during the tuesday session. south korea and focus, a bid from some of these emerging market stocks and assets. the aussie dollar under pressure, down by .25%, and the yen being sold off, which has seen the nikkei and topix fluctuate in the session. copper having a rebound. it has been on a sell down up by .5%. crude up by .6% at $48. so is looking brighter than this time yesterday. to see.ood

juliette there on the markets. tencent, highly anticipated earnings. lulu chen has been all over this. you can see a bit of downside pressure when it comes to the stock today, but what with the takeaways for you? becauseslight miss was cost of revenue jumped 60%. tencent is really spending on cloud, video content, and payment services. the company isn't counting on payment services to make money anytime soon, and same goes for video content as well. that is a big driver for dollars in terms of subscribers and advertisement for but also a costly business to compete in and alibaba have identified this is the key area to invest in. china,: let's talk about the e-book, they will spend this off your what are the details exactly? >> the e-book business had taken

off more than expected. subscriber numbers 2.5 million already. rishaad: is it like the kindle? >> it is. they sell books on subscription basis and a book by book basis. the company has confirmed they are trying to ipo and hong kong. we reported earlier they were seeking $500 million and could ipo as soon as is year. rishaad: what are investors looking at when it comes to trends in tencent? >> the new initiatives are programs that allow users to access right hailing, food ordering. you don't need to download a third-party app. the company says while this does pick them against operators like android and apple for their app stores, it is also driving downloads for third-party apps because users will be able to experiment and test out this service is first and see if they like these third-party apps. rishaad: lulu, thank you very much indeed. get youll right, let's

caught up-to-date with first word news with rosalind chin in hong kong. rosalind: chinese premier li keqiang has received a ceremonial welcome as he begins his first visit to australia. top the agenda with china looking for openings following president trump's decision to pull the u.s. out of the tpp. company by a delegation of business leaders and will go to sydney before flying on to new zealand. minister theresa may has described the terror attack in central london that left five people dead and 40 injured as second appraised. the lone attacker was shot dead by police after driving into the streams on westminster bridge and then fatally stabbing an officer. the prime minister said the attack was no accident, but that london is whenever -- whenever get into terror. in to terror.give

a hearing for jay y. lee, although not required to attend in person. unduelinked to the korean influence, but saw big business donate vast sums to buy government favors. he is accused of attending to secure control of samsung. validand washington have tentative steps against north korea following its latest test. a nuclear capable b-1 bomber accompanied by south korean fighters. it is saying that the u.s. is preparing to invade. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. rishaad: right, just starting out the earnings season for

china's big oil companies, dividends, capital expenditure, and reserves a key focus. here is our asian energy editor. what are we anticipating here? >> good morning. bunch of given out a information. we know there's spending is rising and that it expects output to fall for the second time. what we are unclear is how it will deal with its canadian oil sand assets. it took its first ever loss at the half year, and when it comes to reporting this evening, we expect information about its reserves. those canadian oilsands reserves are are losing value and difficult to process with crude prices at this level. 3.5 billion take barrels off their books from the canadian oilsands. now we are waiting to see what see note says. they took a big bet when they

for $15 billion and now we will see what it means for their earnings at the end of the year. rishaad: they are sitting on a lot of cash, like petrochina and sinopec. the thing being what did they do with it? like another state owned enterprise, the state owned coal producer, surprising everybody with this special dividend. should we look for anything like that? > >> they shot the market and we saw share prices jumped 20%. state owned enterprises in china are not known for being generous with their dividends. petrochina sold off pipelines and gave a special dividend that nobody thought it was special because of how small it was. sinopec is sold off some supply lines come and all three of the state owned companies in asia are sitting on the biggest piles of cash, so investors want to know if they will reward them

with dividends but there is this in chinatheir output is falling, and their options and china are dwindling come up so they are being seen to go overseas to pick up new assets. we have seen this year a few billion dollars in africa, the middle east, and i think south america, so tonight into next week we will see where they will put the cash. we have petrochina reporting next week. they are managing expectations, warning it could be the weakest profit in the company's history and beyond that they are talking about whether the company can unlock value in its pipeline network. what would that mean for investors? and how soon can we expect that? >> they came out earlier this year and warned profits will fall to what could be the lowest in its history since it went

