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tv   Bloomberg Markets Asia  Bloomberg  May 7, 2017 9:00pm-12:01am EDT

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haidi: i am haidi lun in hong kong. rishaad: i am rishaad salamat going to from bloomberg's headquarters in asia. this is "bloomberg markets: asia." ♪ asia-pacific stocks climbing, japan hitting a 16 month high, investors positive about global growth. rishaad: china's foreign exchange reserves strengthening for a third straight month. emmanuel macron emmanuel macroe
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french election with a decisive win over marine le pen. rishaad: right, we are looking at what is going on when it comes to trade numbers out of china. they should be out in the next hour, about $35 billion, the surplus there, giving us an idea of what is going on with the global economy and domestic demand, the intrinsic point for the chinese economy as we see this rebalancing taking place. seeping out of the country, but it feels like these capital controls are working. haidi: some pretty jerked capital controls. draconian -- pretty
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capital controls. we did see that in the fx reserves. #8392, that pulls together these stories, the yuan stabilizing, the spot rate, and then the monthly foreign-exchange reserves. around $3ll sitting trillion, but that number was much better than what economists were in, but does reflect a capitaluan, stricter controls but stopped money from leaving the country, and arguably a pickup in terms of sentiment in terms of how investors are perceiving how the chinese economy is going, moving away from the catalysts of the the diminishment of political risks in europe. we are looking ahead to china data and trade numbers as the next driver when it comes to the asian session.
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we are 30 minutes away from the open. let's get it over to sophie for a look at markets. were expecting japan to play catch-up, and they are certainly doing that. sophie: definitely playing catch-up. japanese traders looking refreshed after their three day break. the nikkei and topix surging to highs last seen in 2015 as the yen hovers around seven-week lows. we had that relief from the wind in the french elections for emmanuel macron, and the global growth richard lending some cheer as it looks intact. aussie stocks snapping a four drop, aussie dollar at january lows. set for another fresh high, very resilient, along with the korean won looking past election risks for
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now. in the bond space, all see bonds sliding as it is risk on sunday,g the vote on matching treasury moves. in the commodities space, focus given that selloff across different commodities last week, but we do have oil on the front wti and brent extending the rebound as goldman and citibank warning that the selloff was not based on fundamentals. and taiwan, we have time when these media reporting that some suppliers of iphone eight parts will kick into gear early, starting production one month earlier than expected in june, and those stocks on the rise. tsmc to start chip production in july to be on track. we do have iphone supplier w was cut toing as it
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equal weight at morgan stanley. rishaad: right, we have been talking about the french elections, but there is also an election in germany. rosalind: we are talking about germany where the cdu has defeated the incumbent social democrat in northern germany. she is gaining momentum, the victory gives the cdu a lift into next weekend's election. it is seen as the main bellwether before the national vote. china's foreign exchange reserves increased for a third month as tighter capital controls and easing currency pressure kept money from flowing out. the pboc says holdings rose $20 at $3.03o end trillion. that was more than estimated by a economists, a three .0 to train dollars stockpile.
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by a capita group has bid for fairfax media. includes the new zealand business, regional newspapers, and stakes in radio and streaming dentures. fairfax says it is viewing the proposal. the premier of taiwan is eyeing opportunities in china as his administration looks to boost trade links to the u.s. and southeast asia. he isn't opposed to stronger cross strait economic links and called china big market that should not be pushed away. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. haidi: thanks for that. china's foreign exchange
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reserves rising for a first-rate month in april. tighter capital controls reducing outflows and the yuan holding stable. a trade data out today at some point expected to show a slowdown when it comes to exports moderating from the stellar growth of the last few months. tom mackenzie has been following this for us. you saw the fx numbers of the weekend, how sustainable is it? question iter that is worth going back to january, you will remember the hand wringing win fx reserves drop through that $3 trillion level. seen three consecutive months of strengthening, over $20 billion in april, hitting that $3.03 trillion mark. there are a number of factors feeding into this stronger fx reserves pile, the capital controls, the stability of the yuan, and then the growth picture as well.
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we are seeing that stronger gdp number in the last quarter of 2016 and the first quarter of 2017, but then you have the considerations as to whether or not the growth starts to slow, particular he after this weaker than expected pmi numbers. bloomberg intelligence saying we could see slower growth in the second half that could lead to a domino effect with the pboc under pressure to stop its rate hikes. it is trying to keep pace with the fed to some degree, raising rates in the money markets. it may be under pressure to stop doing that if growth reduces, leading to more pressure on outflows and the yuan, but this is still the largest pile of affects reserves in the world, but has reduced from $4 trillion in 2014. into thatard, playing is the growth picture we have been talking about, and tying into that is the import, export,
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and trade data this morning. rishaad: what should the trade data really tell us at the end of the day? the export number we are looking for, the estimates are 11.3%, downl up though from the march number which was around 16.3% growth in exports. bloomberg intelligence again pointing out that there is a comparison effect, because this is a year on year number that comes from a low base and there may be an upward surprised, that even if it is in line with estimates, bloomberg intelligence say it would show robust strength or exports in china and strong demand from u.s. households. again, you have had the fx of a weaker yuan. over 18 months, it is weaker,
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and will have supported exports. the indicators leading to this trade data have been mixed. south korean exports came in strongly, but then the pmi number we got last week that suggested that export orders have reduced and have slowed, so it will be interesting to see what these numbers come up with. 18%, downpected up from 20% last month. we will be getting those data points around 10:00 hong kong time. rishaad: thank you so much for that. still ahead, emmanuel macron, victory in the french presidential election, what lies ahead for the eurozone second-biggest economy. plus, south korea's economic growth has been slowing for several years, but can tomorrow's election kickstarter turnaround? to the chief economist for standard & poor's, up next. this is bloomberg. ♪
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rishaad: this is "bloomberg markets: asia." i am rishaad salamat in hong kong. haidi: i am haidi lun in sydney. reported first half cash profit of just over 4 billion aussie dollar's. the bank announced an interim dividend of $.94 a share in line with analysts forecasts. westpac says it sees resilience and good prospects for the australian economy and expects house price growth in the biggest cities to slow. groupd: china's hna behind the sale of a $500 million stake in standard chartered. omura dispose of the one point 6% stake after the conglomerate increased its position in deutsche bank. is the biggest shareholder
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and europe's largest investment bank. numbers wouldshi reflect a 30% sales drop in its rating scandal. the nikkei reported revenue may have fallen 15% on global vehicle sales. south korea alexa new president tuesday with the kospi resilient in the face of rising regional tensions and corporate scandals at home. the vote and how it will affect the outlook for korea and a sense of the mood on the street there as well. it is less than 24 hours away for south koreans to head to the polls at 6:00 a.m. on tuesday. the mood on the streets is optimistic.
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was the epicenter of months and months of protest for the ouster of president park. supporters of the candidates have been around this area effortning, their last to gain support. i saw earlier the conservative and supporters campaigning in this area, but also protesters in front of government offices, asking the government to improve the economy and allow them to survive in this economic situation that south korea faces. it has been a tense situation for south korea since the ouster of president park. a lot of things have changed. we are seeing interest in south korean elections given that this was a historic ouster of the president. there are tensions over the reforms of conglomerates, owning
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about 27% of business assets and so depending on who gets elected president, those reforms could change. the main candidates that have dominated the race have in the liberal, a centrist, and a conservative. they have very different views on the economy and how they deal with north korea. a lot hanging on the line on this election. mentioned one of the key challenges for whoever becomes the next leader will be conglomerate reform. what is being done on that front so far? shery: we are seeing dozens of bills sitting in parliament. there are some easy ones to pass , such as electronic voting for minority shareholders to vote be more, but others may
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complicated, such as enhancing corporate governance and preventing shareholders from installing their own friendly auditors, so lawmakers are across the spectrum saying it might be easier to pass electronic voting, but restricting treasury shares, which are key for these conglomerates to consolidate power, that may be a bit more tricky. theeast when it comes to economic mood, it seems more optimistic. seeing exports jumping to a seven-year high in april, so people are optimistic on the economic side, but take a look at the stock market at an all-time high. haidi: thank you for that. we will be checking with you throughout the day as south koreans head to the polls. for more on the korean economic outlook, let's bring in s&p global's chief asia-pacific economist in tokyo.
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thank you for taking time to speak with us. going into these elections, we have had an uptick when it comes to trade numbers from korea and the markets have been land and a sanguine about the of evils that have faced the country over the are you months -- optimistic that after we get a new government that it will be an easy transition? good morning. it is a tough transition because korea is an open economy hit eyes slower global growth and slower trade. china is moving up the value curve, encroaching on korea's traditional industries, like flatscreen production that has moved out of korea, so korea needs to stay ahead of china and
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has to rotate towards services and higher and consumption goods and away from some the other things they have been doing. it is not clear how much the new , wernment can do, but korea will see if they can rebalance around china and break into a higher growth rate, but they are three-ish for the medium term. how much are you looking at conglomerate reform? that looks to be enormous political pressure for the new president to tackle quickly. will that be growth negative in the short-term? >> it could be. i used to run the imf office and korea 15 years ago and we were talking about conglomerate reform back then, so it is not a new issue. from our point of view, korean needs to be flexible and able to move away from its traditional industries into new markets. if we don't have a flexible conglomerate sector, that will be more difficult.
