tv Bloomberg Markets Asia Bloomberg April 24, 2017 9:00pm-10:01pm EDT
haidi: and is 9 a.m. in hong kong, 11 a.m. in sydney. i'm haidi lun. rishaad: i'm rishaad salamat coming to you from bloomberg's asia headquarters in hong kong, this is "bloomberg markets: asia." ♪ haidi: asian markets extended gains sparked by the french elections. the euro holding onto the biggest advance since june. rishaad: demand for chips, as k high next get the best results in a while.
haidi: china pledges more economic transparency. the pboc will balance the need for stability while controlling asset bubbles. rishaad: sending a different message. weibo currency opportunities. global relief rally continues after the french election, seeing a rising tide, listing all markets across the world. , taking a look with attention to the european central bank. japano have the bank of starting its two-day meeting as well. that is on wednesday. gdp growth figures out of the u.s., looking forward to all that and more as we see the optimism flowing into this part of the world. haidi: that's right. it is a bit of a client trading day, given the australian and new zealand markets closed today to observe a holiday.
when it comes to chinese markets, they are not playing ball. take a look at this chart. a complete lack of correlation when it comes to chinese equities with the rest of the global rally. the shanghai,, completely diverting from the blueline, the msci. what we are seeing is this continued slump. the worst weekly decline in four months last week. yesterday, the worst intraday decline when it comes to the shanghai comp. is a lot of fear that we are going to see continued tightening when it comes to liquidity conditions as a result of the clampdown on limited -- leverage and wealth management products. we are 30 minute delay from the open in china and hong kong. another downtown -- down day. singapore, thailand, and malaysia coming online.
reporter: asian markets looking very much firmer after the rally on monday sparked the french vote. chinese stocks will be in focused at the bottom of the hour. we have a shift in investor focus to corporate earnings. we have a bunch of reports due out from tokyo, for example. we have other potential market moving events among them. one a look at what's going in this space. the risk positive move could be tempered from provocation from north korea.japanese stocks very much on the up , edging towards a four day winning streak, which would be the longest for the topics this year. take a look at how the topics is faring so far. we are seeing it approaching the
100 day moving average, helped along by the study yen and expectations, for solid corporate earnings reports. limiteds are somewhat as japan carries out labor exercises -- naval exercises with the u.s. for now, we have global exit -- equities having jumped to an all-time high, getting renewed voting in france. the index gained 28% since 2013 last year. couldrse, chinese stocks spoil the global markets party. haidi: shanghai is the worst performer globally.we will see if they extend the losing run today. let's get to paul in sydney. paul: bloomberg has been told the cbc capital is keeping up with hitachi in a bid for to achieve a bash toshiba. cbc is trying to preempt an
offer.of the it is hoping to reach agreement before the june deadline for first-round bids. the energy technology company is expected to pitch about $2 billion, although it's not clear what the cbc hitachi business would be. details of president trump's tax plan are emerging. the white house says he will call for lower individual rates with corporate tax coming down to 15%. further details due on wednesday. although the final proposal is not expected until june. attacks release will come as the white house and congressional leaders work on a spending bill to avoid a government shutdown. the president is ready to slap a wood lumber from canada, the latest in a trade dispute between the countries. the white house has confirmed the plan, which came in a comment at a reception for conservative reporters. what prices have surged since the election -- wood prices have
surged since the election. china is calling for restraint over north korea, after discussions with president trump, the appeal comes as u.s. and japanese forces begin joint drills and beijing urges all sides to avoid actions that might increase tensions. pyongyang has denounced the naval exercises as a prelude to invasion. state television threatened to preempt a strike to think the carrier.that -- global news 25 is a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. says it isina getting better control of its bad debt pile as it tries to rein in the severe risk to the country's financial system stephen engle has more on this. . what is the pboc governing? when is a nonperforming loan a nonperforming loan? stephen: the deputy governor commenting at the bloomberg
seminar saying interesting things. the main goal is to stabilize the economy and the authorities primed the pump a little bit with a stimulus target, getting the economy back on solid footing, as we've seen four plus years of deflation.we are now in inflationary territory which can help corporate profitability and put a floor on the slowdown. that's what we've seen in monthly indicators. the problem with that is the rising defaults. the record number, highest since 2011 or so, on short defaults is still a fairly low number, but still a lot of financial risk. the problem is the financial risk to the banking system with those nonperforming loans. however, we saw the ratio in the fourth quarter fall for the first time since 2012.
