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tv   Bloomberg Daybreak Asia  Bloomberg  May 14, 2017 7:00pm-9:01pm EDT

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♪ >> china lays the foundation for a new trade route, the project of the century. finance ministers take a chromatic view of trade. mnuchin says the u.s. reserves the right to put itself first. korea's latest missile launch is seen as a director
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challenge to washington and seoul, korea. we have the world covered here on "daybreak asia." we will be live in beijing for china's plans for a new silk road. in new york, all the details of the global hack attack. he careful as you turn your computers on. liveis "daybreak asia" from bloomberg's u.s. and asian headquarters. it sounds really ominous. it is just after 7:00 p.m. , those is a big story hospitals and government facilities being attacked, but all eyes will be on the bill and road forum, $78 billion in infrastructure spending pledged at the time we are a focus on data, retail
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sales data out of china. when it comes to the u.s., , theng seems to move much s&p 500 2400 for the past couple of weeks. china,a big project from how will the u.s. and the rest of the world react. earthquake-layy quality? we will examine that later in the program. we seem pretty stuck here. the retail sales numbers on friday did not eliminate anymore on where consumers in the market are going, so we will watch for economic numbers this week. shery: let's look at the markets at play. openealand the only market at the moment, now rebounding, slightly unchanged after falling in the last session. .he kiwi dollar also unchanged
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this week is all about australia . keep an eye on on see banks, stepping up criticism of the proposal to introduce a multibillion dollar levy. futures pointing higher, while the asx close lower. also, look at japan with futures looking like this, lower following that drop in u.s. stocks on friday, but also the mega banks announcing results in japan. the nikkei was down while the yen is unchanged at 113.33. this is all to do with global world, although european markets seem to have on becomes after macr
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the youngest president of france. betty: let's get back to that belton road project, the project, xiade jinping welcoming world leaders, describing his plan as the project of the century. tom mackenzie joins us now. you have been there on the ground for quite a few days, so take us to the grand plans and how they might impact the world. tom: this is about china and xi jinping trying to recast globalization in china's image. use investment and infrastructure to link at this overland route and maritime route, linking asia to the middle east to europe, to africa , and they want to open up new markets. president xi jinping said this was a project of the century and
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would be a force for peace in a and theth many traumas difficulties, and he committed to an extra $70 billion of funding. china's development bank has allocated $240 billion, and it is thought china makes 10 $500 billion to this project. president xi jinping lang this out in front of many dignitaries, including president putin of russia, president erdogan of turkey, who sent the center of economic gravity is now moving east. this is also about china securing its energy supply because china is the number one importer of crude. it has become dependent on other countries for its energy needs, and it is on that note that we spoke to the chairman of china national petroleum corporation,
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the largest oil and gas producer and china, and we asked about the potential of investment by assets,u.s. energy particularly around the natural gas. take a listen. the u.s. has very rich or and gas resources, while china needs to diversify. american crude will certainly be one of our options as the u.s. government is losing its restrictions on oil exports. it is strategically important for china to expand the natural gas ratio in its primary energy mix from the current 6% to 10 to 15% in the next 5-10 years. tom: that is the chairman of china's largest oil and gas producer. about wasre talking this hundred day deals signed
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between the u.s. and china that opens up china's markets for more imported liquefied natural gas from the u.s.. i asked whether he would be interested in investment in u.s. energy terminals. he said that is something he would consider. the broader context is that oil. is producing less it cut back on investments because of the week oil price, and the iaea does not think it will be able to up that production much this year, so it does remain dependent on overseas supplies. now the u.s. will be part of that. shery: let's talk more about the belton road project. we have seen huge capital outflows. what are the challenges that rise -- lie ahead? one crucial challenge,
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bloomberg intelligence has talked about the fact that these capital controls are in place and whether or not that will hamper financing of some of these projects. the chinese government has been it anes to say that actually when it comes to belt and road initiatives, capital controls do not apply. we will see if that is the case. so many these projects are so diverse, so many regions, deployed by state owned and private enterprises. financing is a key part of this. tensions they came to the four between the european union, specifically germany and china, around language and international norms in terms of financing these projects. hoping for some internationally accepted language in the documents. they have not had that in china. that is a bonus contention. we also heard a few words of warning from the imf who said these projects do need to take
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into account the environmental impact, and we heard from america's representative saying there needs to be transparency and a level playing field when it comes to belt and road initiative projects. shery: tom mackenzie in beijing. thank you. we will continue to talk about the belt and road initiative and half an hour. we will speak on the business opportunities from the summit. right, let's get a checkup first word headlines. g7 finance ministers signaled a truce and the trade spat with america as treasury secretary steven mnuchin said the group was starting to understand washington's position. that post-meeting statement merited the water down the language, but suggested a more pragmatic tone. steven mnuchin declined to shun protectionism, saying the u.s. would do what is best for itself. >> we don't want to be
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protectionist, but we reserve our right to be protectionist to the extent that we believe that trade is not free and fair. our approach is to a more balanced to trade. >> it is important that protectionism is off the table. there was no disagreement on the fact that trade promotes growth and has to be inclusive, so i am very satisfied. of course we need to make steps forward. there are different views across the g7 and g-20 for that, but i am confident we can reach common views even on these issues. haslinda: the un security council is to discuss north korea's latest missile launch, seen as a direct challenge to the new leader of south korea. the rocket landed in the sea of japan having reached an unusually high altitude, but so far is not capable of hitting the west u.s. coast.
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reports from japan say toshiba may win a government guarantee for almost $8 billion in loans. the financial times and says the state investment fund may take chipol of toshiba's business. video would include $2.7 billion -- the deal would include $2.7 billion each from the entities involved. taking the lead on building nuclear reactors. work at the power plant in georgia could start as early as next month. the atlanta-based utility says they are working out a new service agreement. westinghouse's bankruptcy put at stake of the four nuclear reactors in doubt. the other two are in south carolina. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries.