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this will be a slow, protracted process, negative as you mentioned, but if they get it right, it will enhance flexibility and give a model uptick to growth over the medium term. rishaad: i'm going to be at #571, indicating that these events like this corruption scandal and the implications on growth, how much can growth be hurt by what is going on with political uncertainty in particular? what sort of an impact can it have? typically in korea and elsewhere where this hits is toestment. people continue spend money, so it is not a consumption story, but if there is political and policy uncertainty and the investment horizon's multiyear, firms may hold back on spending.
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you will probably see some soft investment through this political patch, but if we get the upper left, that is where it will be exports as well. rishaad: let's move it along and change countries and have a look at all straight in the budget coming up. how is it looking to you? >> the government signaled they want to get back to surplus in 2021. the headwinds have been on the nominal side, week wage growth, week inflation. other than korea, australia is the other country that needs to rebalance around china, and to be frank given the size of the trade relationship and the the fact that all strain growth growthike -- all strain is around three again, that looks like a pretty good story. we will have to see the details of the budget, but they are on a path to get it back into balance about 2021. here in australia, it
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feels like there is an up holdion with keeping a of this aaa. are they doing enough? can touch the ratings. i will leave that to my sovereign colleagues. that willbackground support that, a similar issue to korea. see in australia that services exports to china are reflate in the economy a little bit, supporting revenue, and to the extent it feeds into the fiscal and help from the macro side, that is a good part of the story. i know the government is distinguishing between good investments, things that would productive frontier and boost growth over the medium-term term, and less productive investments, but we will wait for the details on the
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budget, but are expecting the 2021 target to stay in place. haidi: thank you for that. forng up, a brutal week iron ore and a lot of commodities, concerns over supply, conditions in china. we will take a look at the outlook and how the china data may come into play. this is bloomberg. ♪
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rishaad: we are counting you down to the start of the trading day in china and hong kong. concludedket auction five minutes ago. the upside, some uncertainty gone as we have emmanuel macron elected as the french president. it was all about commodities to a large extent on friday. nothing more so than what happened on the iron ore market,
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tradeown to the inflation out of donald trump coming to an end, fundamentals such as supply and demand with supply outstripping demand? #7778, limit down on friday, 5% off. the day before, another 5% fall back as well. keeping a tab on iron ore at the moment. haidi: if you look at those china, theree in is a significant retail component. we are talking about the impact of tighter monetary conditions. this could be the china part of least when it at comes to producer inflation gauges, we may have hit a peak. we will be watching out for that
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story when we get the china trade numbers and a little bit. coming up, taiwan needs more foreign workers to boost its economy. with the government needs to do to bring in professionals and stop brain drain. this is bloomberg. ♪
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rishaad: that is the view to victoria's peak in hong kong. the tradingart of day looking like a positive session with the nasdaq and s&p coming in. fromrishaad salamat bloomberg's asian headquarters. haidi: i am haidi lun in sydney. we are waiting for china trade numbers, the next week driver when it comes to market sentiment in a you and globally given the ramifications. now that we have have that sigh of relief from the presidential election in france, a landslide margin when it comes to emmanuel
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macron's victory. we are waiting for some numbers from australia. building approval, something we are watching closely given the situation of an overheated property market across major cities like sydney and melbourne. from the reserve bank of australia governor taking awe, he was look at building construction approval numbers come in that would suggest that supply is starting to increase and we will get that rebalancing happening. it is a far worse tech line than we were expecting, approvals falling 13.4%. the survey was for a decline of 4%. in the previous month, a gain of 8.3%. down 19.9 percent on year when it comes to building approvals. the survey was looking at a decline of 10% followed by last month's 4.9%.
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that does not bode well when it comes to that picture, the narrative i guess of an improving supply side situation when it comes to the australian property market. a lot of policymakers saying prices may be higher, but they are real because it does come down to a supply-demand situation. job ads month on month for april, up 1.4%, the previous .umber .3% rounding out the data drop in national australia bank business conditions 14% matching the previous month, and that was for april. business confidence at 13%, picking up nicely from the previous reading of six or sent. look at right, let's that as we digest of that figure and look at french elections,
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better than report on friday in the u.s., and the austrian budget as well. sophie: we are seeing the aussie dollar follow below $.74 following the building approvals drop we saw that you elaborated on, so putting the currency under pressure. equity markets seeing a sigh of relief extending to the hong kong session, that hang seng adding .25%. markets on the mainland not getting with the picture, the purging further from the global shanghai composite falling .4% come the lowest since october. we have been waiting on china trade figures. exports expected to rise for a second month leaving a wider trade surplus. financial shanghai, stocks in particular, falling .5% after china's top regulator
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on anbang. consumer staples up .6%. consumer discretion marginally in the green as retail sales in hong kong rose for the first time since february 2015. i want to round off with a couple of equity movers and asia. take a look at tokyo, mitsubishi surging the most in eight years after the u.s. fda approved its als drug. lg electronics rising the most in nearly a year, the korean asked lg to clarify a report that it is in talks for a potential acquisition. all strained tv stocks climbing
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on plans to ease regulations. and kuala lumpur, shares ishanding almost 30% for skander waterfront regarding a major property project in kl city. haidi: thank you for that. let's get to first word news. rosalind: the final count has been declared in france, and emmanuel macron one with more than 66% the vote and a decisive victory over marine le pen. his victory is seen as a boost for the european union and a blow to rising nationalism. marine le pen said the result as a massive success for the far right. macron prepares to name his government. tonight in the next
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five years, i will take on that responsibility with determination to serve the country on your behalf. long live the republic. along live france. -- long live france. the french people have chosen a new president of the republic. i have called mr. macron to congratulate him. i wish the best for our country and wish him well. rosalind: the san francisco fed president stands behind three-for rate hikes this year. the labor market is expanding be on a sustainable rate and operating above potential. the latest data shows employers added 211,000 new jobs in april as the jobless rate fell to 4.4%. we haveconomic data seen for the past few months is consistent with a steadily improving economy, an economy in good shape.
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oris that whole employment beyond maximum plummet and terms of the sustainable level of unemployment, and inflation indicators are moving in the right direction. warren buffett has assured shareholders they will be fine after he is gone. them that if i die tonight, the stock will go up tomorrow. he said speculation about a breakup would be a good wall street story and said his predecessor would be a capital outlook cater and would already be rich. that's capital allocated and would already be very rich. ibm shares fell on friday after the billionaire said he cut about a third of his stake. warren buffett also admitted that he "lou it" by not investing early in google. than $19 billion in apple's stock, but sees it as more of a consumer products company. global news 24 hours a day powered by more than 2600 journalists and analysts in more
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than 120 countries. this is bloomberg. rishaad: the premiere of taiwan is eyeing opportunities in china as his administration looks to boost trade links with the united states and across southeast asia. interview since being sworn in, he said he is not opposed to stronger economic links between taiwan and its biggest trading department and says taiwan needs to do more to retain talent and attract more foreign workers. we open the door little bit more to see if we can attract good foreign talent. it is difficult to stop mainland china recruiting taiwanese talent because our wages are lower than other countries so what can we do? we can open up in the hope that other people come in. rishaad: let's bring in our taipei bureau chief. what
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exactly is taiwan's government doing to reinvigorate the economy? >> one of those big signature initiatives is the so-called southbound policy to improve economic ties with southeast asia, south asia, australia, and new zealand. these have been identified as the government here as fast growth regions of the world and areas in which taiwan should improve its economic relationship. withis his first interview the press and went to great -- expressed that taiwan should not forget its greatest trading partner, which 40% of trade is with china and says taiwan wants to maintain friendly relations with china. who does not want a friend legendship with china?