authorities are getting that under control. now that those are under control, you can start targeting the other bigger financial risks. this is what he had to say. >> how to control the asset bubble is one of the important things we have to consider, and also when we consider monetary we would like to try to manage the overall risk and prevent systemic risk. being said, of course there are systemic risks all of the place. however, he said the overall the chinese economy is under control. i want to talk about outflows. rishaad: that was the big story. stephen: absolutely. i want to go to the bloomberg terminal to show an interesting chart. we talked about a pick up in the economy, month over month gdp. the pickup of gdp growth on a versusver month races
inflows. the red bars pointing down are the outflows. rishaad: 7.6% growth. moneyat green means coming in. that's right. net outflows are triggering inflows as much as gdp has been improving. haidi: even with those inflows, we know that liquidity is tightening when it comes to the financial system. that's the intent of this crackdown of over leverage. it comes toan when chinese stocks, it will get a ?ot worse stephen: they could, because we are seeing the cracking down a shadow lending, and the intricate web behind the scenes that these wealth management products. what's interesting is we've seen the selloff in chinese a shares into a third week, including 1.4% down on monday.
this is the trusted investments. they switched into reverse. it was about $1.7 trillion heading into these entrusted investment funds that chinese banks farm out to external asset managers. investment banks are now pulling back in response to government measures to crack down on over leveraging in the economy. about $183 billion of market value raised last week alone. authorities are targeting the shadow lending market now that they see stability in the overall economy. they contact us risk equities if the funds are playing out here at equities could be under pressure for a well, however we might see a relief rally as with other global equities. haidi: that's right. we had something of a milestone, falling thatcomp
much for the first time since december. looking ahead, a bloomberg exclusive with the man behind the twitter of china. the chairman talks about growth and innovation at weibo. rishaad: next, the highs and lows of emerging-market debt investment. assete insight from management. you are watching bloomberg. ♪
haidi: this is "bloomberg markets: asia." i'm haidi lun in sydney. rishaad: i am rishaad salamat in hong kong. a quick look at business headlines. india first. reliance industries out with record profit in the third fromer, based on earnings petrochemicals and refining. the core business of refining
and petrochemicals are helping the bank ambitions in areas such as telecommunications and retail. build mergersg to and acquisitions in europe and asia to attract new business or the bank says it will deploy 55 specialists to london, hong kong, and singapore. it has an 80 strong team in new york. zuho says it will help boost income. rishaad: demand for chips itsing korean producer, best quarterly figures since it was founded. they are 10% ahead of forecasts. sales are improving. buycompany says its bid to toshiba's flash memory unit will not affect the 2017 investment plan. haidi: my next guest believes despite political risk in
europe, emerging market that can be a safe haven. a portfolio manager at monday asset management. he's usually based in london, but joins us now from singapore. great to have you. i want to start off straightaway talking about the chinese debt market. we have seen these pressures coming down on the equity market as a result of policy tightening, of the crackdown when it comes to strings of liquidity going into the market. take a look at this chart. i hope you can see it. you see a divergence when it the u.s. 10 year yield is doing and what the china yield is doing. we have seen the pressure come down already. do we expect the bond market to suffer more as we get to greater get word from we policymakers?