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this is bloomberg. i am haslinda amin. looking ahead, china's belton road initiative --belt and road initiative saying pakistan may be the benchmark. retail figures indicate the u.s. economy on track for steady growth. we will discuss the outlook with j.p. morgan. this is bloomberg. ♪
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week for earnings, cisco, alibaba, tencent. first to the earnings. quite a few to keep our eye on. vodafone,lmart and
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but the focus will be on tech and online retailers. 18th,a will be out on the the stock is up more than a third year to date. investors are anxious to see if they can keep the momentum going, particularly with competition from that is presenting some competition. then you have tencent, another online retailer, up by the same amount come out on the 17th with their numbers. ,he focus has been on tech valuations when it comes to apple. #8527, market capitalization passing $800 billion, and the nasdaq's five most viable -- and thigh you bull
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companies are nearing $3 trillion in valuation after rising 24% this year. that is more than the total by you of stocks in any market except for the u.s., japan, and the u.k.. , construction, the biggest number, because that can indicate if the economy is on a rebound. construction nearing a decade high. a economists say housing starts likely rose. industrial production also likely to rise. we have trump and a week of international diplomacy and an international trip on the weekend. betty: indeed. a lot to watch out for. the s&p closing just below that 2400 level. seems reluctant to break through.
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volatility at the lowest level since 1993. someone who remembers what happened back then. j.p. morgan is with us. you mentioned in your notes that we are finding ourselves in a similar situation to 1993, 1994 turning ugly, so could we be repeating history here? >> could be. 1994 was a surprise to all of us, 1992, 19 93, easy money, low volatility and everybody got into a long duration trade, which early in 1994, higher inflation, fed hiking created a lot of havoc and then the asian crisis.
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the question is is there a lot of average. i don't think it is in fixed income. they are still on the cautious side, not long duration positions out there, a lot more sanguine and comfortable than at the time. gone through this big deleveraging and the u.s., so that is not a headwind for the markets. what could be then? is it what is happening right now in washington? how much of what we see with the continuing fallout over james comey and how that might impact legislative action in washington, how much is that being priced in at all or not yet? >> it probably is not. the markets learned that politics creates great headlines , but does not change the economy that much, so most of us
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-- we find it entertaining, but are not building strategy off that. it is all about the economy, and the question is the economy overheating, and in particular in the last few weeks, low inflation numbers, so it looks like a goldilocks environment, steady growth, low as it is, but not a lot of inflation. shery: not entertaining when it comes to dollar bulls. the dollar has been trying to push through the 115 level, dollar-yen. it is subdued today, but has rallied 3%. it last three occasions happened, it was not able to sustain those gains. markets are expecting is fed rate hike next month, could we see a difference this time around from the last three times? is not fully
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pricing again. bond yields are low. the market is very slow over here. the driver of the dollar, relative one pricing -- one country egg and see other is accelerating relative to the rest of the world, and it is not. numbersectations and are steady. it is a mature recovery. the european recovery is accelerating, better numbers in emerging markets, so there is nothing wrong about the u.s.. it is simply more exciting opportunities elsewhere in emerging and europe, that's why the dollar should not go very far here. shery: with the next global catalyst be china? look at what is happening in the equities and bonds market right now. >> there is something going on within china. the government is trying to clamp down on the shadow banking world, but they learned a lot from the stakes in the u.s. and europe. you have to be very
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careful, so they are clamping down on the smaller banks, shadow banking. i think the probability of significant mistake given how china is learning all the time is pretty low. i'm not really seeing things imploding from the chinese side. back in the u.s., we will get quite a bit of economic numbers, retail sales missing on friday. housing starts on tuesday. do think it will affirm that this economy is on strong footing, or have we peaked here? isthe second quarter rebounding from a first quarter, after sixery weak, years of each time the first quarter being very weak and later on getting revised significantly. we have data volatility, adjustments to the first quarter. the second will probably get 3%
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growth after less than 1% in the first, basically cruising, hovering around 2%, but so far not a lot of inflation, so it is still steady in the u.s.. shery: thank you for joining us in hong kong usually in new york . the head of global asset allocation at j.p. morgan. up next, and on alert for what could be phase two of the global cyber attack. warning of more victims on monday, we would take you why. this is bloomberg. ♪
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shery: i am sure and in hong kong. this is "daybreak asia." betty: i am betty liu in new york. companies across the region should be on alert for a massive cyber attack.
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, you will bemac ok. raimi inocencio has the latest. if you have a macintosh come you should be ok. ramy: basically this brand somware is-- ran targeting windows users because there are holes that people can get into. let me go through what this is. cry will make you want to cry if he gets into your own personal computer. it holds your computer hostage. can't get back into your own computer and data unless you pay up. they are demanding at least $300 and asking for that in bitcoin.
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don'tises higher if you pay the first time. there is a countdown clock. if you don't do it within a certain time, you would lose your data. developed atpon to nsa and was leaked the masses. looking at where it has hit, everywhere from europe to asia, the united kingdom, the nhs had 40 organizations hit. that x hit in the united states. russia's interior ministry has been hit. we're also seeing one unnamed business in the asia-pacific. chinese gas station payment systems, atm's hit. lew of placesis a s across the world. you mentioned that
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microsoft users should be careful. how can they protect themselves? in march, microsoft released a patch. need toey said you download this in case you're microsoft user, but when you see that, sometimes you think it will not be for me. i will be fine. you won't be fine. you do need to download that now. microsoft is saying they are providing security updates for people who have windows dating back to 2001. that is how massive this is. microsoft brad smith coming out ,ith a statement saying lambasting what has happened, saying the governments of the world should treat this attack as a wake-up call and need to take a different approach. if you are in cyberspace, the same rules should apply to weapons in the physical world.
