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tv   Bloomberg Daybreak Asia  Bloomberg  May 11, 2017 7:00pm-9:01pm EDT

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♪ betty: asian-pacific shares falling as wall street -- wall street retreated. yvonne: the bank of england's governor taking a for granted that brexit will be smooth. however, investors are not so sure. said heresident trump intended to fire the fbi director all along. yvonne: korea may see its biggest ipo in years. they raised more than $2 billion.
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we have world coverage here on daybreak asia. we will have the latest news from sydney. betty: and, follow from firing of thep's fbi director, that stunning news earlier this week. we are live from our u.s. and asia headquarters. i am in new york, it is just after 7:00 p.m. yvonne: it is just after 7:00 a.m. in hong kong. a soggy day in asia, not just the weather. the markets, as well. earnings at a retail with the biggest disappointment. consumer staples were one of the better performers today on the s&p. as you mentioned, that risk off coming into the market, we did fight back from the low of the session to close near the high
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of the session. still on the red. s&p down 2/10 of 1%. losing. that makes it all the more poor and -- important to see direction in the market. an upside to the retail scale numbers tomorrow to see where the economy is headed. numbers suggest a big rebound. here is how asia is keeping things -- kicking things off in new zealand. cautiousness, stocks down 1/10 of 1%. the kiwi losing ground, extending losses after the "bloomberg technology -- after the rbnz had a dovish tone. oil slating a bit. we did touch $40 a barrel during the overnight session. 7373 for the aussie dollar,
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seems pretty stable right now. futures heading lower today. in japan, the dollar rebounding overnight. we are still around 113, close to 114. stocks showing trepidation. as betty mentioned a head of retail sales out of the u.s. later on this day. let's get more from adam haigh, joining us live from sydney. we saw u.s. stocks falling from record. could this happen as a rising appetite for bonds and gold? adam: good morning. let's be clear about the magnitude of the declines. it was only 2/10 of 1%. the key thing is, the u.s.
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consumer. the biggest input into the economy is the consumer. any worries about flagging appetite to spend dollars and american shops is key to the american economy. that will be the assessment traders are making this morning. into friday night, there will be further data we get from the u.s. malaysiaare looking at for a central-bank decision. later today, a conference in dublin with the chicago fed speaking. also, the irish contingent. plenty more to pass. the key focus in europe is how the tapering will happen. for the u.s., more about balance sheet reduction in policy normalization process over the next couple years. weakness asbit of
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we start with the equity section. nothing should concern us too much at this point. betty: talk about the scoop. chinese authorities may be willing to step in and buy a hong kong stock before the july xi jinping visit? yes, great story. to bring up a chart on the context ono give us how hong kong stocks have been performing relative to the poor performance in mainland chinese equities, this forms the backdrop. state isonder why the in the hong kong market. we have enjoyed a good rally here. the arrival of xi jinping in hong kong does not occur until july. we have many weeks to go until then. our reporters are speaking to sources yesterday. they found out that state funds
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have been set aside to step in and by equities in hong kong, should any material downside in the market play out. would triggerwhat intervention, what the magnitude of the move would need to be, or what else from an economic point of view would require them to step in. funds are being set aside. as we get closer to that meeting, we should keep an i on how the stock market is performing. we will hear more from our sources about how this is lining up as we get closer to july 1. betty: let's get the first word news with courtney collins. the bank of england is taking it for granted that the u.k. will negotiate an orderly brexit. but investors are not so sure. the governor says he may have to raise rates sooner than expected, based on forecasts
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that assume a smooth adjustment to a new relationship with the european union. traders question the likelihood of such an outlook, that has sent the pound down. thee have assumed that process of leaving the european union would be a smooth one. what does that mean? it means there will be an agreement. and that there will be a transition, or implementation period from the negotiation to the new agreement. >> new korean president moon aware of thee is deployment of a u.s. missile shield and will try to fix the problem. and a phone call to xi jinping he said it would not be able to -- would be possible to recover them thaad system if north korea was not a problem.
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a widening on the ban of laptops and other electronic devices on planes bound for american airports. delta willrican, and meet with the department of security to discuss the decision. originating from eight countries in the middle east. the company belonging to the family of president trump's son-in-law says nobody tied to him will be at a presentation to chinese investors this weekend. kushner companies withdrew from whenvent inch and jen there was a similar pitch last weekend. she told potential investors that buying and could help them win residency visas. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am courtney collins, this is bloomberg. betty: president trump says he
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fbi directorred james comey despite advice of top officials. that is contradicting the official white house statement on the matter. as if we needed more confusion. ramy inocencio has been following this. mixed messages here. confusion is the word. confusion over the loss of confidence in james comey. as early as last week, sean spicer told the press that mr. trump did have a full confidence in his fbi director. now we know those words are not true. earlier in the week he said he would fire him and that he asked the deputy rod rosenstein to write a letter on behalf of him to provide cover. now he says he would have done it all on his own, so wherever he stands, we are not sure.
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but this is how it played out. let's take a listen. president trump: he made a recommendation. regardless of recommendation, i would have fired comey, knowing there was no good time to do it. ramy: donald is also saying the fbi has also lacked the support of comey, that he did not have the fbi's support. but that contradicts a statement for the acting fbi chief, andrew mccabe, who says he is contradicting what trump says. take a listen. the greatestn privilege and honor of my professional life to work with him. i can tell you also, the director comey enjoyed broad support within the fbi, and still does, to this day. acting fbi chief andrew mccabe there, by the way. people are asking, why now?