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taiwan and china split amid great acrimony at the end of the chinese civil war, and china claims taiwan as its sovereign territory and threatens to said china must recognize that its efforts to diplomatically isolate taiwan are not beneficial. trade agreements that taiwan manages to sign with , and any mores trade deals with taiwan, would be beneficial for both taiwan and for china. trade or is talking up it is he doing anything else, any other overtures, to improve the relationship? >> this was one of the most interesting things he had to say. he was keen to point out that taiwan needs innovation, investment, but the other thing he says taiwan needs is immigration. when yous at a time
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anti-immigration rhetoric and the united states, brexit, so this is a remarkable thing from the premier here. he said taiwan needs to attract more talent into taiwan to make up for what he says is the biggest threat to taiwan's economy, the brain drain, talented come young, ambitious people in thai one are being taken away -- people in taiwan to being lured away singapore as wages have stagnated for more than a decade. he went to great lengths to emphasize that there is not much the government can do about that in the short term. the way they will combat that is to throw open the doors and make immigration easier and look for talent abroad to fill that gap. haidi: thank you so much for that. hasng up, emmanuel macron
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pledged to reform france and deepen eu integration. can he do that with his fledgling political party? we will discuss his prospects and the road ahead next. this is bloomberg. ♪
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>> we used to have a very short euro position, but now that is gone. a flow perspective, there is a lot of money on the sidelines waiting for this french risk to dissipate. the ecb will breathe a sigh of relief and now focus on economic activity and start talking more positive about that, which will be supportive for the euro. mean that not populism in europe is on the back foot, but the extreme
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rhetoric the national front and france has come out with for a number of years, huge turnoff for a large portion of that population. is a freshat macron face, a centrist face, offers something that french president's of recent years have not offered, which is a new way, a third way of looking at french politics. >> macron will be a comfortable partner either of angela merkel or of martin schulz when we see elections in germany later this year. it is a stronger europe, and integrated europe, and certainly marine le pene if would have come in, and immediate crisis. rishaad: indeed emmanuel macron 's victory scene is good news and a blow to populism around
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the world. my next guest says it makes the ecb's job a lot easier. thank you for joining us. let's kick things off with a look at this. you could say it is say blow to the populist trend, but it is more complicated than that, isn't it? >> this is the big thing. rishaad: we also have that victory for angela merkel as well. >> this is evidence that europe is bouncing back politically towards the middle, and this is good news that is good for the economy. this would bring a lot of positive effects with it. rishaad: you are saying that about the politics, but what about the economy? you are describing it as an economic boom. >> the euro area is bouncing back. the measures the ecb has taken to get the economy back to
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growth are becoming more strongly felt. you see that with pmi, unemployment, in gdp growth, and clearly the year old area is coming back. -- euro area is coming back. in the periphery of europe, the unemployment rates are far too high, but over all unemployment rates have come down massively. rishaad: where does this leave mario draghi? we have no real signs of him tapering off at the moment and no real signs of inflation either. all this money and the system has not created the effects he wanted. , but see plenty of growth not much underlying inflation in europe. wage growth is still low across europe. to my mind, i suspect the governing council will wait a little bit until inflation pressures held up.
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that would be intimately connected to what labour market development would do to wage pressures and costs. rishaad: there is an inherent danger that going in the direction of the eu's wishes that the eu will have less pressure to make those societal and political changes people have been demanding. >> it is clearly felt that the eu needs to reform. a large number of people in france voted for le pen. frexit is another indication of this. there is clearly pressure for europe to change. we have to see what happens next. of macron will give that more impetus. haidi: a lot has been said about newcomer torelative
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politics, the youngest elected head of state for france ever. a huge number of challenges ahead of him. can get thatmarche majority to get the mandate to leave? >> we will see. remember that political power in france resides in parliament, and it is essential for the president to have parliamentary support. i think that dynamics in the will beeek or two important and informative, so we have to wait i think. haidi: a lot of this election has been based on disenchantment with the political establishment , something that macron and his party will have to address, but , is the of the euro existential crisis over our are we still looking ahead to germany & elections for an
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answer on that? a euro is good from perspective and reduces risk that you'll have a breakup of the euro area. this reduces it further. that makes interest rates come down, supports growth, and the work of the ecb better. this is good news for the ecb haidi:.euro i suppose we will be waiting for details of his economic agenda. the ecb clearly sets monetary policy independently, but much like the fed they have had to whatwait and see to see the progrowth agenda will look like. you think it changes things for mario draghi? >> the ecb also looks at the state of the european economy. i think the election of mr. macron will be good for the
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economy and make the ecb's job easier, but the focus is plainly on the euro areawide economy. haidi: great stuff. stay with us. we will talk more about the china numbers expected over the next hour or so. this is bloomberg. ♪
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a guest is a former deputy governor of the central bank of ireland. he stays with us. great to have you. marcus breathing a sigh of relief after the results of the french presidential election, but let's move to the u.s., reassuring jobs numbers on friday. do you think that boosts the fed mandate to go more hawkish this year? think the fact that the job
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market in the u.s. continues to tighten as the fed has expected suggests the feds expectations and game plan are caring itself out, so it does look like further the tightening in u.s. monetary policy. janet yellen has been careful of not doing anything without it being clearly so marketed expectations match what she is about to do. what we have not heard a lot about is the balance sheet. they did not mention it at all, so do you think they should start talking about it, and what does the unwinding look like? can't talk about the balance sheet until they have an shouldere the shrinkage end up, $3 trillion, $2 trillion ? they need an idea where they
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need to in good they cannot initiate the discussion without clear plan. they have not gotten to that point yet, so i suspect we will have to wait to see what happens. rishaad: let's get to the heart of the problem, this is #8395. what we see is this is unemployment and how it has fallen to 4.4%. this is inflation. what point does that have to fall two to get this to go higher? or does it need to? good point. the unemployment rate feeds into inflation, but with a lag. if the unemployment rate stays at 4.4%, it means inflation picks up. clearly the u.s. labor market is getting very tight, and this will add and that inflation pressures. is just it,ht, that can they be comfortable with inflation at these levels? >> underlying inflation is some
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distance below 2%, so we're still waiting to see what happens with that. i think they feel quite comfortable in the current situation. rishaad: are they reading inflation correctly? does it represent what people are buying and selling? >> well, -- rishaad: what is in the basket? is it relevant? >> it is plainly relevant. there is an enormous amount of work that goes into figure out what people buy and make sure it is represented in the baskets. rishaad: a lot of people have been critical of it. >> house prices are not in the inflation numbers for instance, this is don't think then saying core cpi is a measure of inflation. they are saying perhaps it is that the only thing people worry
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about in the economy. rishaad: let's look at growth then. 2.5%? that is below trend for the u.s.. we have to get used to this. >> it may be below the historical trend. in thehe growth rate now u.s. economy, it is probably above that. the unemployment rate is continuing to fall, so the u.s. economy is doing well, not as well as the past, but as well as it can for now. rishaad: what about the fiscal program? guess. is anybody's it is clear that president trump when he was selected said a number of things, but to implement the political program is not that easy, so there is some difficulty there. rishaad: thank you for coming on the program. all right, in the next hour of "bloomberg markets: asia," wall
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street deregulation, what is going on as far as the financial industry goes in this part of the world. we also talk trump, trade, and taxes. ♪
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♪ it is almost 10:00 a.m. in hong kong. that :00 p.m. on the eastern seaboard of the united states. almost 10:00 p.m. on the eastern seaboard of the united states. haidi: this is bloomberg markets: asia. ♪ rishaad: asia-pacific stocks on the up. investors remain positive about political growth. haidi: china's foreign reserve strengthening.
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the owner of australia's top three newspapers weighing a multibillion-dollar bid. haidi: the price of love. a survey ranks the expensive places to take your date. we also have the bad habits index. first we are awaiting crucial trade numbers out of china. we the french elections over, that breath of relief coming through the markets in japan playing catch-up and leading gains across the region. these china numbers are really going to drive sentiment here in asia. take a look at this chart. this is the trade balance. we are looking at what we are expecting. signifiersmber of that maybe this is as good as it
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gets when it comes to chinese exports. like theyng to look have come off their peak. weighs certainly going to on the second half of the year. earlier we had china approaching her first monthly trade deficit in three years. that is expected to be a one-off. this is only an indication of china's economic health but south korea, hong kong and globally. whether this global story has legs. let's have a look at this other chart. it is seemingly working. foreign reserve going up marginally and a slight recovery taking place. younning of this year remember a large number of people were suggesting that we would have been r&b rate which
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begin with seven. currently or thereabouts and trading sideways since february. we're waiting for trade numbers. let's get over to sophie. >> there are no signs of the monday blues in asia. the global equity rally is continuing following the european markets friday. japanese shares are playing catch-up. chinese stocks are still not getting with the program. the government crackdown has billion since$453 mid april. but it has not hit crisis levels yet. heading for new highs. the yuan is looking past election risks.
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up the first day in five. building approvals have dragged on real estate stocks in sydney which is weighing on the aussie $.74 u.s.k below we look at the bond space following macron's defeat of le pen, asian bonds moving lower. gold is also reversing the earlier drop. commodities, we have oil prices on the front foot continuing to warns higher as goldman last week selloff which drew prices with five-month low was not based on fundamentals but all about technicals. capped a third weekly loss friday which wiped out all gains made since opec's november deal.