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download not a victim, that hatch. if you are already a victim, you can pay that ransom i guess. betty:
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♪ shery: it is 7:30 a.m. in hong kong. there could be a mixed open for markets across asia. chinese features are up. we are 30 minutes away from the open of the first ager market. betty: and it 7:30 p.m. sunday evening in new york. mother's day by the way. closing ont lower friday. i am betty liu in new york. shery: happy mother's day, betty. betty: thank you, thank you. shery: i'm shery ahn in hong
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kong. you are watching daybreak asia very let's get the first word news. china has laid the foundations for a new east-west trade route, calling it the project of the century. xi jinping hopes his misleaders for the bell -- it is inspired by the silk route that lincoln china to europe. they call it a source for peace in a world of challenges. china's oil and gas producer said -- the chairman of the operations that they have more than 50 joint projects underway in 19 belt and road countries. cnpc isso told us setting its sights on u.s. energy to fill the glowing -- growing reliance on oil.
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policyakers will include with stability in financial markets. state media say the minister said that beijing will prioritize financial risk while continuing with the management floating exchange rate. lee said china will look at leveraging and economic growth. the chinese aviation officials said china is negotiating with the u.s. and france for better air rights to meet growing demand for domestic flights. this contests domestic rights which have been defeated. this is part of china's plan to boost air links in the one belt, one road trade initiative. merkel's christian democrats a decisive victory, handing her opponents of heavy defeat and boosting her chances in the september national election.
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they took about 34% in western celia. -- westphalia. chances of winning a fourth term. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm haslinda amin, this is bloomberg. shery: we are counting down to some of the major market opens in asia-pacific. in sydney.m haigh sentiment taking a bit of a hit from the u.s. and economic data. we have the north korean peninsula missile launch. what is the likely impact on other assets? adam: good morning. we are already seeing impact on dollar-yen and strength there, though it has come off a bit in the past hour or so. i think you have got a combination of things really. there is that roll over from the
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missed inflation number we saw in the u.s. ride a. that is going through to the australian bond, and bonds are rallying. equities also getting hit by that. remember charles on an -- charles evan, he is talking about his worries over inflation or that game on friday, so asian traders are still playing sing -- placing their first bets on that from the fed policymakers are later on in the day, a huge data pump from china. that will be the key thing for traders to be watching later on, especially on the trailers. -- aussie trailers. -- traders. betty: speaking about currencies , talk about the dollar. it is getting pretty tough for the dollar bulls. they made their money on the world being in rally. what are the key technical
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levels for the dollar? here, you can see on this chart, the bloomberg chart of dollar-yen here look at this resistance level around the 115 level. we have already hit that level three times this year already, so i think the argument for most of the technical analysts and strategists we have spoken to recently is that at the market -- the moment it is looking similar, and any heading to that level looks to be as far as it could go. absence of any further news to push it further. given what we were saying about charles evans' comments over inflation, there are worries around u.s. crude not being as strong as the lofty expectations based into the market. that might be one testing factor
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for dollar bulls, and their relationship to the yen. , analyzing the ctf see data, looks like the dollar is the only one left in the long trade for hedge funds of the g10 , so everything is still moving in the way of generally along dollar position. so that may also suggest that if everyone is positioned that way, something has got to give. betty: all right, adam. lots of things to watch. adam haigh as we set up for the trading week. this auditingf firm said he remains bullish on china as it launches the one belt, one road initiative. faces big beijing challenges attracting private capital. it is pretty risky for
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infrastructure projects. >> there is a big gap. there is a lot of progress that is to be made. if you ask what is one of the biggest risks right now to belt and road, it is attracting the private capital that it will happen to get engaged. we are talking about attracting capital to some pretty high-risk projects in some very emerging markets. so private capital is going to i diligence,emendous and it will be interesting to see what kind of rates will have to be in place to attract the kind of capital. reporter: would you say to the chinese governmentreporter: in terms of what they need to do further priorities? >> there is no silver bullet answer to that. this is complicated to say the least, and you run right into the issues that i think companies deal with when they
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are trying to operate on the global stage. you have regulators that are country-based, tax authorities better country-based. all of those things will be important to the infrastructure projects embedded within belt and road. china will need to understand, how do i work with the e.u. commission as we look at rail opportunities. reporter: should the u.s. play a greater role in the belt and road initiative? >> i think they will. i'm a big believer in the pragmatism of our leaders as hundred daye recent plan and 10 point initiative announced, you can debate whether some of those things weren't in play anyway. i thought it was a positive signal given some of the negative rhetoric that has been coming out of the u.s..
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i thought it signaled a willingness to be more pragmatic and work with chinese leadership on things where there is mutual interest. reporter: given the selloff in equities and bonds, where there is pmi or exports, does that change your calculation regarding china's growth outlook for 2017? >> i am bullish on the importance of china, and i think the strength of the chinese economy long-term, 3, 5, 10 years. we will have ups and downs during that time. i tend to not get distracted or on the next six to 12 months, because i have such a strong believer in the of fortunes this economy and the strength of this economy in the next five years and beyond. betty: that was kpmg speaking with bloomberg. the belthave more on
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initiative. our next guest is talking about the benchmarks for how the plan may work. we will take a look at that. this is bloomberg. ♪
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♪ initiative and road is rooted in the ancient silk road. it focuses on egypt, europe, and africa, but all countries can be part of the belt and road initiative. it is based on extensive consultation, and its benefits will be shared by all. reporter: the economic dependence on china will have geopolitical impact here one thing china wants other countries to two his support -- to do is support this. >> it is hard to see how one can ignore a project of this magnitude which is probably on a scale with building the
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pyramid's were constructing the great wall of china. ,t is truly a massive endeavor and no country can not stay out of it. it is important to the companies from germany have a level playing field taking part on the things which would be built by these initiatives. we want to be part of it, the german companies want to be part of it, but it is necessary we have a level playing field with transparency so we know about the cost, the labor, work, and even things out. shery: that was some of the big voices on the one belt, one road initiative. joining us is the man from silk road associates and founder. thank you for joining us. let's talk about this initiative. more than three years since president xi announced it.