>> i think there's been a couple of reasons for the weakness in the chinese bond market. one has been policy tightening and ensuring the pace of the debt in china over the past five years does not continue at the same rate. the other important factor has been reflation in china. the end of five years of deflation in producer prices in china that is now strong in positive territory. of course, that has put pressure on the bond market as well. we are likelyi, to start seeing it normalized going forward, but policy continue,is likely to especially as authorities feel a little more comfortable with growth, and feel like they can focus instead on their dynamics. i think we might see somewhat markets, butond it's important to bear in mind that in china you have chinese local markets entering the imf
which implies future interest in china from international council markets are likely to be significant. eventually that will cap the weakness of the bond market in china. haidi: i suppose thehaidi: proposed bond connect will have a little impact on that as well. >> can you repeat the question? haidi: i was going to say with the supposed bond connects, you would imagine to see more interest when it comes to the onshore bond market as well. >> absolutely. whilst we have been seeing clampdown on capital outflows in china, we have seen liberalization on terms of capital influx. that will be further support from the chinese bond market as well. we are introducing u.s. seeing emerging markets as being a safe haven. .t is a very broad brush
?here are the safe havens i'm talking asset allocations wise, and geographically, too. >> first of all, safe haven status is a big claim when it comes to emerging markets. there are certainly pockets of it in our opinion. as you point out, it is a broad brush when it comes to em. we've seen a lot of value in latin american countries. countries like argentina and brazil have been in the market since 2017 -- 2016. we continue to see value in these markets. the new darling in latin america is likely going to be mexico. we have seen mexican assets improved since the beginning of the year, but we think there's more scope for the performance as well. we are a lot less worried about the protectionist rhetoric of .onald trump we think mexico is going to
benefit from the acceleration of growth in the united states. somewhat ironically, it is interesting that mexico condemned the united states, put up a joint bid for the world cup in 2026. it might have you wondering whether nafta is ironically stronger than it has ever been before. rishaad: we have another chart here. what it shows is how correlated emerging-markets are to metal prices, mental and lumber prices as well. it?good a gauge is is also a situation of metal prices and basic resource is being one of the cheap exports of many em's? course. mental prices, commodity prices in general are important for emerging-market assets. the on the effects of collapsing commodity prices on emerging markets in 2014 and
2015, but when it comes to commodity price, i think asset allocation within emerging markets becomes important. this is part of the reason why we are extremely comfortable with emerging-market hard currency bids denominated in u.s. dollars. at the point of external shock to em, be it commodity prices, or protectionist policies like from donald trump, what we would like to see in return is weakness on em currencies. but the weakness on em currencies make emerging-market countries very competitive in exports. it makes current account deficits shrink. that is positive for fundamentals, and dollar denominated in this environment we think we continue to do well, . even big oil exporters like russia, we remain very comfortable on dollar denominated debts. haidi: i find it interesting, you're call to basically say that we need to get over the fear of the fact because fed,
tightening is indicating strength when it comes to growth. does that also tie in with a better outlook when it comes to the financial order and current account balances of some of these taper tantrum currencies that were so badly hit a couple years ago? >> absolutely. i think it is time for investors to dump the fear of the fed. we are already three rate hikes into the policy normalization. we see theble that normalization of the fed's balance sheet by the end of this year as well. long wayve removed a from the taper tantrum episode 2013. you might recall that back then we had the so-called fragile five countries of india, indonesia, south africa, turkey, and brazil. the reason we label them fragile was because of their large current account deficits and high reliance on portfolio influence.almost every single
and of these countries has seen a substantial increase in current account balance. on average, e.m. current account balances are now at almost a high, which in our view reduces substantially the vulnerability of emerging-market countries to military policy in developing markets. that's one of the reason why we are not afraid of policy normalization in the u.s. haidi: thank you so much, great to have those insights, portfolio manager strategies for amundi,at a monday -- . this is bloomberg. ♪
rishaad: and i'm rishaad salamat in hong kong as we count you down to the start of the trading day in hong kong, and shenzhen and shanghai. looking at the free market cane -- gaind, a of a quarter of 1%. hang seng futures adding to the volatile session yesterday, the hang seng flitted between gains and losses, and managed to end up with a gain. taking a look at communications, planis a company that has to divest its entire stake in the hong kong pay television operator. dilute ownership of the company. they are in the process of earning about $90 million u.s. -- nineof investors straight annual losses. the company is hoping to turn it around with money it raises. 22% down year-to-date.