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i want to look at the euro-dollar since that has been a key focus. the 110further below level. bb h is calling for the common currency to drop further to 105. some downside to go. let's get the first word news. count has been declared in france. he many macron has decisively beaten marine le pen with more than 66% of the vote. his victory is seen as a boost for the european union and a blow to rising nationalism. she accepted the loss but said the result is a massive success for the far right. the attention turns to parliamentary elections next month with macron needing more to form a government. chancellor merkel's christian democrats have convincingly
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defeated the incumbent social democrats in northern germany. assigned she is gaining momentum head of september's federal election. it also gives the cdu a lift giving -- internet weekends election. weekend's election. fairfax media shares are higher capitalgroup led by tbg bid for its domain and top three newspapers. fairfax shareholders will get 95 australian cents at a share in the company holding is remitting assets including the new zealand business regional newspapers and stakes in radio -- radio and streaming ventures. it may not boost shareholder value. emir of taiwan is eyeing opportunities in china is in -- in his first interview with foreign media since being sworn
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to he says he is not opposed economic links. he says china should not be pushed away. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. we haven't talking about china's foreign exchange reserves because they rose for a third straight month in april as we had tighter capital controls. the yuan holding stable. today expected to show a slowdown when it comes to exports. is here. correspondent how sustainable is this increase we have been seeing when it comes the foreign-exchange reserves held their? -- there? castor i back to january when there was a lot of pressing -- come. a sign of things to
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an inevitable unraveling of reserves. that has not happened and we have seen those three straight months of gains in the reserves. in april of around $20 billion. in terms of sustainability it is worth looking at the things propping up the reserves. the capital controls is the key to this as is the stability of the yuan. antigrowth picture overall and what that means for sentiment and positivity. thand that stronger expected gdp number in 2016. first quarter also beating expectations in 2017. setting the stage for what seems to be a stronger economy. how much strength is left. whether we will see a slowdown. and what that means for the pboc's role in matching the fed
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in hiking rates. if it refrains from doing that does that cause more pressure on the one? more pressure -- on the yuan? so far this is a positive story. the broader context is the reserves is down from around $4 trillion to $3.03 trillion now. any further pressure on the yuan will be crucial from here. you talk about whether we are maybe at the peak of destabilization for china and certainly the recent pmi has been pointing to that. what are we expecting out of the trade numbers that should be coming out anytime now? yes, these numbers we're now hearing are expected around a.m. hong kong time and will break those live when we
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get them. 11.3% forxploits -- april, down from around 16.4% in march. robustet that forecast, demand should continue particularly from the u.s. household sector according to bloomberg intelligence. in terms of imports of those are also expected to slow according to the survey we have done. 18% for aprilund is expected down from around 20% from march. the trade balance bigger which is also important given what is happening in washington. the trade surplus is expected to pick up to around $35 billion. weeks indicators -- strongker pmi, also a
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pickup in south korean exports. it'll be interesting to break that data down when we get it or expecting it from around 11:00 hong kong time. haidi: absolutely. that massive catalyst when it comes to the china data job for regional markets. tom price in beijing. next we will take a look at what we are expecting when it comes to trade. bank of america's chief economist joins us next. rishaad: i will be talking to adamsf president tim about global growth, you ask tax reform and much more. ♪
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♪ back with bloomberg markets: asia. a quick check of the
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latest business flash headlines. tradingg regulators say in china may not resume without its approval. 85% on marchlunged 24. securities commission will be required to give the go-ahead for any resumption of trade under a rule that lets the market regulator -- china -- authorities want to boost the moment of online media by encouraging websites to go public. they hope to speed up the growth technologynd 3-d among other things. china also wants to develop culture is a pillar of the industry by 2020. haidi: it is soaring after it
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.s. approval to treat lou gehrig's disease. it is the first new drug for the condition in more than 20 years and only the second drug approved for the disease. causes loss of control of muscles. rishaad: we are expecting china's latest figures. it would be the longest winning streak in three years. helen is chief economist at bank of america merrill lynch. what will this data tell us? helen: exports still remain rather firm. after a march surprise on the upside come export numbers will probably still stay very well around 15%. in the meantime if you look at the number compared to march which was particularly high due to the chinese new year, this
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may come down for a little bit. we think imports will probably remain robust. very strong and robust commodity prices. rishaad: what does it tell us about the domestic economy? [stand by]
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rishaad: we have this bit of negativity in the index. but all guns are blazing. the struggle with china is also they have to get up the value chain when it comes to manufacturing. how will that affect the trade balance? helen: two things. one is the drive over rebalancing. away from the external demand and more towards domestic. such rebalancing more towards consumption and towards domestic demand is probably going to mean that china is going to be less driven by the external driver. still to the external driver because you can't talk about that without talking about america as well. -- ld trump this is a chart showing if
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foreign-exchange mapped as it used to the u.s. trade deficit would be far worse than this. helen: fx never had a good protecting power on what happens on the trade front. what happens is between u.s. and china in particular given their new 100 a program that the two governments probably are currently actively debating. they are probably trying to reduce -- instead of reducing more of china's exports to the u.s. the are trying to encourage china to import more from the u.s.. that is new direction of where things are going. haidi: he talked about this-- we have this great bloomberg story focusing on the numbers. since mid april, topping $500 billion. that's the value off stocks and bonds, liquidity.
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in your opinion what is the pain fresh old -- threshold for beijing? helen: a lot of people might say why is growth slowed down a bit if it shows a little liquidity time this? i highly doubt it. this time if you look at the presidention i think xi jinping held -- he definitely has demonstrated that he is very determined to push it through. further deleveraging from the financial sector is unavoidable. if you think about it, what really matters to them is the growth bottom line. the target this year has been adjusted to 6.5% while the first quarter was 6.9%. it really gives them a lot of room for a bit more timing without being too worried. haidi: what about the social instability part of the story?
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it doesn't matter if you're looking at the commodities exchanges in china, the stock exchange, bonds, property. it is such a heavy retail component. is there a point where they have to pull back or step in to give some support? helen: good question. first i would say from unemployment point of view, policy do not seem to have to worry too much. at the moment unemployment rate remains very low. andt of people have jobs therefore they are less worried about the social instability. inflation, pricing issues. if you talk about price changes and property prices, i would say furtheru are seeing correction recently. that would not say any of this is large enough to mobilize a very big crowd into a
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significant social instability event. haidi: i just want to take you into the bloomberg. i want to bring up projections when it comes the june fed meeting. 100% expectations. we know how important it is for janet yellen to communicate properly before she moves. some people say we still have to get three to four-this year. when you say to people who say it puts more pressure on beijing? helen: i do think that what the fed is about to do is probably going to affect what the pboc does as well. -interest rates at the fed meets the pboc will have to consider the pressure on capital outflows they do not follow. i think that china has a different agenda at the moment. they're pushing up the funding costs but for different reasons. they're are more concerned about the leverage in the interbank
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market and they definitely need to reduce such leverage before even the fed hikes the interest rate. i think there is a much bigger domestic impact over here compared to the forward-looking upcoming interest-rate hikes by the fed. rishaad: you know what we saw last week, a massive meltdown when it came to commodities, particularly pieces -- basic resource stocks. is that a china story? helen: it wasn't from last week. rishaad: almost capitulation. helen: oil probably cannot blame china. metal, china consumption has been close to 50% of global production. yes, i think people are starting to see the impact of the liquidity timing in china and the orders are coming down, especially from april. electronics and car orders are coming down a bit and therefore
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effecting demand for commodities. this is really the time for rolling over. rishaad: thank you so much for coming. --ing up we have what is on the cards for fairfax media. ♪
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♪ this is bloomberg markets: asia. shares of fairfax media have been trading higher in sydney today. the owner of the sydney morning herald received a bid. their whileting in they are in a vulnerable position. >> you could call them opportunistic.
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fairfax has lost 80% of its volume in the last decade. withering in the digital age that traditional print media has been eroding. the money made from print has evaporated. pg looking more at a real estate transaction rather than a media transaction. biggestfairfax's -- the contributor is its domain real estate advertising portal. the jewel that thereafter. -- that ppg is after. rishaad: the bid comes in between 120, 125. is that indicative of investors thinking this will not go through? angus: a couple things. there has been speculation that tpg has been waiting to make an
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offer. there was a little bit of mna price into fairfax's offer. i think it is also indicative that this offer on the face of it is not particularly generous. cashoney it is offering in for the unit that would be domain, and three major , it is just $.95. that is just the best casey violation for domain. there is no obvious premium for future growth at domain. it is also unclear what the rest of the offer is to fairfax shareholders. it essentially holds all the assets that tpg does not want. fairfax shareholders have a decision to make. they can either take this cash in this unknown media business whose future is unknown or they can stick.
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haidi: thank you. coming up with take a look at china's car industry about to get shaken up. ♪
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paul: these are the first word airlines. thanuel macron one more 66% in the vote in a divisive defeat of marine le pen. the victory is seen as a boost to the european union and a blow to rising nationalism. she said the result is a massive success for the far right. attention turns to parliamentary elections next month as macron prepares to name his government. nextd from tonight and the five years, i will take on that responsibility with determination to serve the
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country on your behalf. long live the republic. long live france. san francisco fed president stands by his outlook for three-for rate hikes this year. the labor market is showing signs of vix landing beyond the sustainable rate and is operating above potential. the latest data that showed employers added 211,000 jobs in april and the jobless rate fell to 4.4%. economic data we have been seeing for the last few months has been consistent with steadily improving economy, an economy in good shape. inflation indicators are moving in the right direction. has assured buffett shareholders they will be fine after he is gone. he said if i die tonight, the andk would go up tomorrow,
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there would be speculation about breakups, so it would be a good wall street story. he hopes his successor will be a good capital allocator and very rich. he said his ill-fated on ibm should not discourage tech investment. ibm shares fell after he said he cut a third of his stake. he also admitted that he "blew it" by not investing in google. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. haidi: thanks for that. asian markets are starting on a positive footing, particularly gains in the japanese markets. a lot of pent-up activity given that japanese investors have been on leave.