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how much has been accomplished? projects tracking 400 across belt and road countries. the key point is there is not a specific list of investment projects. it is not clear. but what is certain is the commercial expansion is growing all the time. shery: and what we can see for certain is the loans that we have seen from china. for the viewers, if you take it the loan search function, that would be lsrc go. if you have narrowed the search into the loans, you can see how far the belt and road initiative has come along. you have to narrow the search 20, the date, september 2013. that was the day it was announced. loans from the aib and the silk road fund. you go into ranks and list by
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country, the uae has received more than $200 billion, pakistan $400 million in loans. no credit suisse said we could see $500 billion being funneled into this project, more countries being involved over the next five years. who is expected to win? will be the biggest winner when it comes to these countries being involved? that struggle with financing. pakistan is a great example. they struggle to attract private capital. what was clear, drastic banks are not in a position to fund all the infrastructure projects, so chinese financing becomes. important. the free market economies are international economies like saudi arabia are building subway construction projects. this is likely to benefit directly from belt and road. betty: how much is this all
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great pr and a great tagline? how much will this turn into profit? ben: the headlines are always grand. what we want clear, again over the last 18 months is a chance to travel through kazakhstan, egypt, to saudi arabia, talking to people on the ground. these are being done. we have exciting projects taking place, but what is clear is pakistan is important benchmark to this, largely because the year.ment has mixed once they get together to decide what projects are on the list of officially approved projects through that makes a great deal of confidence for the banks looking to fund these projects, to know the governments have approved a list of projects. it sounds like it sets a
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good example. as we mentioned earlier, this money is going to be quite helpful, this investment, coming out of china and countries around asia. what about over here in the u.s. or in europe? capital flowing out of china into some of those countries as well? ben: the current mood is not explosive -- exclusive membership. everyone is welcome to join. but the capital itself and the projects focus on asia, middle east, and africa or europe. the real benefits for companies, american companies, to collaborate with the chinese companies. i mentioned saudi arabia. this is a point where there is a lot of railway construction taking place. chinese parties are part of big consortiums that u.s. companies
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are leading or our partners of. so that is good for multinationals. shery: how much of the outflows and stabilizing force of the yuan affects these projects? from our little understanding. the capital outflow in the build and road projects has been little effective. once -- much of the financing is coming from the china action bank and the china development bank. shery: what about economic growth in china? we are seeing a different environment than when it was announced three years ago. how will that affect some of the funding that these projects will get? clearly there are growing concerns in china's financials. that does have an impact on the ability of banks to lend money, but the slow gdp growth is a benefit. it encourages private companies
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that would have looked for deals to go abroad. so it might actually be higher than in china for the first time. shery: so we are seeing gdp growth in china starting to slow, but also the fact that the markets have been volatile in recent weeks. we have the pboc sort of stepping in, or there is speculation they have tried to support the markets. how committed is the government in avoiding volatility in chinese markets? ben: they are committed in the markets. the real commitment needs to be very much on stable economic reform and more general economic reform because it is those types of measures that will produce robust predictable growth that will avoid the volatility. shery: thank you so much for joining us. all eyes now on the belt and
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road initiative and the reform taking place in beijing. the silk road founder and ceo. you can did a roundup of the stories you need to know to get your day going in the bloomberg go.cribers, dayv you can also customize your settings so you only get the news on industries and assets you care about. this is bloomberg. ♪
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♪ let's get a quick check of the markets. volatilityng less out of europe. merkel's party is winning the election in the most populous state in germany. that is expected to bring european to you and --
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markets. and emmanuel macron has become the youngest president of france. the market trading in new zealand unchanged, but that is after gains we saw in asian markets. the kiwi dollar unmoved after gaining in the last session, 65.68 u.s. cents. the lastng 0.7% in session, take a look at the aussie home loan data expected later today. they will be flat. keep an eye on aussie banks. there is a proposal for the multi-billion-dollar levy. the japanese yen trading like this, futures pointing lower at the moment, down 0.2%. the japanese yen training -- gaming. we had the north korea missile test confirmed by korean news agencies this morning. -- nikkei index, four point 0.4% lower. keep an eye on the banks,
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because megabanks in japan will report earnings after the close. betty: let's get a check of the business flash headlines. shery: more people in talks to sell a third of the property units, which considering a bid for a majority stake in the real estate. sources say talks are at an early stage, and the nhk said they want to boost profits by strengthening its property business. the market value is $3.4 billion, and nomura holdings is at its biggest shareholder. betty: a low-cost carrier in china in partnership with the everbright group. the venture is the ambition of creating a pan asian airlines. they have affiliates in taiwan, indonesia, japan, and vietnam. hundreds of planes to invest in infrastructure, including a low-cost carrier terminal.
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shery: changes to mitsubishi financials him a planning to consolidate corporate accounts at its trust banking unit into commercial operations. it was a reference to the bank of tokyo. they hope to boost efficiency and negative interest rates. changes will affect about 2600 customers with borrowing around $106 billion. to plaind going back old bhp, the world's biggest miner about to launch a $10 billion advertising campaign changing its logo, dropping billiton. they said they need to change the way people think about it. the change has been in the works for 18 months and has nothing to do with active investor elliott's calls for reform. shery: the latest movie version of king arthur could manage third place at the north american box office.
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the warner bros. legend of the sword earned $15 million for 18% of its costs. guardians of the galaxy sequel held onto top spots with $63 million and the amy schumer second, earning $18 million. right, i always liked talking about the movies. more to come with asia's first major market open, moments away. shery: i have got to say, i love guardians of the galaxy. i am a big fan. i could join it in the top spot. let's bring in sophie kamaruddin to tell us what we should be watching. australia, japan, south korea. is not ase news exciting, but we have plenty to keep an eye on. megabanksree big coming after the market closing today.
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mitsubishi, u.s. chase, mitsuo straight drophird in annual profit. the lowest for this fiscal year. we are keeping an eye on japan in tokyo. this giant will be in talks with nomura in the brokerage real estate. this could boost its profits there. we are looking at this media company. they had weakened their offer. they want all caps at $20,000 a them, which is bringing up on friday. forecasts signaling a mixed start with a series of weak u.s. economic data. we will keep an eye on the defense stocks in south korea. the kospi futures looking fairly resilient. we have seen the point that it has changed. that is a brief look.