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some are pointing to the fact he was leading the probe into the collusion between the white house and russia. potential he folks are saying he was getting too close to something? we are not sure, but some people say that maybe is a possibility. democrats are asking for a special counsel to get to the bottom of this, regardless of what has been happening. the white house says it will speed up the russian probe. yvonne: we did not get much clarity when it comes to the timing of events leading up to this. the senate confirmed of the president's nominee, robert lighthizer. what will be his first order of business? ramy: that was confirmed in the last few hours, robert 4,ghthizer by a vote of 82-1 confirmed in the u.s. senate. the first thing on his agenda is likely to be the renegotiation
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of the nafta. that said, it is not going to be immediate. there is an official, 90 days in terms of consultations with congress in order to pull the united states out of its agreement with mexico as well as canada. donald trump has threatened to withdraw from that agreement, if he thinks the discussions are not going his way. with lighthizer, there is been politicking back and forth. he was nominated in january. but there have been questions about his dealings a few decades ago, his working with foreign governments on their behalf to the united states. he did get a legal waiver. that will be going as planned, the confirmation in the u.s. senate. i want to go back to donald trump one more time. hop into my bloomberg terminal. with all that has been
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happening, i have to highlight the real clear politics poll of polls, in terms of approval and disapproval numbers of donald trump. the lines are going in ways he does not want them to be going. the blue line, disapproval at 53.1%. it is at its highest since the early part of april. the white line is the approval, 41.9%. april,est since middle definitely since april 13 or so. wrong way, for president a little more than 100 days in office. yvonne: thank you, ramy inocencio joining us from new frenkela we ask jacob what he expects from the fed and other central banks. economy, a wall street session, may spill over into asia. we ask advisers why it they
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remain optimistic. this is bloomberg. ♪
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♪ this is daybreak, i am yvonne man in hong kong. betty: i am betty liu in new york. consumer prices. retail. there is no sign of a slow down. we have a chief economist at first trust advisers from chicago. in your view, are the risks to the upside? >> yes, i think it is. a have a full plate tomorrow. no different than the consensus, about 6/10 of 1%.
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auto sales, everyone talked about how disappointing they were. that is compared to just a year ago. compared to last month, they were up 2%. that plus higher gasoline prices could give us a surprise. index, we arerice at 0.2. if you look at today's producer -- theumber, the risks risk of inflation is rising higher than people think. you put those two things together, the economy overall, real growth us inflation, -- plus inflation, we are rebounding strongly from the first weak quarter. betty: why are markets looking so tired? why are they not responding to that robust assessment? >> it is a great question. i have been 35 years in this business. i have never figured out why markets moved this way or that
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way over a month or days. not to say it is not important, but i still believe that in noeath the economy, way close to a recession, earnings have recovered really nicely. we are up over 15% in the first quarter for u.s. earnings. the stock market, in my opinion, is still undervalued. not as much as it was. it is not super cheap, but it is still undervalued. earnings will grow faster than 10% this year. it is a recipe for higher stock prices. what the market is doing is giving people a chance to get in right now. yvonne: getting back to the inflation numbers, you mentioned a much stronger rebound. by some indicators, more than doubling. how long before it feeds into the economy? it will take some time, right? >> it does. inflation is not a mystery, it comes from too much money.
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the federal reserve has done quantitative easing. there is $2 trillion of excess reserves sitting in the banking system. i have not been worried about inflation until now. now that the federal reserve starts to raise interest rates, it makes it more attractive for banks to lend. that increases the money supplied and increases inflation. of theway, that is one reasons people should not worry about the dollar appreciating too much. yes, the economy will accelerate. but inflation is picking up, and that is a negative for the currency. i do not think dollar strength will take away u.s. corporate earnings. that is not one of the things i am worried about. yvonne: you mentioned the fed, the market is underestimating the fed could hike three or even four times. you look at financial conditions, i want to show up a bloomberg chart.
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you see that the last two hikes we did see barely had any impact of financial conditions. in fact, conditions have loosened. can the fed just rip the band-aid and get away with it? >> i still think the fed is super easy. even if they were to do four rate hikes this year, i know it is a surprise to the market if that were to happen, but even if they were, interest rates would only be 2%. that is still lower than inflation. that is why these past couple rate hikes have not hurt the market. all the fed is doing is going from super easy, super loose, to less super loose. they are still very easy. are low, theytes are not a danger to the economy or stock market. betty: i want to show our viewers how low them vix is
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going and has gone. has closedes the vix in the single digits. au might think it is positive. but is it a warning sign, as well? are we too relaxed here? goes up,he vix everyone says volatility is up, run for the hills. but when they say it is low, they say it has to go up, run for the hills. to scaree them vix people every day. i do not pay attention to it. it has been high and low in the last 8, 9 years. force to go up is a earnings. -- lots ofations global corporations, are very profitable today.
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they figured out how to do business, and they are doing it every day. betty: a no-win situation sometimes when it comes to the vix. up, we may see korea's biggest debut in seven years and ipo market. netmarble starts trading today. this is bloomberg. ♪
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♪ south korean mobile games company netmarble expected to raise as much as $2.3 billion after pricing an ipo at the top of the range. it would make it korea's biggest share sale in seven years. let's look at netmarble. ofill get to the back story
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the founder later because it is a remarkable one, from rags to riches. why is this so important for south korea? first, it is the biggest ipo in seven years in korea. it makes the company more valuable in terms of market capital -- capitalization than lg electronics, which is a hardware company. the fact it is becoming more valuable than a hardware company like lg means a lot for south korea. the economy has been centered around these huge conglomerates, producing hardware. this typeve to see if of shift will continue in south korea. betty: what is expected in terms of the stock price? where is it likely to trade? there are mixed views about whether it is going to go up or go down when the stock market opens in 30 minutes. the market right now in korea is
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quite bullish. on the backuld ride of that bullish sentiment. at the same time, its price to earnings ratio is quite high compared to competitors. right now it stands over 70. other companies are below 50. there is pessimism over whether it will do well. there is also optimism because it has been showing phenomenal growth over the last several years. yvonne: tell us more about the company and its founder. it is a different story than what we see in south korea when it comes to the conglomerates. really timely, given the election and the president requesting chaebol reform. sam: it is true, he has an interesting story about his life. he was born in at textile factory slum, dropped out of
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high school. he started businesses unsuccessfully before founding netmarble. it is quite interesting because most billionaires in south korea are from a family run conglomerate called a table -- a cable -- a chaebol. last year, three people died in suicides in his company. netmarble stresses those that did do with personal reasons. but the culture at netmarble is just too hard it may not be sustainable for the company to become a global company. betty: sam, thank you so much. we will watch a netmarble as south korean trade opens. andral banks strategy ambitions.