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during that time, some nice gains globally, but a patch of weakness when it comes to the yen. they are capitalizing on that now. the best intraday numbers since december 2015. the slump and shanghai continues. this is very much a money market condition type of story. still trying to explain that plunged in iron ore over the last couple of days. also basking in that better than expected jobs report out of the u.s., stocks moving up, helping sentiment here. we have had clarity with the french election. we are looking at south korean next, a vote tomorrow, and australia's budget as well, so all those things in play right now. wall street and chinese business filing in there with more than 320 firms with china ties registering with the sec since
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2012. has been tracking all this and is with me now. so why do chinese corporate went to get in on the asset management game? these hedge funds primarily? >> these are money management firms with ties to chinese vanke, solike hna and you have these very rich and largey people and a corporations trying to get a slice of the u.s. money-management business. the reason is that a lot of chinese money has been leaving the mainland in search of that are returns. with.s. dollar compared in recent years has been a factor driving chinese money to the u.s. rishaad: it is strange how they
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can get their money out. why are they pushing their money out? and why is wall street acting like a for tax here pulling it in?- vortex here pulling it >> wall street is the logical choice whether you are looking at wall street, real estate assets, dollar assets, or the stock market. toseems to be a smart thing do, especially given the volatility we have seen on the mainland, so it is not despit surprising despite capital controls that there is money rushing out and seeking higher-yielding and better returning assets. haidi: it is outbound flows, find itscation, but i political aspect interesting, a investing in hna
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one fund that has some political linkages to the white house. yes, that was very much when hna bought a stake in sky bridge. that was something that subsequently the head of sky bridge told us they did not subsequently take a position in the white house, and so there ,re these political dimensions apart from the financial and investment motivations that are driving some of these investments in the u.s. fascinating stuff. good story. thank you so much for that. let's get the latest when it comes to what markets are doing at the start of this trading week, some diversions with the chinese markets and the rest of asia is really doing. we do have a little bit of clarity after the weekend
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presidential runoff in france come up that we have south korea and the elections there, australia's budget, and a lot of china data this week to let's get the latest with sophie. at the still looking global equity rally continuing in asia. japanese stocks, the nikkei 225 and topix at highs come the highest in 16 months. the topix rising the most in three months as the yen is seven-week lows against the dollar. electronics companies getting a boost, and we are waiting on 800 companies to report in japan, softbankitsubishi, and . signse stocks on the other of the spectrum, the loan laggard in asia, amid leverage woes. the regulator has doled out more fines in 2017 so far than all of last year.
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continued drop in base metals not helping, industrials leading the declines, down 1.4%. at 11 months some bright spots to be found. take a look at some equity , beijing creative distribution jumping to a two-week high in shanghai after saying it is planning to start a power unit in china's new economic zone. in hong kong,ng jumping the most since november, raised it to outperform at mccoury. casino stocks in hong kong, shares dropping on news that chinese atm holders will face tighter scrutiny. haidi: thanks a lot. a headline just coming through on the bloomberg a could and will have ramifications for the oil patch, the saudi oil
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minister saying opec's production cuts could extend beyond the second half of 2017. we are going into this key opec meeting in may, saying he is confident the opec cuts beyond the possible second half of the year, the producer coalition determined to bring stocks to the five-year average, saying china demand growth will match last year on the back of transportation and u.s. inventories will continue a downward trend, which is interesting because we have seen crude come under pressure, hitting $46 a barrel, the level we saw before the last opec a deal was struck, a lot of this on the back of this relentless ascent when it comes to the shale revival undermining these efforts by opec to rebalance the global market and get that colette under control, but the saudi oil minister saying the moving towards a rebalancing and has been hit by low seasonal demand and refiner
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work in the u.s., but does continue to improve from early last year in the so we will be looking at some of these lines as they continue to come through from the saudi oil minister, but saying these opec cuts could extend beyond the second half of 2017 which has been what most analysts have been speculating. china, beijing auto has confirmed the government is planning to scrap the current 50-50 joint venture requirement with foreign automakers. makes mercedes-benz and hyundai cars in china, and it's chairman says reform of soa he's remains its major challenge. leadinge of china's auto companies, the biggest soplenge for baic are the reforms. the chinese government has put reforms high on the agenda, and the time is pressing, so as the chairman of a traditional a
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soe, my pressure comes from this front. as for the 50-50 jv arrangement, it will be scrapped and the door will be open. this is not a huge challenge. maybe a few years ago this would have been a big difficulty because at that time china's homegrown brands were in their infancy. in light of the fast growth of china's own auto brands, lifting restrictions on the 50-50 jv structure will not be a dire threat for us. to do to stayve ahead of planned or proposed or possible changes to the ownership structure with joint ventures? you have to be number one in new energy vehicles, number one at the top in autonomous driving vehicles. what needs to be the priority if structures -- what do you have to do for the next
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10 years if the landscape is changing? with counter the threat our strengths, leading technology, that is our trump card. the global auto industry is investing in intelligence, autonomous driving, connectivity, and electric and lighter weight vehicles. has absolute advantages in two of these four trends, namely intelligence and internet, besides this grabbing of the 50-50 jv arrangement will not happen overnight. soon, domestic chinese cars will make up more than half of china's auto sales. with strengths like these, why should i be afraid? >> i know there are lots of rumors in the market, and i will allow you to may be addressed and if you want to come ok? cannot talk to about new energy whatle possible ipo, and is the progress, is there any progress or any truth to the rumors about fiat chrysler joint venture?
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>> beijing of electric vehicle company has been developing soundly in recent years. we have just completed a b- rounbd of private financing and expect to list the company and a short time, and that is all i will say today. beijing well, automotive group chairman speaking with stephen engle. talked to the institute of international finance and look at the prospects for global growth. where are we with the growth story? that is next. ♪
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haidi: this is "bloomberg markets: asia." i him haidi lun in sydney. rishaad: i am rishaad salamat thin hong kong. industry leaders, innovators, and global decision-makers in
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tokyo today. changing coming amid a political and economic landscape globally speaking, and are global economics and policy editor kathleen hays is there with a rather special guest. >> thank you so much. head of the the institute for international finance. he was u.s. treasury undersecretary for international affairs. this is the 35th anniversary of depths ofunded in the the latin american financial crisis in 1980's. big challenges remain in the economy and financial system. thank you for taking the time. >> always a pleasure to be on your show. >> you are taking off this afternoon, the whole conference. let's wait in on the global economic outlook. 2017 different in 2009? >> it looks better than almost a
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decade. growth for 2017. europe looks better after the elections. the u.s. at full employment, and emerging markets looking better. >> so much better in fact that central banks from the u.s. fed, boj, ecb, the next step is tighter. you can look at some other nations in the asian region which are on hold, but everybody is looking to move, particularly balance sheet reductions. how will that affect the banks? >> it's huge. it will help net interest margins to improve, so good for banks. the fed will leave the process, but it is a $13 trillion challenge for the big three over the next decade. >> what is the risk? >> trying to get the balance between the short end of the curve and the long into the curve, and which device, which
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tooled you want to use and in what proportion? >> do you see a risk of market? >> indeed. it will take a steady hand. we will have a whole different fed board in the u.s., so people now in charge will not be in charge two years from now. too far is falling behind, having inflation pick up, then a rush to get things done. >> this is a fifth anniversary of abenomics, japanese economy, japanese policy, i have had conversations saying monetary policy has a musty grow impact right now. it is all on shinzo abe's shoulders. >> i think they have made enormous progress. japan has been in a deflationary cycle for almost 20 years. i think more focused on structural reform is needed. i think we will seem more in the coming years. >> what still needs to be done?
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our japanese thanks healthy enough? certainly, the healthy as they have been in decades. they are moving beyond just japan, but institutions here are being a force for economic growth. >> how about in india? some big reforms in the last couple of days, prime minister modi giving the r.b.i. the authority and backing to clean up a big pile of nonperforming assets. is the right thing, late in the credit cycle, so important to deal with nonperforming loans now. it took some time to get there, but the prime minister has said this is a priority. >> how about china? there is a lot of angst in the market starting to build, particular the in asia, about steps to force the leveraging -- could lead tothat upsets in chinese capital markets and the economy?