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japan, ♪ south korea, omens. ♪
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♪ the foundationys for a new east-west trade route. xi jinping calls it the project of the century. finance ministers taking a pragmatic view of trade. steven mnuchin says the u.s. reserves the right to put itself first. shery: the weekend cyber attack may strike again on monday. betty: air asia doubling to almost one billion passengers by
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2025. shery: this is the second hour of "daybreak asia" live from bloomberg's u.s. and asian headquarters. of course we are watching how some of the major markets like japan and korea are doing at the open. here in the u.s., we are watching this continuing fallout from washington. will the firing of james comey affect the markets at some point. how will they price it in? more economic numbers this week to confirm the first quarter economic growth was just a blip, a first quarter slow down, and we will be wrecking the economy back up again. a lot to look forward to. europe, the at
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geopolitical risks diminishing. getting anel's party election victory in the most populous state in the country. becoming france's youngest president. a lot to look out for. u.s. stocks dropped on friday, let's get the details from sophie kamaruddin. most markets in the red. getting aven assets bit, so pressure on equity markets. yen weighing on ,tocks, the nikkei 225 down .7% investors taking a cautious tone , especially considering north korea launched its seventh missile test on sunday. .1%, but nowned up
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swinging into losses. the won up a .25% against the greenback. all, the nikkei 225 trading further from that 20,000 to digest earnings today. japan's three megabanks as well. we will be looking out for ppi for april and march machine tool orders today. take a look at the bond space, aussie bonds looking bullish after the u.s. economic data on friday. inflation missing estimates, but the fed on track to hike rates next month. on suchtraders betting a move, falling to 70%. given thatency space backdrop ahead of that meeting, hedge funds are set to go short all major g10 currencies.
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when you look at the aussie dollar currently it is the only net long among g10 forex, but contracts falling as depicted by the line in white. this as the currency suffered for the first time in about a year, so hedge funds may short the aussie to. this perhaps gives the aussie a miss onut if we get a the chinese data, we may see the $.73, sove towards keep an eye out for the data around 10:00 a.m. this morning. watching outl be for that data. sophie kamaruddin there. let's get first word news with paul allen. paul: security experts are saying the weekends attacked
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will continue claiming victims. the malware uses a technique stolen from the nsa. it affected the british national health service, russia's interior, ande fedex. >> this is something we have not seen before. the latest count of countries is over 200,000 victims in 150 countries. the un security council will discuss north korea's latest launch, seen as a direct new southto the korean president. it reached an unusually high nottude, however it is thought capable of reaching the west coast of the united states. reports from japan say toshiba
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may win a government guarantee for almost $8 billion in loans. the financial times said the state investment fund may take control of toshiba's chip business. the deal would include $2.7 billion each. precision hon hai seeking a loan a $15 billion for the chip unit. taking the lead on building two work at thetors, power plant in georgia could start as early as next month. the atlanta-based utility says it is working out the new service agreement here at westinghouse's bankruptcy put the fate of four nuclear reactors in doubt, the other two are in south carolina. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. i am paul allen. china has laid the
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framework for its belt and road initiative. president xi jinping welcoming leaders to beijing, describing the plan as the project of the century. tom mackenzie joins us now. it certainly sounds grand, but the devil is always in the details, so tell us some of the details of the plan. the chinese are trying to show this is not just hyperbole, but they are trying to reshape globalization in china's image. this is crucial for china, crucial for president xi jinping, because this is his that project. it has been given added momentum. the mystically, growth is slowing. they are looking for new markets , to shift excess capacity, to internationalize the renminbi.
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the u.s. is looking more inward, at least that is the perception as this spaces carved out for president xi jinping to build on his image as a champion of globalization, and now again here. this is about crunching through some of the details, not just pushing on with a broad branding exercise, putting together disparate interests and different products -- projects. an chinese have announced additional $70 billion in funding and talked about doing deals and signing memorandum of cooperation and understanding with different players. one of the key factors they will have to work out is financing, and that is why i'm here because behind me the bankers are meeting. this is a bankers roundtable focused on putting together a framework, and infrastructure to address some of these projects. so you have the development banks, chinese policy banks,
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ikes of standard chartered. we spoke exclusively to the international chairman of kpmg, and he sent financing was one of the big risks to the belt and road initiative. take a listen. >> there is a lot of progress that needs to be made. one of the biggest risks right now to belt and road is attracting the private capital that will have to get engaged, and frankly we are talking about attracting capital to some pretty high risk projects in some very emerging markets, so dovate capital is going to tremendous diligence, and it will be interesting to see what kind of rates will have to be in place. that is the international
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head of kpmg, a company that is a good one to speak to about this because they have so many clients across a room jurisdictions and countries. he was saying amongst his client list, he is hearing interest from sector financial planners, the insurance industry, anyone involved in navigating the complex regulatory environment. that is where he is seeing interest, but there is still caution and the desired from many clients to get more details , and maybe china will be up to produce the goods at the end of the summer. we are waiting to find out. the chairman also speaking about higher risk projects, so what are the challenges or tensions around this initiative? it is the fact that or alle having to fal infrastructure projects, the
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maritime routes and overland routes, having to navigate all these jurisdictions, laws, rules, set of frameworks for financing, for example. you have to work through all of these for each of these infrastructure projects, and that is what is so complicated, and that is what china is having to do, bring the different players together and get some commonality or understanding amongst of these players. what we heard are some of the tensions on the back of this initiative. the germans were concerned about some of the language china is using around investment, and the germans are concerned as to whether or not their companies will get a level playing field as part of this initiative. the u.s.eard from representative sent over by donald trump, and he said there needs to be transparency and there needs to be fair access again to american firms that may look to get involved, then we
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heard from christine lagarde from the imf saying environmental and ecological concerns have to be at the forefront of these projects as more so there are a lot details that have to be worked out, but for president xi jinping, this will now be part of his legacy he hopes. he hopes this will turbocharge the belt and road initiative launched in 2013. there have been bumps along the way, and now he hopes to harness all these different powers and political leaders to push this forward. thank you so much for joining us. looking ahead, china may show more signs of stability later when retail sales and factory data are released. we will preview that in half an hour. betty: up next, japan's megabanks expected to lower profit forecast. towill be live in tokyo discuss those challenges. they are reporting those results today. this is bloomberg. ♪
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betty: this is "daybreak asia." analysts expect annual profit at japan's megabanks to fall for a third straight year when they report later, even as the impact of negative rates begins to ease. snapshot of earnings season, go into the nikkei index . you can see that most firms have , 190 nine outed of 225 firms on the nikkei have reported earnings. at the financial sector, 15 out of 26 have reported. if you look at the earnings surprise, at least when it comes to earnings, 64% have surprised on the downside.