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we will get more from jpmorgan jacob frenkel. this is bloomberg. ♪ ♪
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7:30 a.m. friday in hong kong. a gloomy picture out there as asia's first market opens. betty: soggy all the way around, a good way to describe markets, too. york..m. thursday in new a risk off feeling in the markets. some preparation ahead of tomorrow's retail sales. i am betty lou in new york. yvonne: i am yvonne man in hong kong. president trump has described
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a former fbi director james andy as "a grandstander," would have fired him, no matter what the recommendation. it has been in turmoil for months, and that comey was not the right person to help them recover. president trump had lauded comey for his handling of president -- hillary clinton's emails. ofositive atmosphere ahead the handover from britain. president xi is expected to visit to mark the occasion. state-backed institutions have set aside funds ahead of july 1. china is not known to have taken an active role in the hong kong market before. robert lighthizer has been confirmed as u.s. trade representative, clearing the way for the trump administration to reset relations, starting with nafta.
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his confirmation was delayed about questions about work you did decades ago on behalf of foreign governments, for which he needed a legal waiver. said china is one of america's leading trade problems. nissan has forecasted a surprise drop in profits on the expectation of a stronger yen and higher raw material costs. to $6ion profit will fall billion for the year in march as competition increases. it boosted annual sales by 33% since 2011. they've improved their brand value. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am courtney collins, this is bloomberg. yvonne: let's have a quick check on the markets. trigger, ang for a catalyst to reverse the downfall
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we saw in the u.s. overnight. new zealand down 1/10 of 1%. the kiwi continuing to go down, .6842. a dovish stance from the rbnz. hang seng, 21,000. aussie futures heading lower today. not much movement in the aussie. futures in japan out of chicago, we did see a subdued reaction. 113.77 for the dollar-yen. betty: investors increasingly see the fed hiking rates again. they could pick up. the u.s. unemployment rate continues to drop. us nown hays a joining from tokyo where she has been all month long. is the fed ready for another hike? kathleen: it certainly looks that way.
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we want to put this in a larger context. we have a very special guest, someone who has been following the banks for several years. he is the chairman of chairman international,se from israel. he meets with these policymakers, and is known them for many years. jacob frenkel, welcome. the fed to get off the dime a the world is ready. what is the rush? inflation has plateaued, we have news consumerism is not strong in the u.s.. what is the reason for hiking rates at a faster pace? jacob: when you're talking about faster pace, it gives the impression there was a pace. -- startingtopping after about 10 years of not
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doing anything. there was a good rationale for keeping interest rates low for a long period of time. there was a deep financial crisis. the fed was clear, when the economy recovers, and there are signs of stronger financial robustness, this would be the time to go. whether it is a strange of the financial system, liquidity is higher, capital in the banks is higher, leverages lower -- if you look at labor markets, labor markets and unemployment is at the lowest in a decade. yes, we're still below the 2%. if we wait for, the 2% to happen we will miss the boat. this is the trend, this is the direction. the strength of the u.s. economy justifies it. but most importantly, as we
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stand still and do not raise things,here are some negative movements, moving in the wrong direction. implications for the financial market, we have chasing after deals, which means greater risks. we divert resources to the financial market. we delay plants and equipment. we help the growth, rather than promote growth. yvonne: you have said you would a sentence and all the policy statements from major banks around the world that would focus on meeting our goals of higher employment and inflation. something about financial stability. you are concerned about a potential rise in leverage, equity prices rising, a bubble. i you seeing signs of that in the u.s. -- are you seeing signs
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of that in the u.s.? jacob: most central banks in the past few years have changed jure or dete, de facto. some have graded institutions within the central banks that focus on financial stability. therefore, as you look at the and focus inniques the public debate, there is one single variable that matters, are we at a 2% inflation rate? if not, we are still not reaching our goal. but there are circumstances that in the effort to reach the 2%, and if you are not there, in the meanwhile, you potentially endanger financial stability. i am not saying that could happen, but it could be very useful to have an explicit look at it and therefore, restore the balance over the discussion on
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hiking rates. call it hiking rates -- i would call it normalization. when rates are zero, hiking rates -- it is not there. we're farther away from equilibrium of interest rates. kathleen: policy diversions, a big theme among central banks and in the market. the fed is on a path toward a path toward more rates this year, reducing the balance sheet , starting the process. ecb not on the path, bank of japan does not look like he gets on the path anytime soon. start with the ecb. in your paradigm, what do they do now? is our willingness to taper off on bond purchases? jacob: this is a very important issue. when it all started a decade ago or so, all governments and all central banks ended up doing the same thing, expansionary fiscal
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policy, expansionary monetary policy. each country in a different way, some focusing more on interest , but itome more on qe's was all in the same direction. since the u.s. has made more progress, it is more flexible, and therefore reaches its objective in a faster way. the u.s. is ready to ease into normalization. there will now be a period, europe and japan are still not ready for it. it will look like we go in different directions. it is part of the adjustment. what is important to emphasize, it will have consequences on the exchange markets. in the foreign exchange markets, if one country goes in one direction and the other does not, we will see changes in the exchange rate. it will intervene and prevent that adjustment. exchange rate adjustments in this context is a helper to the
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process. not ready, you think it will be quickly. the bank of japan, where are they? people say the tools are not working. what does jacob frenkel say about the boj policy? jacob: it is the only game in town. in a courageous way, they have changed the mood of the country. but it is a one leg in a three legged stool. there is monetary policy, fiscal policy, structural policy. most reaction has been on the monetary policy. nobody can expect this will be the only tool to revive growth. it is essential that now the government comes into the game. todaylation in any area could release entrepreneurial powers. there are a lot of initiatives