downs up 16% on friday, around 10% on monday. so it is a roller coaster ride. haidi: a bit of a wild ride. taking a look at this stock, this is the maker of the premium chinese liquor, almost like vodka. fourth-quarter profit jumping 25%, the strongest growth in more than three years. they take advantage of the shift towards more expensive taste when it comes to chinese consumers. take a look at this chart. it shows that they surpassed another company to become the world's most valuable distiller. market cap of around $73 billion. the stock is up a massive 320% since the start of 2014. it was one of these names that did carly -- poorly out of the
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call today. comcast business. built for business. rishaad: we are counting you down to the start of the trading day. victoriatart here on city. i am in hong kong, from bloomberg's asia headquarters. haidi: i'm haidi lun here in sydney. trading is not underway today, as australian and new zealand markets are closed to observe a holiday. we have some data from the pboc. weakening. we are watching the repo rate. we are seeing tightening play out when it comes to money
market rates. the china one-day repo eight -- rate extending gains the highest since, april 2015. lots to play for. we have a lot of fear when it comes to worrying for the presidential election. looking ahead to the second round for the french presidential election and the second round of worry. we have the european central bank and growth and others on investors minds. let's get to the open and the start of the trading day in hong kong. reporter: keeping those walls of worry in mind, we do have modest gains in asia. some concerns around north korea.we have the cost be rising be rising.
--ean won is on the box said back foot.we have the hang seng rising for a second day. we have seen the msci world index at an all-time high. as the editors point out, not all is looking gloomy when it comes to chinese stocks. while we are seeing small-cap improving, -- stocks chinese consumer stocks has been rise, not wait down by the regulatory clampdown on financial leverage. stacking up against the shift toward the consumer oriented growth model, this makes some sense. while chinese equities have slumped on the mainland, we see offshore you one remains steady yuan remains steady.
pboc officials are focused on the debt burden. coming in the yuan slightly weaker. today we got the latest data around global payment currencies for march.the you want taken down and h as the most widely used global currency. the canadian dollar remains in the fifth spot used as a global currency, rose to the highest level in almost four years. on u.s. imposes tariffs softwood lumber and may do the same when it comes to dairy products. this is putting the five-month trading range for the canadian dollar in jeopardy. 36 hasn't traded above the1. line since last february. rishaad: looking at china's getral bank as it tries to
optimism for the economy. let's get the details in the first word news headlines from paul allen. paul: thank you. the people's bank of china says nonperforming loans declined in and theth quarter, third time since titles. capital outflows that eased along with pressure on the yuan. says the pbocr yi will pursue prudent monetary policy, balancing the need for stability while controlling asset bubbles. he also promised more transparency. >> how to control the asset bubble is one of the important things we have to consider, and also when we consider monetary policy, prudent monetary policy, we would like to try to manage the overall risk and prevent systemic risk. paul: the london metal exchange is conducting a two-month consultation to revive -- revamp
the top metals market. as theyain takes over explore ways to boost revenue and open up to new users while placating concerns of traditional hedgers, traders, and brokers. malaysia has formally agreed to a one point $2 billion payment plan to settle the death of a struggling state fund. up louis dabney sovereign wealth fund will receive half of that by the end of july and risk a year and. the filing in london says they will assume the coupon and consumer applications for $3.5 billion on bonds, which were co-guaranteed. south korea has shown signs it moving on from the president's in preaching scandal with consumer confidence -- in teaching scandal with consumer confidence rising. -- impeachment scandal with
consumer confidence raising. this follows months of uncertainty after president park and some of the nation's biggest companies were involved in accusations. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm paul allen, this is bloomberg. rishaad: chinese stocks and bonds suffering biggest losses of the year. crackdown.egulatory something like $1.7 trillion sources of inflows suddenly switching into reverse. regulators tightening scrutiny on interested investments? >> the spotlight has been on this interested investments for the past three weeks for the regulators. those are typically the bank rate through wealth management products, and then to external
third-party managers in order to get higher return, and the amount of such investments has ballooned to $1.7 trillion. critics have blamed those interested fund managers for adding leverage to china's financial systems and reducing transparency. that's why it are very concerned about this right now. sort: and all of this is of feeding into the negativity in the stock of bond markets, which is already being squeezed by money market rates being tightened. >> yes. as a preemptive move, banks have been pulling money out of such investments. most of them are invested in bonds and smaller amounts and stocks. withdrawalthat, the has been how to erase to being dollars of stock market value, and has sent government bond