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about half of them have surprised on the upside when it comes to sales. let's get more details on what is expected this afternoon as the megabanks report. here is garrett allen in tokyo. megabanks reporting, a third annual drop in profit expected, combined drop in profits. is this all because of the negative interest rates or is there something more to it? >> the banks would like you to believe it is about negative interest rates. it has made it difficult for them to turn a profit. margins have been well squeeze. analysts are saying this time around perhaps it is getting to the end of the squeeze and we might be looking at them easing back. the three banks reporting after the close of markets today, and admit expecting they will
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their annual forecasts are rather conservative and they will forecast next year for slightly lower targets. said, mitsubishi , it would had to have been an abysmal quarter for them not to have had. it will be interesting to see how they benefit. when might this bottom out? is that eight this year story? or is that next year or a year after story? not a lot ofe's room left to go further.
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there's not much further they can really fault. thank you so much for joining us. let's continue this conversation with a senior vice president of equity research. michael, you can give us more perspective on what is going to happen to banks. are we going to see them bottoming out this year, or is this a story of next year or 2019 ? ofthat was a good summary the current situation. i think the megabanks are in a holding pattern. the downside we had last year with negative interest rate policy was first introduced is now reduced since the boj has changed the policy of yield curve control, but in terms of that upside breakout, we need to wait. 2017, if one happen come
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and the question will it be 2018, 2019, or later? under boj policy, they have committed to overshooting and expanding the monetary base and tell inflation is sustainable on that side, the boj policy will not change for a while, but it does it in the level of interest rates. see quite a few of your ratings on banks. a couple there on neutral. that makes sense, why would you jump into any of the japanese banks? go ahead. indeed as a sell side analyst, i don't like to have neutrals. i prefer i were sell recommendations. banks aree japanese
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0.6 times book, compared to banks elsewhere around the world and their own history, the not demanding to on a five-year view, i am quite bullish. it is hard to be bearish and less there is an immediate catalyst, we will need to be patient for several quarters and you are better off looking at other financial stocks. i have been strongly recommending non-life insurers or leasing companies that have more immediate catalyst, where have,e megabanks, a few will report targets for efficiency, but in general on banks, you need to wait a little bit longer for japan. that mitsuiwe know will come out with a new business plan and expecting the boj will announce new
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, and perhaps even a new name for the banking unit. what will you be looking for in terms ofd in terms efficiency gains, cost-cutting, those sorts of things? rather than mufg, i'm looking at what we will hear from some units of mitsui -- sumitomo mitsui. one of the reasons i bullish on g is maybe the markets are a bit too negative on the basel rules. also, whether we will hear further comments. i think that is overdone.
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regarding the midterm plan for fg, they have had a better otherfficient ratio than banks, but feel they have lost under this negative interest rate environment, that it has smfg has clear that less of his injury. where they can take out costs, a sales finance, also credit union and a traditional consumer finance, and also some of the leasing and other peripheral businesses, they probably have room to take out costs. to price toit comes book ratios for japan's megabanks, they can look at #8573. is five is -- fact that price-to-book has trailed other regional megabanks.
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when will rates normalize? r.o.e.,pends on the when the r.o.e.'s go to the same level as the u.s., double-digit , japan banks or 7%, eight percent, and some cases 6%, it depends on the earnings. where i can get bullish on japanese banks, not 2017, but beyond, is when interest rates rise, it could be at the same time we get accelerating loan growth. loan growth is 2%, 3%, picking up a bit, but more at regional banks. if you don't have loan growth and interest rates pressuring them come up when that turns, we get a turn on both of those and see income pick up, so at that time we could get an bookeration, one at times is a reasonable by wishing on a 3-5-year timeframe. betty: thank you so much for
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joining us. , thank you so much for joining us on the banking earnings. up next, alibaba set to report this week. we will ask what we can expect on that. more on the earnings front. this is bloomberg. ♪
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♪ this is "daybreak asia." they group including tpg capital has revise its bid for fairfax media 2.8 alien australian dollars or $2.1 billion. the consortium has ditched a plan to cherry pick assets and will now pursue the whole operation. the offer is worth $1.20 a share.
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sevenx close one dollars cents on friday, shares unchanged at the moment in sydney. the investment arm of abu dhabi sovereign wealth fund will invest $7 billion in softbank's vision fund. the company is planning to make an investment over the next five years. softbank's fund as expected to wrap up into-three weeks with $95 billion of commitment. air asia planning a low cost carrier in partnership with ht group to create a pan asian airlines, having already launched the feelings in indonesia, thailand, india, and vietnam. air asia will invest in infrastructure, including a terminal. a moment, china's largest oil
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and gas producer is wrapping up the timeline with his russian partnerships. our exclusive interview with cnpc is next. this is bloomberg. ♪ these days families want to be connected 24/7.