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that are stifled. i really believe that unless one of focus is, it is the task of government, not central banks -- unless one focuses on healthy d regulations, removals of mobility,to creativity, putting oil on the wheels, that is what we need to do. kathleen: we need to grease the wheels. jacob: more structural policy. kathleen: we want to talk about china, one belt, one road. i am kathleen hays here in tokyo. this is bloomberg. ♪
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♪ welcome back, this is bloomberg television live in tokyo this week with jacob
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frenkel, that chair of j.p. morgan chase international. he is on a board of trustees of about 30, and former head of the central bank of israel. we want to get to china. you travel here frequently. your firm does business here. belt, one road, the summit coming up in the next few days, we have focusing on it. let's start by putting china in context. many say china wants to increase its power. in the chinese economy context for us. it is different than it even five years ago. is the greatest change that has happened over the past 20 years. in 1990, china produced 4% of the world's gdp. today, they produce 20%. it has become the major player. in the trade area, there is no country in the world for which china is not either the largest
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or second-largest trading partner. china is deeply integrated in the trading area. states, the year 2000, only 5% of u.s. exports went to china. today, close to a quarter. europe, same story. china is an integral part of the world's economic system. there was a time when people said china is a threat, and there were calls for protectionism and the like. more and more people recognize china is an opportunity. as such, one really needs to ask, how does one bring about a greater interaction and integration of china, not only in the trading system, but also in the international government system? in other words, china must play a larger role in running world affairs, not only in being part of world affairs. in this regard, for example, the creation of -- the
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infrastructure bank. it was viewed with suspicion by the united states. they did not join the bank, even though many of the large countries did join. it was a mistake on the part of the united states. the united states should recognize china is a major player. and the reason to create a new bank is that it did not get what it deserved in the international organizations and power game of international governance. i look at the question of the one road, one belt, in an integrative way. we have a situation that calls for protectionism, which is a disaster. wasonly reason the world able and is able to thrive is because of trade and integration. crisis, trade shrunk
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by 10% or so. it will be a disaster if we are to start avoiding dealing with our problems by putting obstacles to trade. now, one belt, one road, it is potentially -- we should not worry about it. it basically connects hundreds of millions of people, hundreds of millions of markets. and you know what? if somebody gains from it, it is perfectly fine. both of us will gain. kathleen: there does seem to be nervousness, not us with the united states, but other asian nations. is it an attempt to create an economic networks centered on china, push the u.s. influence out of the region, so china's role increases even more? there is the question of infrastructure lending.
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itans are indebted to china, is another form of potential control, influence. belief ofpond to the asian nations nervous about where china is headed and what its motivations are? jacob: all discussions about vicious cycles -- let the best win.-- let the best it is a similar issue, is china a threat or an opportunity? i do not downplay completely the concerns of some countries. the way to deal with it is not to prevent development, but to get incorporated into these developments. i am all in favor and we should really focus now on the governance, on a level playing field, on things that will ensure healthy interaction in the world. we will not make progress by increasing fragmentation. and we should encourage
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initiatives that are eliminating fragmentation. kathleen: if you were to give the leadership of china quietly, on the side, send them a tweet on these concerns -- what does china need to do for trust? to boost trade, economic growth, and not a power-play? jacob: it is a way of life. for example, the last speech of the president was eye-opening. he gives a speech by quoting the gettysburg address, a speech a president -- american president should have given. in the u.s., the debate was, who will be more protectionist? this was over the change of presidency. ishink what china should do,
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gain trust that they mean business, respect for property rights, that they mean the opening of markets. that the rhetoric is not just the rhetoric. you cannot speak about what you want without doing that. kathleen: a big issue in the region -- what is the sense and korea, and how do these geopolitics play out when it comes to integration with one belt, one road? jacob: it is a very important issue. i was in korea yesterday on the subject is, what do we do with north korea? as point to understand is, it exists in the context of north korea, it is not the problem only of south korea. it is a problem for japan. if north korea remains unchecked, it will be a problem for the united states. it is becoming a very global
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issue. in a global issue, you need to be dealing with global instruments. global instruments require global understandings. the word "global" is part of each strategy. do not do any measure that destroys globalization. korea, comes to north basically there is one premise, the current situation is not sustainable, it is very dangerous. there are two or three ways to deal with it. either the north koreans change their mind, which is a probability that is low. or there needs to be military action. they talk, one focuses on the u.s. or there needs to be, the preferred outcome, and economic rusher on north korea. -- economic pressure on north korea.
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china is the key, they have the strongest, largest leverage. china is not eager to take this role. of it is exactly the type communication happening between president trump and president xi. what is the way in which china can take constructive measures that will improve its incorporation into the global strategy. the global strategy today cannot be separated between this is economics, this is politics. it is for world stability. kathleen: jacob frenkel, thank you very much for joining us. he is the chairman of a j.p. morgan chase international, , former a group of 30 chair of the bank of israel. jacob frenkel knows of what he speaks. back to you in the studio. betty: thank you for bringing us that terrific interview with jacob frenkel.
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you can get a roundup of that interview and other stories in today's edition of daybreak. bloomberg subscribers go to dayb on your terminal. it is also available on the app. to onlye your settings get the news on the industries and assets you care about. this is bloomberg. ♪
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♪ this is daybreak asia, i am yvonne man in hong kong. betty: i am betty liu here in new york. aac technologies think the most in seven years after a damning report by gotham city research. the stoxx of been skyrocketing, that drew attention. profile shorth seller of late. they vote on companies.