public. what the investors are looking at now is what is very to inside this company, this massive pipeline network, 80,000 kilometers of oil and crude pipeline which can stretch around the earth twice, but it is this unknown entity now. the government has been pushing for the sorts of reforms within the energy industry and one of those seems to be this idea of spending off these pipelines for various policy reasons of it taking them out of the company and making it another one. so far we have seen $85 billion spun off as its own into a new company. everyone iswhat looking for. how soon we will see that is unclear. some analysts say we will need $60 andrices go above revenue rise higher before it decided to spin off these pipelines, and that may not happen until maybe next year. there were reports they were

planning to do it this year, but it is still wait and see. maybe when they released earnings they might be able to update investors on how that is looking. haidi: we will be watching for details for that for sure. our asian energy editor for us in hong kong. coming up, how has brexit affected the uk's credit rating? what lessons can asia be taking away from the process? we will talk about that and more with fitch up next. this is bloomberg. ♪

withad: you are back "bloomberg markets: asia". i am rishaad salamat in hong kong. haidi: i am haidi lun in sydney. has lost a patent infringement case and faces a bill of $1.3 million.

the beijing intellectual property court ruled in favor over sony's use of its patent identification software. 35 models are affected. reports from japan say the government may halt toshiba's planned sale of the chip unit if the winning bid comes from a foreign company. the energy minister is considering suspending the plan -- chinese are taiwanese companies emerge victories. the government says the chip business is crucial to japan's national security and fears losing state secrets. pleading guilty to violating u.s. laws on selling american technology to iran and must pay a fine of $1.2 billion, zte's agreement ends uncertainty about the ability to do business in the u.s..

the company admits three felonies. right, let's have a more considered look at these markets. agoust opened 30 minutes for hong kong and shanghai, moving to the upside here as well. we have this asian-pacific selloff easing, equities getting a boost. tokyo market moving to the upside there as well. to higher for the nikkei two five. this is what we have because we assetsd demand for haven . looking at what is going on the kospi .2% to the upside. here we go. 56 93 on the asx 200 in sydney

in the green. that is what we have at the moment. coming up, a look at what is going on with the federal reserve, janet yellen speaking later, investors looking for clues as to the future and the timing of future rate hikes and what she has to say as well. that is on the way. ♪

haidi: this is "bloomberg markets: asia." i am haidi lun in sydney. rishaad: i am rishaad salamat in hong kong. china's annual blowout bringing together executives and leaders of international organizations. this year's theme is globalization and free trade. our correspondent stephen engle is there for us. take it away. globalization and trade, the

asian perspective is the official tied up here at the forum in china. china a major player, but also the u.k.. that's where i want to start with james mccormick, head of sovereign ratings at fitch ratings. thank you for joining us. the unfortunate terrorist attack overnight on top of the impending trigger of brexit, scotland rumbling again, what is the ratings outlook for the u.k.? >> the out look is still negative. we downgraded the u.k. on the back of brexit and still have a negative outlook. >> i guess the concerns what really happens with scotland, brexit negotiations. of tradelly what kind arrangement does the u.k. end up with with with respect to the eu in two years time? i think free trade agreements take longer than that. it is possible they could have an agreement in goods, but

unlikely in services, but we will see. how is your looking right now? the dutch election went one way not to the protection aside, but france is still coming up. and we haveand play germany and people are focusing there is a lot of electoral issues on the table from a growth perspective. we think the eurozone will look like it did last year, 1.5% to 2% growth, growth coming down, inflation in the u.k. going up, so the economic outlook not quite as favorable partly due to the weaker pound, so we are seeing some of the implications of brexit eating through. in china, we have stabilization in the economy, but what at costs? the debt pile has risen. frome they barring growth the future with stimulating or supported growth today?