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>> it is a real balancing act. president xi jinping has indicated he wants financial stability. it is important, a code word for dealing with the shadow markets, financing, and nonperforming loans. we are already seeing it hit commodity prices. >> financial regulation or is welation, the question are rolling back certain parts of dodd-frank, and some are talking about a return to glass-steagall. some are saying glass-steagall 2.0, revise it, make it better and applied to the modern u.s. banking system. >> i think we will see some version of glass-steagall, but i don't link it will look like the glass-steagall. small and medium-sized banks have been overregulated and need relief. not asking for sweeping deregulation, just a tweet or turned their, and this administration will do that. >> capital ratios, high enough,
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high? some say the standards are in posing too much of a burden at a time when banks are much safer and it would just prevent mending from picking up. in the post-crisis era, banks have raised $3.7 trillion in capital. that's high quality capital, leverage out, more liquidity, less emphasis on wholesale lending. the banking system is safer and sounder than it has been in my lifetime. still in the final stages and it may not happen for a while. there is still some disagreement about the calibrations. i think it will happen before the end of the year, then it is time to think about doing cost-benefit analysis. >> you spend so much time working in this region when you were treasury secretary, undersecretary for international affairs. trade is big for the entire world, but certainly many asian nations are major exporting countries and the end on exports.
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what about donald trump and what he has said and done so far on trade and what you expect and what it means? been instrumental to the rise of asia. it has transformed this region and lifted hundreds of people out of poverty and created a fiber and middle class. we should celebrate that. i disagree that protectionism creates prosperity. it doesn't and never has come and we will see over time the administration dialback its aggressiveness and it is about opening markets, not closing markets. >> more specifically, what to expect to see when it comes to bilateral deals? is that which you are looking for particular when you look at china, japan, korea, where trump was saying the deal that was struck with korea a few years ago has to be re-examined? >> there is a lot of rhetoric. you have to look through the noise. let's look at nafta. there are aspects of nafta not included in the original treaty, such as the energy sector and
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cross-border data transfers. we can make a nafta better, but they seem to be focused bilaterally rather than multilaterally. i don't think they will eject any of these foundational trade deals, so i would look through the noise. >> you think these will just be surface, not about about getting the japanese to buy more cars? >> there are some legitimate issues. it is about opening markets. world's population resides outside the united states, 80% of gdp, and 70% of savings. they should be out trying to open markets. it makes the country better off. closing markets is not the way to go. >> timothy adams, thank you very much. goodbye. thank you so very much. >> thank you.
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they are kicking off their 35th annual spring meeting here in tokyo. we will send it back to you. haidi: thanks for that. ,oming up, the price of love the most expensive place in the world to take your date is up next. this is bloomberg. ♪
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haidi: this is "bloomberg markets: asia." if you're looking for some might is for the next date night, i can recommend manila, jakarta, l, new delhi is the most affordable locations. rishaad: unfortunately we are in hong kong. talking $197 to go on a date in switzerland. 110.kong is one city on that list is not singapore. david, a single man, it can't be cheap to take anybody out for a drink in singapore. to get a beer you have to take out a mortgage, don't you? david: there is always the hawker stand. if you take her to zürich and
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she does not love you, then there is a problem. a lot coming up, the south korean elections. throughone guess coming . he will be talking about the key challenges here, especially when it comes to the markets. we are expecting an improvement in corporate governance and south korea, so will that come in the form of a payout and will that payout ratio increase? ,hina trade could come out commodities in china. we speak with the head of the international, global head of commodities at boci up next. this is bloomberg. ♪
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david: we are in the middle of the asian trading session. i am david ingles. in seoul,m shery ahn "bloombergthis is markets: asia." ♪ david: japanese stocks at their highest level in 16 months, new confidence in global growth has concerns in europe ease.
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a decisive victory in france for emmanuel macron as he promises to heal the divide. it is korea's turn after a campaign overshadowed by tension and demand. china, a gloomy story where stocks are facing the lowest close since october, the clock down on leverage continues. the crackdown on leverage continues. a big day for markets out of europe into south korea. the next 20 hours will be crucial. exactly, a sunny day and south korea. kospi ate cos an all-time high. 11 million people have a ready finished early voting on thursday and friday, so there is a lot of attention on what happens here after that distort ouster of president park.
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koreanot all about south when it comes to the political scene. over the weekend, we had the french elections, macron leading , commanding gains in france, and the market seemed a little muted in terms of reaction, david. david: absolutely. last week, we were talking about these risk reversals. -yen, theil and euro lowest levels in years, so it was priced in. just in case we did get a pop in the euro, it would be a surprise given how markets were position. look at a share. function. we are looking at past these hurdles. this takes us to brexit and canher or not mr. macron
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form a coalition to have a majority in parliament. have a look at markets on the fly, japan reopening after three days of holidays. the rest of the region on the way up with the exception of china. forex, the dollar up, the south korean won up, and commodities getting a decent bid. yields basically up across the board in the asia-pacific. see one of them leading the way, the kospi at an all-time high, topping 2200, and we are getting election for the new president on tuesday. let's talk a little bit more about what will happen in south korea. joining us now is the managing director and senior economist a[an, also a 15 year
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veteran of the bank of korea. thank you for joining us today. we have to mention this incredible rally for the kospi, an all-time high despite geopolitical tensions and everything else going on. is this rally sustainable going forward? electionlly we see the result will be positive for the korean market, especially the equity side, because our equity research team believes that the corporate governance and south korea will be improved substantially under the new government. their agenda for corporate governance is promising. in terms of the macro data and south korea, the exports came in and wer than expected,
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believe this is a super cycle on the memory chip area, and then finally we believe that mr. moon , currently the front runner in the election campaign, he has diplomatic re-engagement policies with north korea, so we believe at the margin that the geopolitical tensions will be andued to some extent positive for the korean market. shery: good thing you talk about moon. we are expecting him here to give his last speech as a presidential candidate. it is his last ditch effort to boost support. some of his critics have said that some of his conglomerate reform policies could choke growth. how do you go about overhauling this financial, economic,
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conglomerate system in south korea without killing growth? that is pretty much export driven, and the big conglomerates are major players in the export base. mr. moon's economic holocene we like expansionary fiscal policy. -- when it comes to the corporate restructuring or heporate reform, we think will and prove the corporate governance. at the same time, he promised to make sure there is some kind of fair business practice between large corporations and small subcontractors. agendaeve the economic
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from mr. moon, this is basically have positive for the corporate earnings and the governance. the importance here is that the dividend payout ratio in south korea is around 20%, the lowest in asia, so our equities research team believes that if corporate increase the dividend payout ratio from 20% to let's say 50%, then that uld a huge upside potential for the south korean equities market. one of the concrete transmission effects of improve corporate governance is what you mentioned, higher payout ratios. i want to bring up a bloomberg chart to illustrate what you mentioned with the payout ratio. we are at about 1820.
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if we do get 50 on that bottom panel, how does that translate index?e kospi we are just under 2300 at the moment. >> if that would translate into be kospi, then it would 3000. david: that being said, how do i position for that? we have the usual names, samsung electronics, but a lot of what will happen depends on the painful pieces of legislation they can push through, the new president can push through. what is the probability that we will see meaningful bills getting past this year, or is that just wishful thinking on my part? s party proposed some corporate restructuring bills. knowuth korea, we need to
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that 60% of seats at the national assembly, that is the threshold to get past all this critical reform bills, but none of the korean political parties nothis moment has any -- political party has more than 60% of seats in the assembly. that means any president, he must cooperate with other political parties. the one positive thing in south korea is that we believe there is some kind of consensus being made. we need to improve the corporate governance. we need to cut out that very unfair political pressure on the business sector. we cannot no longer allow that kind of very bad practice in the past. a very important
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momentum for the korean economy and korean markets, so the bottom line is i strongly believe that korean policy makers would pass critical reform bills under the new government. those are very strong words. what i have been hearing on the ground has end that the easier measures such as when it comes to conglomerate reforms like electronic voting for minority .hareholders to vote remotely that could pass after the election, but restricting treasury shares in mergers for those conglomerates that are trying to consolidate power, also enhancing corporate governance such as introducing friendlier audits that large shareholders tend to do, those could be more difficult. that is what i am being told on the ground. do expect those hard to reforms to also passed the national
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assembly? >> it will take time, but i believe that the national assembly will pass the easy ones first, but the important one is how we make consensus, how we reached a consensus and moving on, so in that sense, this kind of political scandal under the in paged president park -- impeached president park gave an important signal to the market, and also business in south korea. we must improve the corporate governance. i think that is fair important. it may take time to get through this kind of very important, critical reform bill, if those bills are very complicated and different parties may have a different view, but in terms of corporate governance and south korea, behind the curve, and
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dividend payout ratio is low, shareholders were largely ignored in the past, but and in this kind of in firemen, i strongly believe there is a good consensus under the political parties, and this is one area. -- erms of a consensus shery: it looks like we do have consensus by economists on potential supplementary budget coming up as soon as we get the new government, as that which you are expecting as well? expect its, we also as early as june. at the same time, we believe the fiscal policy will move in a more stimulative way, and every
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single major candidate promises to increase jobs, especially in the public service area, so the government debt to lowertio is only 40%, far than other oecd countries, so south korea has ample room to increase fiscal spending. time, south korea has a large current account assets, so that is positive for the korean market. hopefully we do get the momentum. we are less than 20 hours away from the elections in south korea. thank you for joining us.