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they put out reports that tend to drop the stock lower. slammed, down 10%. it is the biggest drop in seven years. of course, they are an apple supplier. they get a lot of attention for that, alone. seller, got some city research is saying the profit margins are perhaps a bit questionable. there are questions about the accounting. let's take a look at the role with apple. one of the things the founder of gotham research is saying, it looks like we are dealing with third parties that were not exactly on the apple list. he said we are in trade to because the margins are higher and smoother than some of the best companies in the world. daniel yu with gotham city research. come back andc
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say the information in the report is inaccurate and misleading. is a hugetioned, aac performer on the hang seng index. 50% in hong some kong, going into today. a lot of investors were impacted by this. there are other analysts coming forward and questioning gotham city research's report. betty: have they come out with any statements that all, the company? they are saying they do not think it is accurate and they have the support of the community. they're questioning things that were brought up. city, atarget of gotham short seller, their stock dropped as well. they're getting a lot of attention and will probably get a lot more. betty: thank you so much, su
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keenan there. we are moments away from the major market open, including in seoul, where netmarble, the gaming company, will be debuti
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♪ betty: president trump breaks the white house message, saying he planned to fire the guy director all along. yvonne: the bank of england governor is taking it for granted that brexit will be smooth, but investors are not so sure. betty: and game maker net marble starting trade today. this is $2 billion in korea's
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biggest ipo in seven years. the stock is trading now, look at it a little later. like an asian headquarters -- betty: we are live -- yvonne: we are live at our headquarters in hong kong, i'm yvonne man. betty: and i'm betty liu. we are looking at some of the data coming out in the u.s., and it is giving you a softer read in asia. atnne: we are still looking some direction here at the start of the session. we mentioned retail sales and inflation out of the u.s. to be crucial in how they consumer is rebounding and reflation -- inflation will be rebounding as well. net marble shares are still trickling through here. let's look in with heidi first. haidi> ? >> it feels like this directionless trade has some
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volatility, and what we had overnight was actually the biggest movement on the s&p for about 15 sessions. that counts as volatility, but take a look at the open shares. we are expecting a low open when it comes to tokyo and sydney. different riders, but for the nikkei, take a look at that. it is definitely a yen story because we have the at one $1.13,13, the most -- the most we have in one night. preparing for a potential but of downside when it comes to the us really markets today as well. but let's take a look at commodities, because we have been seeing this fall in copper and iron. rallying, buts that is not iron. copper is seeing a nice rally overnight.
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i guess they will try to susan these markets that have been increasingly traumatized by the emerging drag in beijing. i wanted to take a quick look at the aussie dollar, because this is one bet that has gone wrong for a number of hedge funds. the had been putting -- on aussie dollar of the past several months, but it was falling to a four-month low earlier this week, having some pretty big impact in the way of retail sales. this will continue to wear on the currency as well as uncertainties over china. it's take a quick look between the early move. in the tokyo session in particular, the earnings season -- let's try to bring it up. we are looking at the automakers, where the hits keep coming. a surprise it -- drop in annual profit from , and incentives in the
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u.s. are not turning up where they want, but this is actually one point teen percent -- 1.16%. -- and we are looking at the world's largest nuclear camp by april 29o open -- april 2019, which will help offset some of the cost related to the cleanup there, down about .5% on that. and start up improbable world is one of the largest in the u.k. for the past 10 years. betty? betty: heidi, thank you. tmarble's back to nemar debut, raising $2 billion, the largest ipo we have seen out of
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south area and seven years. this values the company at about 13 trillion yuan, and this actually succeeds -- exceeds the likes of lg electronics in south korea. it shows where the mobile gaming industry is going as well, and the demand behind it as well. the owner started this from scratch with eight employees, and helped build it up in the past 17 years, but analysts say this is an attractive by here. here. we will see where this goes, but a good start. betty: and certain -- yvonne: and certainly not an overnight success, and one thing to note is that tencent is a large shareholder in the company, and you can imagine that some of the numbers in the stock prices could be in the anticipation of the expansion into china with the help of someone like tens and. it is great to have that company .acking you up -- tencent
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that is great to have a company like that backing you up. ♪
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betty: you know yvonne, to put a human aspect to this, not to be such a downer here but i thought one of the most fascinating part of the story of this company had fact,with the bit morbid where a few employees actually died -- not related directly to symbol or a but a signifying to some people to get that next game released, work overnight, 20 47. 24-7. that is a statement on that south korean culture. betty: as about -- yvonne: yvonne: i was about to say -- i was about to say when it comes to be mobile game industry as well, this is a very saturated market.
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one interesting thing is the remarkable success story behind it. the founder grew up in a slum. he did not come from money, and this ipo is a signal that south korea is moving oil from that, new chapter here after the election. betty: indeed. we will certainly keep watching this stock and how it trades, but let's get to our first world news. >> first up, president trump has described former fbi director james comey as "a grandstand or," and says he would have fired him no matter the recommendation of the attorney general. the bureau has in in turmoil for months and comey has not been helping it recover. hisy was criticized for handling of the investigation into hillary clinton females. tradee new u.s. cleared,ative has been leading to new negotiations on
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highs are toldt lawmakers china was one of america's leading trade problems. over in japan, nissan has forecasted a surprise drop on a four-year profit on an expectation of stronger yen and higher raw material costs. profit will probably fall about 8% to $6 billion through the year in march. competition is increasing in the u.s. as well as china, as nissan has did sales by 33% by 2011. this company has improved its brand value by over 50 places. and the company owned by trump's son-in-law will not be -- says be --resentatives will jared kushner's sister invoked his word to a president in a similar pitch past weekend. -- last weekend.
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buying them could them win residency visas. local news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm ramy inocencio, this is bloomberg. looking ahead hell we go into china's world leading high-speed train industry, key driver in the economic expansion. china's growth is projected .o fall below 6% next year this is bloomberg.
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♪ betty: -- yvonne: this is daybreak asia, i'm yvonne man in hong kong. betty: i am betty lou in new york. correspondent tom mackenzie is
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in china for us, and tom, what kind of challenges may have come up this weekend? there are a lot of the discussions on this project for china's one belt, one road. tom: that is right. is on what china's messaging is around its growing political influence as a result of this hugely ambitious economic program, the one belt, one road initiative. there are huge and locations for the u.s., for example. we heard from the former director of china's national security council, and he said that the u.s. would see this very clearly as an attempt by china to expand its spirit influence. problemht say this is a in the making for the u.s. because they pulled out of tpp, but there is an opening for ,hina economically, politically and in other ways as well.
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and there is tension between companies like russia and india as well, where china is working with pakistan on a road in this region. there are concerns in countries like myanmar, where bans imposed have been scrapped after there was opposition from local residents around environmental concerns. they are also looking at the port recently built in china and some of the military installations there. this initiative goes into politically volatile areas and navigating that and china's role and influence will be a key challenge for both beijing and its partners on this project. people here will be looking to get some transparency in answers from the chinese as to how they expect to play that role out. i am expressed -- impressed you can talk with lad blasting noise behind you.