almost the highest in two years. economists are telling us they expect pressure for the bond yields to continue and the 10 year government benchmark bond can rise another portion to 3.8% by the end of this year. rishaad: the other thing, something else which is concerning investors. ofs is the cross guarantees each other's debt. when this sort of thing starts to happen, you are building a house of cards.it depends how big a problem it is. is it at worrying levels now? >> indeed. the phenomenon of cross guaranteeing debts and smaller companies and china has been around for a while, because smaller companies typically cannot get bank loans themselves. banking regulators ordered checks for those kind of loans among the banks because they are concerned. there was an incident last month
where acorn oil producers said it is guaranteed a third-party alumina makers debts for 2.9 billion yuan. that alumina maker is stuck in a cash crunch now. that is a problem. aalysts say the worst case is chain reaction where a group of companies can be dragged down as well. the situation can get bad i quickly. rishaad: thank you so much for that, on the that in china. let's have a look at the business flash headlines. the world's most valuable distiller, profit up 29%. it is raising prices to take advantage of a chinese consumer shift to more expensive drinks. million through the end of march. revenue surging 47%, coming in at $1.9 billion. they are aiming for 15% revenue growth this year as drinkers go more upscale.
said to bebank is close to an investment in london-based the our startup improbable worlds. the deal may be reached this week, although it is not sure how much it is considering. venturecked by capitalist andreessen harlots and has raised about $20 million horowitz andreessen and has raised about $20 million so far. rishaad: software updates for smartphone. some users are complaining of red tinted screens and poor wi-fi connection. the device started shipping last week. users fixecommending them problem manually. sales beat the record set by the s7. haidi: another hip-hop -- pickup
haidi: weibo is commonly known as china's twitter, and its parent company has enjoyed accelerating revenue growth over the last year. that is largely because of the rapid take-up of weibo inlet -- in rural areas. >> last year, we grew independent venue -- revenue by 110%. that is very big. at that moment, it is continuing this year. you will see significant growth in revenue.
two less extent from services. reporter: and weibo, the messaging services that provides so much of your revenue stream, you done a very successful job in growing weibo users in second and third tier cities. where are your new markets? >> we will still grow faster than most competitors in usage growth this year. going to focus on the time spent competition. we are going to increase more products and more diversification into offerings, especially into video area. we have tremendous growth in year,of video uses last and tremendous growth in live streaming. started beta just
,esting with video storage similar to what snapchat has. this is an area we will focus. video is the key for future growth. reporter: you say there's too much money into the tech sector.are you subjecting -- suggesting there's a bubble in the chinese tech sector? >> it's everywhere. it's not just one area. i was talking about the internet business in general, especially in the last five or six years. tremendous amount of money , whethernto the market from following -- four in funds or local funds. there's too much money. whenever there's a new concept emerging like streaming, or a , or the so-called shared economy in the uber
hundreds ofyou see companies being created. in theory, these companies will never be successful, but everybody, whenever they have a new concept, they think it will work. they allow the money to pour into new companies and businesses. the result is that there's a huge competition in terms of market share. you have to bring cash to get market share to get bigger. a lot of competition is irrational, in a way. rishaad: our next guest is an sector. in china's tech joining us is sebastiaan van den berg. he's with an investment finance firm working in china. what are you investing in? >> basically, as an investment
firm, what we do is look at sectors where we feel we have an edge. for example, we own a number of finance created businesses. one of them is ua finance. it is the longest hong kong-based consumer lending business. we are the largest in hong kong. we had a very established business in china. with the business, we really can leverage our experience and expertise to invest in smaller sin tech companies that value that expertise.another company is in canada , another large consumer lending company. we did that deal with another group of financial investors. we are leveraging what we have. , anotherould mention business we do not own any more, it is a well-established hong
kong-based brokerage firm and asset management company. two years ago, we sold 70% of the business to china everbright. with that business, we are able to leverage expertise here in the thin tech -- fintech space. rishaad: i'm looking at the new investment. agricultural areas in china. this is a landscape dominated by some of the biggest banks. to the average person to borrow money in china, it is difficult. it is very expensive as well. how do you bridge the gap? >> the real issue is that many people in rural areas do not have access to investment products. works in china with the tiered banking system, only international banks are able to provide investment products for clients.