the concerns in the medium-term are the corporate debt problem gets larger and larger and to say it is unsustainable is a truism, you cannot have debt grow faster than income forever. it is not sustainable. the shorter-term issues i think we are starting to worry about our wealth management products and the leverage inside the financial system itself, which we don't think regulators are entirely on top of. >> we don't know the web of intricacies tied up in these wealth management products, but also at the local government level, the financing vehicles probably have so much off-balance sheet that we don't know. >> this is the problem. it is getting bigger. wealth management products or 40% of gdp, so we are expecting to see a regulatory response, and there is word that there will be a coordinated regulatory approach to this, which will be good news in china because there

is a multitude really of regulators, and that has been part of the issue over the years. if we get some regulatory response to the wealth management products, that is step one in getting it sorted out. what is the likelihood of china facing a significant credit issue? with these wealth management products, you have what are badeived to be nonperforming assets layered on top of each other as underlying assets. >> it opens up the system to contagion. securities a small firm that runs into trouble and it feeds into a local bank and that feeds into another bank, that is the problem china potentially faces, and that becomes difficult for the pboc to provide the quiddity to get there fast enough to identify the parties involved. not knowing who the parties are other problem at the outset. >> is there a chance of a major

credit event? >> we are not expecting that. the longer-term corporate credit issue needs to be addressed. we are not talking about deleveraging just yet. they are talking about getting income growing at some point down the road. r> we are seeing riskie borrowers going overseas come bond sales overseas in the first quarter. it is china really starting to export its debt issues? >> i guess you could potentially think about it that way, but it is something we would expect to see to be honest and not have this completely closed financial system, completely close capital markets. the opening up of the capital markets in china has been a long-term initiative. >> are we going to see more corporate defaults here? we would expect to see that

given where debt levels are and we expect growth to be slowing going forward. happens withhat interest rates, so it would not surprises to see more corporate defaults going forward. look atou having a good the united states, the outlook there, the up-and-down rhetoric from the white house? havethink the markets responded favorably. everybody is in dizzy astec about the growth. we will see if that is too enthusiastic. the issues we are focused on are the tax in this myth, the border tax, and trade policy. >> thank you for your time. that is it for now from sunny boao. back to you. rishaad: thank you very much indeed there, steve. central banks, janet yellen to give a speech thursday. new zealand, philippines, and taiwan holding policy meetings. kathleen hays, let's start off with the rbnz holding its key

rate, not a huge surprise, but why? signaled it widely. the head of the rbn, graham wheeler, said last month that he sees the key rate staying where it is for another couple of years. here is what he said in a policy statement where the rbnz cap there record low one .3%. monetary policy will remain accommodative. numerous uncertainties remain, particularly in respect of the international outlook, and policy may need to adjust accordingly." he has also said that it is just likely that the rbnz could raise its key rate as cut it. the fact that he said that bank would also like to seek a weaker new zealand dollar because that would help their gdp get stronger, you might think he would be ready to cut, but economists don't link so. far away from that 3.5%

he would like to see in the second half of the year. no cuts, even though that could help boost new zealand's exports. chance of a move from the philippine central bank today? well, there are two economists who follow this in our recent bloomberg news survey who are looking for a rate increase, but 19 others say no way, and that is the majority few when it comes to the philippines. bank is keeping the therate at 3%, but it is first time it has not been ironclad unanimous since 2014. let's look at a chart, this is about the fed hiking rates, the philippine central bank, it is about inflation. it is about inflation moving higher. you can see that blue line.

that is what is pushing them to raise rates, but not yet. thank you. still ahead on "bloomberg markets: asia", what does china need to do to rebalance its economy. ♪

♪ >> from our studios in new york city, this is charlie rose. charlie: we begin with the confirmation hearings for the supreme court nominee judge neil gorsuch. in the first day of questioning, judge gorsuch emphasized his judicial independence and he was asked by charles grassley if he would have any issues going after the president. >> that is a softball. mr. chairman, i have no difficulty ruling for or against any party, other than based on what the facts of the case require and i am heartened by