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analysts.g in on yvonne: let's talk about the strategic it locations, but also the economic and locations. i have this chart and want our viewers to see here the total trade that we see from china with some of the what belt one road countries. has that come down since it really started about three years ago? is it too early to gauge the success of this or have these projects not been enough to move the dial? >> this is quite a long-term thing, so it takes time to see the real results and also, as we can see, most of these in the emerging markets are over the commodityears, the prices have gone down and those are some other factors, but looking ahead, i think this initiative will inject new growth in china.
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it is a long-term thing. it will take time to realize the benefits. betty: betty here in new york. accuratene of the most forecasters on the chinese currency, so i want to ask you what you think this project might have as an impact on our in the? is this a good way for chinese governments to test the international duration of the currency? xia: yes, i think this is a very interesting one because before this reformed in 2014, chinese authorities tried to push forward interests for legalization at the same time, but after the reform people realized that this was very important for all of these facts. to i think they prioritized
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-- before a push -- they push forward. on the other hand, this one belt, one road thing can give us something to help us with the capital for liberalization. there are forces that were enacted in a very controlled manner, so that means through this project, china can issue loans to these countries and the countries can use these receipts to buy goods or services from china. that is a very safe way to push forward on nationalization. betty: with this put some pressure on the renminbi? xia: i would like to say it is a long-term thing, so maybe on the long-term there will be a boost. term, i do not think that impact will be very
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significant. yvonne: and i want to bring tom back to this discussion. you mentioned the political applications of this and the maritime search two. china is obviously flexing the military muscle around asia's waters, but when it also comes to the riskiness of some of these projects, some of these countries involved are unstable and corrupt. how big a risk is that? tom, do you hear me? yes, i hear you. the risk is significant in terms of the financing, because where we are at now we have the develop and -- developing banks snapped up by china, like the silk road fund and others. they are ready to put money into these projects. to key now is getting china
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get private investors involved. they are looking for public-private investment, public-private partnership to work on some of these projects. it is convincing investors, as you say, that the risk is worth it. they will have the frameworks in place, the infrastructure in place, the oversight in place to make sure that these infrastructure projects come to fruition and offer some decent returns for private investors. i think that will be a key part of the question at the next few days here in beijing -- is china trying to convince private investors to get on board? they have corralled about 240 billion u.s. dollars from their development banks, and they have their state policy banks as well. now the focus on getting private investors involved. and we've also seen were private and public work very well on a dollars scale, so what l private investors that the chinese might want to
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bring in? tom: it is interesting. clearly, the asset managers here in china -- stephen engle was speaking over the weekend, talking about some of the inortunities to save money terms of lawmakers, cooperating. there are other asset managers in china who would be part of that. we heard from the consultancy, who has been talking to their clients. iny say they are interested determinations to get on board, even if parameters are still being refined and given more clarity. there is a determination amongst to put their toe in the water because they do not want this to be an infrastructure product, a building project, cornet all that information's on a scale far larger potentially then the marshall plan, according to mackenzie. the interest is there, but private investors will be looking for more clarity on
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exactly the terms and positions before they put their money up. wanted to come back to the influence that china has on this project even the -- project,dle given the domestic hurdle. when could we be seeing this internationalization before china starts leveraging the weaknesses? it still seems to be the key priorities for central banks -- the central bank at the moment? xia: i agree. he internationalization has slowed a bit, but this topic is still on the table, and i think in the next five years we can t through in these areas. athink this one should be better shot in months. process, china has
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had more incentives. they have more reasons to push this through. expect bondou markets and stock markets to continue to lose faith and selloff? xia: i would say they know how to protect the moments in the financial market, but i would like to save the tightening for the authorities. we may continue in the next 12 months. wenne: 12 months, you think will be seeing growth below 6%. you think this is when this could start to hit the economy? price think this is the you need to pay for elaborating things. tom: i am just outside the national convention center, talking about the deleveraging in this initiative. there have been concerns voiced that this project will give out to -- bad loans to companies in
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china. is that fairly contained in terms of lending? is xia: definitely. this takes some risk. but they also need to pay for rise of thesee loans and also the financial turmoil in the stock and bond market. but i think the chinese have enough leeway to ensure this position. i think the future will see more financial volatility, but i'm sure that they can manage. you, thankat to have you so much. and i would like to think tom mackenzie from joining us live from beijing. when we come back, more limber
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television. this is "daybreak:
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betty: let's do a quick check of the latest business flash headlines. one year to return to profit after the worst quarterly loss since 2015. shares fell by a record as they reported a net loss of $129 blamed onrough march, wrong way bets on coal. a 30% droppared with a year earlier, with coal also to blame. and toshiba in japan is considering delaying the buying process for its memory chip unit. that may be pushed back to next month or even july with toshiba a bid froml awaiting japan. they are teamed with a number of companies. the government wants a homegrown
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bid. and a half billion investment -- in a $500 million investment london. we areeated virtual -- also committing new funds. softbank shares are down about 1% right now. let's look at market trading here in the asia-pacific. on this friday morning, there is a bit of a downside when it comes to stocks. nikkei 225 down .4%. reaction leading up to the u.s. as we wait for inflation data coming up, a very long and big week for potential sales. popping as much as it
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percent right now. -- the asx 200, down a little bit as well. coming up next, this leaves governors -- forecaster scratching your head over this forecast.
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betty: happy friday, cloudy on this friday morning. a: 30 in atlantic city right now, -- yvonne: i'm yvonne man in hong kong. betty: and i'm betty liu in new york. >> china said to be ready to support the hong kong stock market to create a positive atmosphere ahead of the 20th anniversary of the handover from britain. issident sheesh and thing expected to visit to mark the toldion, and we have been that financial institutions have set aside funds to ensure stable trading ahead of july 1. ang kong is not known to take
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large part in the market before. and moon jae-in is concerned a u.s.eployment of mitchell field. in a phone call, he said it would be easier to settle the differences over the sad missile defense system is news korea would stop being so provocative. in the u.s., airlines are protect -- preparing for a widening of the ban on laptops and other large electronic devices on planes bound for american airports. your meeting with homeland security to discuss the decision, but it is not clear if there will be an immediate announcement. originatingflights from eight countries in the middle east. and analysts expect annual profits in japan's mega-bank to fall for a third straight year. monday, evenrt on as the impact of negative rates continues to ease.