banks don'te rural have access to that. to think about their customer base, to 70% of assets are in deposits. it's very inefficient. -- geventcompany does provides a platform for the rural banks to access funds created by the big national banks, and able to provide hottest to clients. it is an interesting product. it feels more complete. we think that will really help drive the dissemination of investment products across the chinese community. talk about this as being a transmission issue when it comes to lending, particularly in rural sent -- centers, but it is also accountability and transparency issue, which is why you have
regulators cracking down on the sector heavily, because they are having issues with poor business practices, etc. how difficult is it to transition when you have new regulatory frameworks and it seemscoming up, every other day? you are talking about such a massive industry already. it is quite a challenge to transition to meeting these new regulations in a non-messily done way. >> you mention a very good point. clearly, the regulation is important. by the way, our view is it is very important to have regulation. quite frankly,, overview. i think what we are now seeing is much more of an orderly market. we certainly welcome that.i think it is our ability to basically preempt that regulation, given our experience.
we are very attuned to let regulators like and don't like. we are able to help our custard -- companies to be in the right place, know what to say, know what to do, and essentially preempt a lot of the problems that otherwise would arise. isgree that regulation important. because of our experience with regulators in hong kong and china, we are helping the thin tech companies we invest in -- fintech companies we invest in. haidi: it was a very telling interview with the chairman from weibo. the demographics in china are really astounding, but when you are looking at investing, how do you determine value and sidestep some of these potential asset bubbles in the making? >> clearly, there's been a lot of capital into the fintech space, which we invest in as
well. one thing we do, we have the luxury of being able to be very selective with the companies that we ultimately invest into. we want to make sure that we see value. looking at valuations is very important. we only invest in those companies that also recognize the value we bring to the table as a strategic investment. those companies that are willing -- a startup yesterday was saying that the trouble with hong kong is that companies are not investing in anything but fintech and health care. it's all they look wet. -- it's all they look at. >> we as an investment business look at consumer related companies, and make investments there at well. given our expertise, we are well placed to do in this that's -- investments there. rishaad: thank you very much.
renowned fora's driving projects through rapidly when the decision has been made. think high-speed rail and renewable energy. now beijing seeing robotics as a big economic goal. what do they want to achieve here? reporter: they want to dominate. resistance is futile. [laughter] you are right. china thinks big all the time. they see what japan and korea and europe has done in terms of robotics, and they want to think big. they have an outsized project to be a player in industrial robots and service robots. what sort of areas are
they focusing on in terms of industrial application? now, the china market is actually the fastest-growing in the world, but dominated by foreign players. is torst point of attack try to be a player in the robots on the factory floor that help automate companies. this also dovetails with a very big push by xi jinping to industries.nese it kind of works together. rishaad: strange you want to automate and industry when you have so many people, the population is 1.4 billion. the point being, does china have any advantages? the traditional players, the superpowers like japan, the u.s., and germany. reporter: they had scale, growth momentum, and money.
it's the fastest market. there will be huge demand from the industrial side of it. governmentse local pumping billions of dollars into build industrial robot parks, to give subsidies tax breaks, to get this industry off the ground. rishaad: everybody has been trying it. we've been waiting for robot leaders, etc., people cleaning our floors and doing housework. we seem to be no nearer to that. it is a slow process. reporter: certainly when it comes to the factory floor, i think they can be a player pretty fast. the robots are kind of commoditized. if you look at the lower cost of software development and digital technology, sensors, cameras, the point of entry into that side of the market is a lot lower than it used to be. in the service sector, think logistics. think what amazon does, and it is a possibility. rishaad: thank you so much for
♪ announcer: from our studios in new york city, this is "charlie rose." --rlie: steve ball mark, steve ballmer, the former ceo of microsoft, announced this week a new project. is letting usafacts, a comprehensive nonpartisan data platform that track government performance. i sat down with him on tuesday at the economic club of new york about his career and this new venture. let me start back where you were. when you had the question that how isted to answer, government mone