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shery: we are half an hour from the opening of the trading day. singapore post announced a fourth-quarter net loss instead of a profit. a beautiful day in singapore. in hong kong, a couple of hours away from trading. betty: looks picturesque in singapore. you are watching "daybreak asi " ." let's get to first word news with paul allen. laid thena has foundations for a new beast-west trade route. president xi jinping told world leaders and business figures
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that the belt and road initiative was inspired by the silk road. he described the initiative as a force for peace in a world fraught with challenges. the belt and road initiative is rooted in the ancient silk road and focuses on asia, europe, and africa, but is open to all, all countries can be partners in the belt and road initiative. its benefits will be shared by all. beijingate media says the will prioritize risk while managing the exchange rate. strike ahey were
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bounce between stability and growth. g7 finance ministers signaled a truth and there's ray -- truce in their spade -- trade spat with america. is post meeting statement water down from language earlier in the year, but suggests a pragmatic tone. steven mnuchin declined to shun protectionism, saying the u.s. would do what is best for itself. want to be protectionist, but reserve our right to be protectionist to the extent that we believe that trade has not -- is not free and fair, and as i said, our approach is to more balanced trade. that is important protectionism is off the table. i think there was no disagreement on the fact that trade promotes growth, and has to be inclusive, so i am very satisfied. we need to make steps forward. there are different views across the g7 and g-20 for that, but i
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am confident we can reach common views even on these issues. paul: chancellor angela merkel's christian democrats won a decisive victory in germany's most populous state, handing her opponents a heavy feet and boosting her chances in september's national election. the cdu took 34% of the vote, than 31%,spd won less its worst showing since world war ii. the victory lifts angela merkel's chances of winning a fourth term. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. i am paul allen. a down day for most markets across asia, led by japan come the nikkei, and the topix down. let's get a look across the asia-pacific was sophie kamaruddin. focus on want to tokyo, the nikkei 225 falling
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for a second straight day given that cautious investor sentiment, the yen rising for a third session to a one-week high. while geopolitical risks have increased, sony financial says the market is not buying the yen aggressively. also, that string of earnings out today it's sending real estate stocks higher by 2.6%. we are seeing energy shares dragged over 2%. take a look at what is moving in tokyo, a smattering of results. motorses of the zoo zoo -- motors falling.
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take a look on the flipside when it comes to gainers. hitachi jumping the most in six months after it forecast a 30% jump in net income for the current fiscal year. this company was upgraded to overweight by j.p. morgan and has reaffirmed plans for ¥1 trillion in m&a. 3.7% -- toshiba corp. up 3.7% given its chip sale of their. you so much. sophie kamaruddin there. we are in the thick of trade monday morning. steady as she goes, that's what we are likely to get in the latest batch of monthly economic numbers from china this morning.
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get april retail sales, our retail sales were on friday. industrial production and fixed asset urban investment, what will stand out and what will surprise? main indicators for april, and what we have seen is that higher than expected gdp growth in the first quarter, 6.9%, allowing authorities to continue to contain risks in the economy like over leverage and excess industrial capacity. later this morning, we will look at whether that first quarter the peak and we will see a slight deceleration from here on out with many economists saying we are likely to see that. retail sales, march was 10.9% growth, matching the highest percentage growth in a year. 10.8%, so was for steady as she goes, but a slight deceleration in the pace of growth, so we will be watching
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that one closely. comefactory output industrial production, producer prices, and pointing to the first quarter peak, but we could get a surprise pop upwards, more than 7% because if you go back a year ago to april last year, we saw a d7 ration, so there is a ase effect and we could get surprise number that is an aberration above that 7%. also, text asset urban investment, belt and road big focus, roads, railways, bridges and focus. fixed asset urban investment, 9.1 percent, still a healthy number. i was surprised by the numbers we got out of china on friday.
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china continues to talk about deleveraging does efforts, and yet we are not seeing that on the ground when it comes to credit. >> that's right. the issues the front loaded, so we get that big number. it drops off a little bit because of the lunar new year holiday, but this is the first time -- i went back as far back as we could, and this is the first time ever we have had more than one trillion yuan in the first four months of the year. two years ago, the first three months was over one trillion yuan. this is four months in a row. we were expecting 815 billion yuan, so it is considerably more. this is the most on record in the first four months. where is that emphasis on deleveraging? ,he government once good credit
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so you have to look at aggregate finance, which include shadow lending and the things they don't necessarily control that are off book, rising by 1.3 trillion yuan, higher than estimated. m2, the broader measure of money supply less than expected, 10.5%. we were expecting 10.8%. that is primarily deposits them a so if you have this higher-than-expected aggregate finance, more lending into the economy, but lower deposits, lower liquidity, that could lead to a liquidity crunch down the road. shery: this is really what confounds me about the chinese economy. we continue to talk deleveraging, and yet the numbers come in this way. thank you so much. the latest at of data from china. we had data on friday, and have more data in about one hour or two hours. let's continue talk about china,
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its largest oil and gas producer expects $20 billion of deals in the belt and road form in beijing. china national petroleum's chairman says oil at $60 is not sustainable, and the price of oil may recover next year, but he does not expect to see $100 again. >> cnpc is currently working in over 50 projects in 19 different countries within the belt and road framework. of the 12 projects, we are signing at the summit, some are upgrades of existing projects. some are completely new projects. depending on local resources in different countries, we mainly invest and gas projects. , oilssia, in central asia
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operations in africa. had you think the country can mitigate its dependence on overseas energy supplies? hand, chinese oil and gas companies like us must continue to play the role in terms of domestic oil exploitation. on the other hand, we need to speed up our efforts in collaborating with resource rich countries to jointly develop assets in order to replenish how country's ever-growing demand for oil and gas. in this way, we can balance our heavy reliance on imports with better use of foreign resources. tom: what is your outlook for oil prices? and you think the opec cuts can balance the markets? >> i don't think it is realistic