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seen falling to just under $20 million. a bloomberg survey all projects a further 1.4% drop for this current financial year. arm remy inocencio, this is bloomberg. check on how the asian markets are shaping up so far on this friday morning with haidi lun, joining us from sydney. haidi? haidi: happy friday, but not if you are an equity trader. take a look at this equity function, and you can see that our markets at the moment are trading to the downside, down 4%. we are seeing even more from that key $20 level about what we -- stronger yen to building at about one dollar 13,
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weighing on things. again, it had a good run in terms of yen weakness over the past couple of weeks. we are off the session lows we saw earlier, and interestingly this is a role that we have not the bestlities doing and materials looking up nicely, .y about .7% but this is were some of the iron ore miners, because this is the story you would expect to be aiving sentiment and be definite concern over the reflation trade out of the u.s. and china, and whether they have any coin of that kind of sustainability given the troubling issues we have seen with iron ore in the 50's. why do bit of resilience when it comes to this, up by .9 percent metals --d 40 school fortescue metals, up by about
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.3%. automakers in tokyo, nissan announcing a surprise profit theyng essentially after found a drop in annual profit on expectations as well as higher material costs, but that stock was looking resilient in the tokyo session. something we are watching is rakuten, jumping to a record high after the company reported a profit that was almost double investment coming in over -- coming in, over $40 billion a year. softbank is seeing a bit of a decline, but that stock is up over 50% on the past year on the --ouncement it is leaving this is a virtual reality startup based in london, and they will be looking at a lot of the better sure capitol builder
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have been seeing in the u.k. over the past few days. betty? brexit negotiations are set to be raised this year, but governor mark carney is raising some eyebrows saying his forecasts are based on a smooth departure from the eu, something that not many are betting on. is this decision all about brexit? brexit intertwined through about every statement made by the bank of england in its policy statement and inflation report about growth, where the economy is heading, and about monetary policy. basically, mark connie said this is a smooth path, it could be rocky for now. they can change their forecast and cap, but in this particular theing, they voted to keep
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rate at 0.25%, a record low. is brexit, hitting british pocketbooks. there is what mark carney said at the press conference. >> with mage growth -- wage growth watering -- wage growth reflecting market expectations of a more orderly brexit process. >> and in reference to which or really process, we shall see. but the biggest thing down the road has been seeing growth after brexit past, starting to rise again, and looking at better investment and fiscal policy -- assuming we are going to get decisions made decently with the european union to offset the slower consumption. and a weak pound will keep inflation above target for a while. #6974, andat
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2%lation has rose above the target, and a bank can discount that knowing it is temporary because of the sharp drop on the pound ahead of the actual brexit decision. there is a lot of chatter about more dissenters pushing forward at the last meeting, very hawkish. there might be some more voices joining her. there was only one dissent, astem forms, but this is possibility that the things are moving faster and markets than expected. have ratherw-up consistent with them a central projection than monetary policy could be tightened by a somewhat greater extent over the forecast time. we are watching the economy, watching inflation, and seeing inflation rise of the economy gets stronger, faster. exit is smooth, they can start hiking rates faster as well. yvonne: it seems like the currency traders are still doubting, despite that hawkish
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statement. but talk about the fed. yesterday in the u.s., we heard president eric rosengren urging more rate hikes and a faster balance sheet reduction. is this the new tone for the fed? think so. bill dudley gave a speech in the past 24 hours, talking about the fed perceiving -- proceeding which -- with care and caution. his colleagues beyond to rate hikes a year, three and reduce the balance sheet after the next one. and we just spoke to the chair andpmorgan international, the former central bank governor himself in israel. he said that that has to move faster. there are risks. here is what he had to say.
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>> japan is still not ready for it, europe is not ready for it, so it will not help we go in different directions. something that is important to emphasize is that this will have consequences on the exchange market. the foreign exchange markets -- if one country is going in one direction and the other does not, we will see changes in the exchange rate, which will be a intervene and prevent that adjustment. exchange rate adjustment in this -- in the a helper hamper for the process. so they're going to try and stop currency from moving and see if we get some strengthening our weakening in your currency, vote when it comes to the fed, how does it affect things more broadly? jacob said you cannot look up an appointment alone, you have to look at financial stability and the possibility of instability if you keep things too low for increasing and
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encouraging more leverage. he is adamant that this is one of the big things the fed has to be watching, but he said the europe bank is not ready to move, and the japanese banks, what is that need? more structural authority. market health has done what it can. yvonne: kathleen hays, great work there. joining us live from tokyo. coming up next, some huge investments are planned in the united states. the business that is driving the decision and the politics as well. we look at the plan, players, and ramifications. this is
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♪ betty: this is daybreak asia, i am betty liu in new york. yvonne: and i'm yvonne man in hong kong. this reflects a market closed to to beingance -- close
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balance. they wanted to work directly with indonesia to solve a legal dispute over and oil spill in 2009. >> we would like to honor the policy, and the process that we know of looking for this for the government of indonesia. what is the way forward? from outside, we are open to , andnuing the partnership i guess we will see the impact. on the are your thoughts lower $50 that the springs? ,> we went through the process where the price was as high as $120 a few years ago, and then it came down. about $126. ime back to about $50, and
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feel pretty comfortable about that. -- andd always say that we realize that is not good for the consumer and their productivity if it is too low. survive. below whereut $50 it is now. it may come up a little bit to 55, go down to 48, 47. that is about right. so i am pretty comfortable, and given our operation the past two years, we have in through the leadership to survive at $50. so we are quite comfortable with this. >> so this is making it easier for buyers and sellers to come to an agreement about valuation? >> right now it is pretty much
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opecced, we used to have with a lot of power in directing --, ande by monitoring now we have additional production from many places. i think there is a balance between the producer and the consumer. chief: that was the executive officer of the thai energy company ptt. we have more big names coming up today. it 9:30 p.m. new york time, we are joined by john rice. 9:30 a.m. for those in hong kong. and after that, we will speak to the president of the asian infrastructure investment bank. betty: saudi arabia, we antioned it is planning