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right, let's get you up to date on other stories making headlines. haslind: emmanuel macron promised to heal france's divisions after a decisive victory over marine le pen, taking more than 66% of the vote, his victory as a boost to nationalism. marine le pen says the result is a massive success for the far right. needs lawmakers to form another government ahead of congressional elections next month. >> this reduces the risk of a breakup of the euro area. it makes interest rates on the periphery of europe come down and support growth and makes the work of the ecb better. this is good news for the euro and ecb. rosalind: angela merkel's christian democrats have beaten the social democrat in northern
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germany and assigned she is gaining momentum ahead of september's federal elections. in thes the cdu a lift nation's most populous state. it is seen as the main bellwether for the national vote. reserves,reign foreign exchange reserves increased for a third month is tighter capital controls and currency pressures cap money from flowing out. holdings rose by $20 billion to $3.03 trillion, more than estimated by economists surveyed by bloomberg. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. david: thank you. ofll ahead, the drivers chinese appetite for commodities .
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the man who was instrumental in starting the whole trend. we are talking about an uneasy volatility, weng will chart that next. this is bloomberg. ♪
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shery: this is "bloomberg markets: asia." am shery ahn. over 4westpac profit billion aussie dollars. a income dividend of $.94 a share, basically what the street was expecting. resilienceys it sees and a profit for the austrian rampantand expects house price growth in the biggest cities across the country to slow down from here.
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right, china will tighten control of search engines and news apps. authorities also want to boost development of online media by encouraging websites to go public. they help to speed up the growth of audiovisual content, multimedia, animation, and 3-d technology. china also wants to develop culture as a pillar of the 2020.ry by aa group said to be behind $500 million sale in standard chartered. imposed a holding on its behalf after increasing its position in deutsche bank. it is now the largest shareholder of europe's investment bank. right, china's foreign
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exchange reserves rose for a third straight month in april as we saw tightening controls reducing outflows from the country. data today on monday, but that is expected to show a slowdown in exports. ours head over to correspondent in beijing, tom mackenzie. how sustainable are these increases in fx reserves? think it allows us to focus on a few factors underpinning the strength in fx reserves, at least the last three months. we have seen three straight months of increases in fx reserves, and that is down to capital controls put in place that have reduced outflows. there is also the yuan stability, onshore yuan versus the u.s. dollar, up .6% so far this year. we had that surprising gdp number for the first quarter,
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six .9%, beating expectations and adding to optimism about the growth environment here. supportedfactors have fx reserves. the big question going forward is china's growth picture. we have heard from bloomberg intelligence and we may have eaten in terms of growth this year for china, that the second half of the year may see a slow down, and that calls into question what the pboc does. whether continue to edge up rates in the money markets to keep pace with the fed, or will it be under pressure to reduce those? if it eases off on tightening, that could put additional pressure on yuan and capital outflows, but for now, this fx reserve number is a positive. this is looking forward has to how long it was stay above this $3 trillion level. david: the won has been stable.
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i wonder how that is expected to play out in trade numbers. they are out right now. 14.3%. in won terms, the estimate was 16.8% to reducing their? exports, the number for april 14.3%, below the estimates of 16.8%. this is year on year in yuan terms. we will wait for the dollar numbers. increaseof imports, an of 18.6% for the month of april, well below the estimates for 29.3% for imports. that compares to last month, 26.3%. let's take you to the trade balance number in yuan.
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again, the trade surplus much higher, 262 billion in yuan terms, way above the survey .hich was 197 billion for april in terms of both imports and coming in yuan terms, below the estimates. we had seen a mixed picture in terms of the indicators leading into this. south korea's exports had benched longer in april and are seen as a read through sometimes to what we are seeing in china. that does not seem to have played out this time. also, the pmi data we got last week, some weakness, some reduced new orders, export orders, and those pmi numbers, to be reflected. exports up 14.3%, but slower -- the survey was 16.8%, so below what we expected
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in terms of estimates. we will bring you the trade data in u.s. to look terms when we get them. david: thank you for that. this is supportive of the narrative forming that a lot of the data out of china starting to roll over, missing estimates, and we will get you the dollar terms when they do come up, but if you do the math, this is $38 billion. we will be looking at a new future for fairfax, the owner of some top newspapers moles a multibillion-dollar offer that would involve breaking up the 176-year-old business. this is bloomberg. ♪
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david: shares of fairfax media on the way out after the owner receiving a bid from a group that includes tpg.
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so take us through the key points here. what we have heard this morning is that a group led by tpg has offered little over $2 billion for fairfax, potentially changing 200 years of publishing. they want to break up fairfax media and hold on to the earnings engine of fairfax, which is its real estate advertising business called domain and keep the three main newspapers, which includes this sydney herald. the rest of the businesses, they are not so keen on, including more than hundreds of regional publications and digital investments, and they will be sold back to fairfax show holders and spun off. thanffer price is 80% more fairfax market capitalization, shares rising this morning.
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it is not clear fairfax shareholders are totally convinced yet. david: when you look at the difference in the markets between the market and the price . thank you for that. the latest on fairfax. we are looking forward to the open in tokyo. that is next. this is bloomberg. ♪
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i'm gonna just go back to doing what i was doing. find your awesome with the xfinity x1 voice remote. >> it is 11:29 in hong kong. these of the latest first word headlines. 14.3%, exports rose falling short of estimates of 16.8%. imports also missed forecasts, rising 18 point 6% against expectations of a 29% increase, theing a trade balance equivalent of $30 billion. the saudi oil minister expects opec production cuts to expand well into next year. expectations were that
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they would keep the cuts in place to train the glut and boost prices. inefficiency is keeping more pressure on traditional producers from u.s. shale operators. dairy may notna resume without approval. shares have been frozen since they plunged 85%. and futureses commission will be required to give the go-ahead for any resumption. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. sophie: no monday blues in asia, the global rally on. up almost 1.9%, coming back from the lunch break. chinese stock still not getting
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with the program. today's trade numbers weaker than expected in yuan terms, which had to concerns about growth in the world's second-biggest economy. h-shares climbing in hong kong. korean assets looking resilient ahead of the elections on tuesday my but the aussie dollar falling below that 34 sent level level. bonds picking up the nation. short covering kicks in, oil back abovece higher, 46 dollars a barrel. ahead of tuesday's elections in south korea, some movers like lg electronics gaining. it denied reports that it is looking to buy a handset maker. fallingfiliated stocks ahead of elections in seoul, korea, but not putting a downer on the kospi.
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in malaysia, waving goodbye to its title as the world top performer in the small-cap space. shery: it is quite interesting to see china's trade figures missed estimates. south korea has done pretty well in terms of exports, and these two economies are pretty interlinked. an april, exports and south korea jumped to 24% growth, a seven year high. there is a lot of optimism on a modest recovery in south korea. given that when new administration's take office in south korea, they tend to be aggressive on fiscal options. a lot of people are expecting a
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supplementary budget to help economic growth. and we are seeing markets reacting, the kospi at an all-time high in fact. david: absolutely. are we still in the middle? of thist the onset re-rating when it comes to markets in south korea? you mentioned the trade numbers we are still waiting on out of china, the dollar figures at some point, hopefully in the next year and a half. that thing said, have a look at my bloomberg chart. this is another way of tying into the trade story and south korea, what happens in china. my question at the top, what is happening there? you are looking at the export pickup come up bottom panel, south korean exports, 24.2% the latest read. that hasme time, happened despite the fact the currency has strengthened
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gradually against the currency of its largest export market, china. how does this break into the output for the chinese economy? we know that it is a reliant economy. that, its biggest trading partner in china, so we will see where this goes and will bring you those dollar figures when they do come out. trade, offking about tangent, but on tangent as well, of's talk about the premiere taiwan, eyeing opportunities even as his administration looks to boost trade links with the u.s. and across the region. sworn in almost a year ago, he says he is not opposed to stronger economic links between taiwan and china. he also stressed that taiwan does need to retain talent and attract more foreign workers.