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for the oil price to hike significantly and continuously in the short-term. at the moment, the global supply and demand is undergoing a transition, and the balance between supply and demand is the foundation for a stable trading price. we estimate that in 2017 the price per barrel will be around $50, with possible short-term upturns. but $50 is not sustainable. the oil price will see a slow 2018-2020. however, prices won't get back to 2014, $100. betty: that was the cnpc chairman speaking exclusively to tom mackenzie. upre is more on oil coming
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on bloomberg television. in a few hours, we will be speaking to the saudi arabian energy minister as opec struggles to boost prices amid rising u.s. production. that is 10:40 this morning hong kong time. you want to stay tuned for that interview as well. shery: up next, thousands of fear theere victims weekend cyber attackers may strike again today. we will have the details. this is bloomberg. ♪
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♪ betty: this is "daybreak asia." let's get a quick check of the latest this is less headlines. ra holdings to sell a third of its property unit, japan pose
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considering a majority stake in nomura real estate. japan pose once a strengthen its property business. ofura has a market value $3.4 billion. changes at mitsubishi ufj , planning to consolidate corporate accounts into its commercial operations, dropping references to the bank of tokyo, hoping to boost efficiency. the changes will affect 2600 corporate customers with barring around $106 billion. bhp billiton about to launch a $10 million advertising campaign, changing its logo and dropping billiton. the company says it needs to
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weigh the community thinks about it. it says the change has been in the works for 18 months and has nothing to do with elliott management's recent calls for reform. asia-pacific companies are bracing to see if they will be next in the global wave of cyber attacks that have hit the u.s. come u.k., and russia since friday. users of older microsoft windows operating systems are the ones most at risk. is a revelation into which organizations and countries are running on older microsoft windows dating back 15 nots or so or if they have updated critical patches. most recently for example, bank of china's atm's have had issues , also sinopec's payment system, getting gas at the stations, a taxpayer. apparently runs on
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90% of its computers using microsoft windows, and also fedex, nissan, so many companies clearly running on microsoft systems that need an update. looking ahead as we wait for other countries to come online, india is also one to watch. the times of india is reporting arerts say in india there so many people who run older operating systems in that country, they are not sure what the extent of any attack might be if they get hit. pery labs, a russian base antivirus company says india would be the country's worst affected by this outbreak if the ransomware called wanna cry does hit. the finger-pointing has started. russia has been blamed for cyber
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attacks linked to the u.s. election come up at this time it may be different. tell us why. it is different, or at least according to russian officials speaking right now, saying it was anyone but them. one russian officials saying humanity is dealing with cyber terrorism, this according to the quoting oneency russian politician, but kas it was hit theng hardest, targeting computers in that country more than anywhere else. the interior ministry got hit with 1000 computers affected, 1% of all the computers they are. has just beene starting, and microsoft itself is saying while it involves our own software, it actually points to something with the nsa. microsoft coming from
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president brad smith saying the governments of the world should treat this attack as a wake-up call. need governments to consider the damage to civilians that come from vulnerabilities and the use of these exploits. that is something he is alluding to with the nsa, because this , was this ransomware developed by the nsa, and now as we know, it was leaked and now making its way around the world. you so much. right, you can get more on this roundup ofk and a other stories you need to know to get your day going in today's edition of daybreak. bloomberg subscribers go to dayb on your terminal. you can also customize your setting so you only get the news on the industries and asset classes you actually care about. plenty more coming up. this is bloomberg. ♪
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♪ shery: we are starting the week in the red in asia, losses led like japan. the nikkei down .3%. also down as much. the japanese yen unchanged at keep annt, 113 .36, but eye on this banks because
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megabanks are reporting earnings after the close. when it comes to the alitalia --kospi, we are seeing some momentum. sydney down .2%. the aussie dollar right now looking like this, gaining a 73.91, gaining for the past four sessions. aussie home loan data expected flat, and banks very important in australia as well. criticismtepping up of the government's proposal to introduce multibillion-dollar -- unchanged after falling in the last session. some news from north korea that medium and long range missile test this morning, the state run media claiming success they are. a lot of things to watch out for, especially out of china as
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we get industrial data out of there. betty: that's right. sums it up nicely, a lot of data to watch out for that will likely move the markets. we are watching air asia starting a budget airline in right group,he everb seeking to tap demand and a market poised to pass the u.s. in the world's biggest and less than a decade. let's get more from haslinda following that story for us. air asia expanding its ambition. haslinda: you can say that. it is spreading its wings. air asia started out wanting to be an asian carrier here it has done that. it is the largest low-cost player in southwest asia. now, china is key to completing its asian ambition. rbright and air asia signed an agreement.
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here is what the ceo said, the chinese venture represents the final piece of the air asia puzzle and a canal live up to its name as the only airline that connects travelers across asia-pacific. air asia has ordered hundreds of meet itsom airbus to expansion strategy. at the same time, in the process of selling its plane leasing unit to raise cash. this is one ambitious carrier getting closer to where it wants to be. that: another ambition, be madent expected to in china. what do we know about that so far? will invest in aviation infrastructure, including a dedicated terminal for low-cost carriers. on top of that, it's set up an crew,y to train pilots,
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engineers, as well as maintenance and repair and overhaul facilities to service its aircraft. quite an investment, and understandably wine. according to estimates, the number of people flying to come up from, and within china will double to 930 million annually by 2025, and by 2035, expect the number to reach 1.3 billion, so a phenomenal growth story. thank you so much for that. we will continue talking china bloombergt hour of markets: asia as we wrap up this edition of "bloomberg daybreak: asia." china, the numbers come output, retail sales, what are we expecting? >> a data dump coming through, the rebalancing working out.
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at what has been going on with alphabetic come amazon, facebook, microsoft, and apple, $3 trillion of market capitalization. a lot more from australia and half an hour. betty: what are we expecting for china's industrial output and retail sales numbers? we will get instant analysis , the chief economist looking at that. central banks as well as we see global tightening taking place. ♪
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♪ i am haidi lun. rishaad: i am rishaad salamat coming to from bloomberg's asian headquarters. this is "bloomberg markets: asia." ♪ haidi: cap the data and concerns about north korea. that missile launch seen as a direct challenge to washington and south korea. haidi:


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