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multibillion dollar spending spree in the united states, looking to reset relations under the trump administration. detailscencio has more on this. remy, how much are we talking here? ramy: an unprecedented amount. $40 billion from what we have heard. this will mostly be going toward infrastructure revitalization, and interestingly enough we did no donald trump did campaign on this pledge to revitalize american infrastructure. it is coming at a time that is opportune in a way, trying to open the door with this current white house here. this is so far not official, but donald trump is scheduled to be going to saudi arabia sometime next week, and the news could in order to coincide with this strip. interestingly, trump's own son-in-law jared kushner, who has had his hand in many of donald trump of the affairs, both domestic and international,
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is reporting that he played a critical role in this deal. that is according to a white house official, but that person also spoke on condition of anonymity. all this is important to people who want to be confidential on this matter, because it has not been official yet, but officials have said that no final decisions have been made and in fact there still could be a delay in any announcements so far. yvonne? the question is why now? we have seen oil prices slumping, so is this a way of diversifying investments away from oil? y: this is a twofold deal here. if curry favor with the new white house and donald trump. in the past few years and the waning years of the barack obama administration, there had been a cooling of ties between audio rabia and the united days. did saudi arabia, they
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wanted to try and reset relations with the country, but in particular in 2015, things really went south with the white when the saudi arabia barack obama administration forged that nuclear deal that we remember. one other thing to went out is that iran was of course saudi rival in thete region. we are posting pictures of a meeting between donald trump and the crown prince earlier this year. during that time at the white house, it was said that it was "a historic turning point in bilateral relations, clearly trying to spin something more positive there. one of the reasons here is about the price of oil, and what you did mention about diverse vacation here. looking to the price of oil over the past year today, you can see it is down by about 8.5% year. -- here, and that is one of the reasons the saudis want to
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diversify, throwing money elsewhere as their own fortunes in oil start to fall. come to the -- bloomberg with me. the blue line here is the price of oil, but the green bars here are gdp growth by quarter. one largelythat tracks the other. we're going down to the 2.0 mark when it comes to normalize oil prices here. it is also tracking largely with 2.4 gdp, coming in at 1.2%, one of the lowest you can see, stretching back to the early 2013. reasons why all saudi arabia wants to curry good favor with the united states here. one quick point is that so far in the past year, saudi arabia has thrown in about $50 billion into overseas investment. with this $40 million, you could almost double the amount.
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be -- we willld be looking forward to that plan. first quarter adjustment earnings have been reported at $475 million, below estimates of about $493 million. revenue was $2.3 million -- billion dollars, but destruction is -- construction is set to resume. and this has instructed -- attracted strong demands, and the housing or been development corporation is now selling 204 million shares at 56-60 rupees and the government is selling 10% of the state owned company as it seeks to heal -- hit a $7 billion investment chart.
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this balance of criticism of compensation practices at the playmaker. the executive chairman was here for two years, and will continue to release the board as they fall short of changes from outside shareholders, which won the independent chairman. and microsoft wants the windows operating system to fraternize better with ios operating systems and android. this is also becoming available in a windows app store. microsoft seems to be embracing customers use of multiple devices, and the reality that most gadgets do not run windows. and you can get all the other stories you need to know on friday, right? subscribers, go
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to tv on the terminal. you can also customize your settings so you only get the news on the industries and assets you care about. this is bloomberg. ♪
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♪ yvonne: this is "daybreak: asia," i'm yvonne man in hong kong.
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betty: and i'm betty liu in new york. this is going to be the focus this weekend in beijing at the , attendedoad summit by world leaders and top business figures -- one belt, one road summit, attended by world leaders and top business figures. it may be called the one belt, one road initiative come but the heavy lifting will be done over a whole lot of rail line. be it high-speed or hard-core hauling. this is central to what china does well and central to the goal of extending relations across europe. across china rail is like a business card for the entire manufacturing sector. it is an important product as china goes forward into the world. >> china already has the world's largest rail system, including a high-speed network of stretches more than 22,000 kilometers.
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it helps to dump it -- it hopes to double that over the next decade and a half. >> they need to meet the government's push for urbanization. these are handled in the far west, and that further export -- along theong developer, including malaysia, pakistan, and context on. >> these are the courses china .s installing overseas china's top locomotive maker, crc, hopes to roll out the next generation of bullet trains with max operational speeds of 400 kilometers an hour by 2020. great, but the unanswered questions loom large as the road itself, like who is going to pay the tens of billions of dollars and will it be enough in trade and investment to make it viable? raildy, chinese high-speed projects have hit snags in places like malaysia, india, and
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the u.s.. se achinese did lo partnership over a separate los angeles-las vegas line, caught over regulatory concerns. >> many people leave that high-speed rail is not igh-speed moneymaking, but think this is a misconception. it is much more market-driven now. through increasing output, they have been able to slowly lower costs. it is completely transparent, including international products -- projects we are hitting four. >> high-speed trains already link china with multiple other forms of transportation. this is a question as to whether the high-speed land transportation will boom or buckle. is a reporter what is coming up in the next few
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hours on bloomberg markets. road, what belt line this means is that -- for these people who are going to be benefiting from this in for structure in the long term. what they are trying to do. it --political sense to what they're trying to do here has a political sense to it as well. yvonne: are you going to be visiting the belt and road forum on sunday? >> i will. ge will be a long as well, and the aaa president will be there as well. all the come, next on bloomberg.
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♪ it is 9:00 a.m. in hong kong. i am sophie kamaruddin. rishaad: i am rishaad salamat from bloomberg's asia headquarters. markets."loomberg ♪ sophie: asia-pacific stocks extends wall street's decline. oils recovery stalls. rishaad: president trump raking with the white house message, saying he intended to


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