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that opening the door a little bit more to see if we can attract good foreign talent to drive taiwan's economic development. it is difficult to stop mainland china in singapore recruiting chinese talent -- taiwanese talent because our wages are lower than other countries. what can we do? open up in the hope that other people come in. what exactly is taiwan doing at the moment to draw a line and reinvigorate its economy at this point? the big issues for taiwan, not just taiwan, but for export-oriented economies in this part of the world is that when global growth shows some signs of recovery, where do you go to drive more growth. has decidedcase, it to look at the fast-growing
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economies in southeast asia, south asia, and australia and new zealand. this is part of a drive by the government to diversify its trade. taiwan is dependent on the united states and mainland china, which accounts for over 40% of taiwan's trade. this brings a certain dilemma for taiwan. relations with china are very difficult. china on the one hand it's a massive market and a massive trading partner. on the other, it is a military and political rival. china claims taiwan is part of hassovereignty and threatened to invade of taiwan formalizes independence. clear thatvery taiwan does want to diversify its trade markets, but also once to make sure it maintain strong it from the relations with china , and that also makes it difficult for taiwan because one of the things china does is that
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it tries to diplomatically isolate taiwan, so it makes it difficult for taiwan to sign free trade agreements with other countries. it currently has bilateral agreements with new zealand and singapore, and is looking for more. he told us that what he wants is for china to rethink its isolation of taiwan. he said bilateral trade agreements, yes, good for taiwan, but also good for china. we are talking about these trade relationships, but what else does the premier have in his pocket to end prove things there? >> one of the more interesting things he told us is that we want investment and want innovation, but also want immigration, and this sets taiwan at odds with this global
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sweeping anti-immigration sentiment you can see if you look at president donald trump in the united states, the brexit vote in the united kingdom, and if you look at japan's constant aversion to opening up the doors to greater immigration. pathn said this is the forward for us. one of the biggest threats to taiwan the premier told us it is stagnant wage growth, and what this does is it means all of taiwan's best, youngest, brightest talent gets drawn away to mainland china, hong kong, and singapore. he told us there is nothing the government can do about wage growth in the short-term and so they plan to make it easier for skilled foreign workers to come into taiwan, reinvigorate growth, find innovation in the economy, and drive things forward for taiwan. other countries also struggling with wage growth, a key issue for the u.s. , europe, and south korea as well.
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thank you so much for joining us out of taipei. let's continue discussing china, because beijing auto has confirmed that the government is planning to scrap the current 50-50 joint venture requirements with foreign automakers. the group makes mercedes-benz and hyundai cars in china. says that a reform of state owned enterprises is the number one challenge. as one of china's leading auto companies, the biggest challenge for baic in the future are soe reforms. the chinese government has put reform high on the agenda. as the chairman of a traditional my biggest pressure comes from this front. secondly, about the 50-50 joint venture arrangement, the policy would definitely get changed and the scrapped for sure. the door will be open for sure. a hugec, this is not
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challenge. may be a few years ago this would have been a difficulty because at that time china's homegrown brands were in their infancy. in light of the fast growth in china's own auto brands, lifting the restrictions on the 50-50 joint venture structure will not be a threat for us. >> what you have to do to stay ahead of plan, propose, or possible changes to the ownership structure with these joint ventures? you have to be number one in new energy vehicles, number one at the top in autonomous driving vehicles? what needs to be the priority if , what-50 joint ventures do you have to do for the next 10 years if the landscape is changing? >> we counter the threat with our strengths, leading technology, that it is sour trump card. the global auto industry is
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investing in intelligence. autonomous driving, connectivity, and electric and lighter weight vehicles, china has advantages and two of these four trends come intelligence and internet. gripping of the 50-50 jv arrangement will not happen overnight. soon, domestic chinese cars will make up more than half of china's auto sales. like these, why should i be afraid? >> i know there are lots of i willin the market, and allow you to maybe address them come if you want to come ok? can i talk to about new energy vehicle possible ipo and, and is there any progress and any truth to the rumors about fiat chrysler joint venture? electric vehicle company has been developing very soundly in recent years. b-round just completed a
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of private financing and expect to list the company in a short amount of time, and that is all i will say today. david: that was the chairman of the beijing automotive group joining us there talking about the company. right, during that interview, we did get the latest trade figures out of china u.s. dollar terms. missing estimates, not a surprise given the renminbi a few moments back, 11.9%, decent but missing estimates, exports up 8%. $38 have a look at this bloomberg chart, the year on year growth decline, 8% growth. that's it for april. next release on june 8. good, but not as good as what people were expecting. we will see how this plays out in the bigger narrative we have seen perhaps the peak in
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economic activity in china this year. coming up on the program, taking a shine. chinese banks have building up their commodities desks as western banks shrink their own. so we discuss the trend with the man who led the move. he joins us next. this is bloomberg. ♪
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shery: welcome back. this is "bloomberg markets: asia." a quick check of your latest business flash headlines. has won u.s. approval for its medication to treat als. it is the first new drug for the condition in more than 20 years, only the second approved option for sufferers. of disease causes loss
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control over muscles used for breeding, talking, and eating. about 5000 americans are diagnosed each and every year. mitsubishi motors pulled your results likely to come in at $26.6 million on tuesday. it would reflect a 30% sales drop in japan. revenue may have fallen 15% and global vehicle sales sliding. now to movies, who has seen this yet? guardians of galaxy the number one movie in u.s. and canada. than $145 million below the $160 million estimate in it. it was the only film to make its debut in wide release suitable for children and young adults. right, western banks have
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been shrinking their commodities desk due to regulatory pressure. chinese banks have been building up theirs. china international is the first chinese bank to get clearing membership in multiple international commodity exchanges. joining us now is the man who led this move. so much for joining us this morning. let's talk a little bit about these regulatory moves and how other banks are shrinking their business, but then chinese firms are growing there's. how can you survive this environment? >> thank you. chinese corporations has huge demand for commodities trading, and also the financing part. in the past 10-20 years, there has not then any chinese banks participating in the financial
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landscape of the commodities industry, so we were the first ones, the first chinese bank to into the international commodities market, and then to build up the commodities platform. there iseason is upstream come amid stream, and downstream, chinese customers, so that is why it is a strategic to come up with this commodities trading capability to provide these products to our customers. after six years, we have five offices globally and built up and rid ofities trading, financing, and commodities research. we are now helping our chinese have a one total
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solution to help them manage their risks, especially under the current market situation. this is critical for chinese customers. market, reenter the there are other chinese players entering the market as well, so i think the last six years, yes, some western banks have scaled back or exited commodity business lines. david: your business has come a long way. a lot of our clients and viewers are probably interested in the answer to this question. are you hiring? in which areas are you hiring? i am not asking for me. years, theast six next 5-10 years, we are always hiring because we are new in the industry was so we need to rely , soxperts in the industry you can imagine.
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about 35,000 have ,raders, about the right size five offices globally, so we are always hiring. when ever there is appropriate talent, we are looking to hire. right, help me understand something. let's look at the market itself. the big story last week was the iron ore on the chinese exchanges. why do we see these massive price swings in these commodities exchanges in china, shanghai or others. >> i would say that over the past 6-9 months, or the past couple of years, the whole reacted as market has little bit more, so it is not
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just chinese exchanges. wholek it applies to the industry. we can see the oil price, the base metal prices, copper, aluminum, they are more volatile than before, so i don't think this is a single incident for the chinese exchanges. precious metals had been the best performing sector year to date before this route, so what will drive the sector for the rest of the year? aluminium for the base metals , and we have a conservative optimistic view. china, mayl, may be butversupply of aluminum, then china is changing from an
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investment-driven to him or consumption-driven growth, so at the same time there is a more higher demand for the more value added products, for example aluminum alloy products, especially high-end auto products that is why aluminum is doing quite well this year. -- products. that is why i aluminum is doing quite well this year. thank you so much for joining us this morning as well. he is the global head of commodities for boc international. seoul,n countdown in korea with a look ahead to tomorrow's vote and whether it could finally bring progress on conglomerates reform. this is bloomberg. ♪
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south koreans will be
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electing a new president tuesday . stocks remaining resilient in the face of everything. is in seoul, korea for us. that wesn't it amazing are seeing so many uncertainties for the south korean economy, and yet the equity markets are at an all-time high? there is more optimism now on where the economy is headed. we have seen a moderate recovery. , still theld be 2.5% slowest pay since 2012, however, now that we have an unelected newdent and finally get a precedent come up that will bring more certainty to the markets, especially when it comes to the conglomerate
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reforms. those bills are still sitting in parliament. bys race has been dominated a liberal, a centrist, and a conservative who all have different ideas of what they want for the economy and how they want to deal with north korea and china, but the key questions remain for the new president. what will he do with unemployment rates? right now, youth unemployment is double that of the general population. we are hearing protesters around , the epicenter of protests that led to the ouster of president park, and they were protesting the labor law, saying this is unfair, that there should be more full-time employees instead of part-time employees.
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still a tense situation in south korea when it comes to where the economy is headed. you can still hear them protesting outside. we will get one of the , having his last speech before south koreans head to the polls tomorrow. that will be here this afternoon. absolutely. despite the challenges, you look at the stock market, strength to strength. the kospi index up 12 points. bloomberg markets middle east coming up at the top of the hour. what do you have in store for us today? >> there is always plenty in store. we kickoff with the french elections, with emmanuel macron, what this means for the french political landscape and various asset classes across the board. we will be joined by michael avery. he will break the strategy down,
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especially when it comes to the foreign currency space, but also widen it out and look at what is happening with crude oil. you saw a selloff in kuwait. plenty on that and more.
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