tv Bloomberg Markets Asia Bloomberg June 6, 2017 9:00pm-10:01pm EDT
♪ it is 9:00 a.m. in hong kong, 9:00 p.m. in new york. i'm haidi lun. rishaad" i am rishaad salamat coming to you from bloomberg's asia headquarters in hong kong. this is "bloomberg markets: asia." >> investors are increasingly cautious in what could be a dramatically. treasuries searching on stable yuan.f a
isolation deepens. the white house says qatar should do more to tackle terror. strengtheningmies , factory prices rising, so where is the inflation? getting back to one of our top treasuries somehow chinese officials are getting back into the treasury market after the last couple of months. the previous eight months, they have reduced treasury holdings. let's have a look at what is been going on since 2010, the buying program when it comes to the treasury market, and looking at this chart #9172. there we go. we have this move back up. well, it has driven those yields
further down when it comes to the u.s. market, so sustaining the rally for the time being. haidi: that's right. is that going to drive that you lower? we had that 10 year the lowest since just before the u.s. elections last year, so we will talk about that a little bit more, a briefer spite when it comes to china's buying interest. the other data point is this check of the australian economy, first quarter gdp numbers at the bottom of this hour. take a look at this chart, # 6371, 26 years without a recession, and a lot of this and that white lined there is on the back of this commodities boom. or so, weast year have come off that rally in iron
ore prices, still in that bear market with prices continuing to slip. also questions on sustainability of demand out of china and domestic consumption as well, 60% of economic growth, and that has been lagging on top of this red-hot property market tapping households ability to spend and earned with wage growth at record lows as well. away from thetes open in china and hong kong. let's get over to sophie. a quiet start, but investors have a lot to contend with this thursday. sophie: defensive decisions being taken ahead of that trifecta on thursday, the ecb, james comey's hearing as well. , aticularly asian markets down day and currencies taking a hit.
the yen and gold higher. taking a look at what is moving asx 200 continuing to fall after tuesday's biggest drop in two months, shares and wellington following that first quarter manufacturing viands saw a decline -- volumes saw a decline. the currency space, we have the korean won leading that drop, the offshore yuan giving into broad weakness. bounce, black rock says it is serving as an acre for asian forex, instead as that source of disruption. ,oing back to the korean won ,hen it comes to the kospi falling for a second day, yet foreign investors continue to buy korean stocks for a third day, although the pace of inflows has slowed.
on the track this terminal, where you can see the peaks and ebbs here. checking in on the year to date areormance, foreign inflows $26 million. year to date, $8 billion, just second behind taiwan at $8.7 billion. earlier we saw the taiex up by .2%. rishaad: thank you. rosalind has first word news headlines. >> qatari stocks fell again as isolation takes hold. been banned toe sail to and from qatar. relies on imports for almost 40% through the land border with saudi arabia.
president trump claiming credit for the saudi led isolationist campaign, calling it just punishment. he says it is prove his trip to the middle east is paying off. washington is taking sides in a dispute between two key allies in the gulf. china has told the u.s. to mind its own business over the detention of labor activists who were investigating shoes made rand.he trump b the state department called for the release. china says no country has the right to interfere. california isf warning the u.s. not to rest on its laurels amid rising competition in china.
the democratic governor needs a 2.5 train dollar economy, the world's sixth largest just behind the u.k. onehey are making a one to trump down, china up. now they are saying china is on the move. the president say when china puts its mind to something, we persistent we get it done, so i thought those were the words of someone who is looking out over the whole world, and not looking inward. global news 24 hours a day of powered by 2700 journalists and analysts in more than 120 countries. this is bloomberg. rishaad: as we were discussing, an unexpected did force pouring fuel on the u.s. bond market fire, and we are talking china. kathleen hays has more.
we were just discussing the stability of the yuan, the strengthening does give impetus to buy treasuries again it would seem. interesting process, this link between china's holdings of u.s. treasuries and managing the currency is once .gain on full display here it goes wanting to buy some bonds back, and here is why. ,n that list of reasons why that yields on treasuries are attractive. they sovereign bonds, if want to put their money back into bonds, you're going to get the best yield in the u.s. compared to other developed countries. versus the up 2%
6.5% drop in 2016, so discussion as you look at this story that bloomberg news broke after speaking to chinese officials, analysts and traders are saying this can promote confidence in china's exchange rate system and the pboc's ability to manage it, promote a more globalized exchange rate market. #3032 two underscore the point of yields around the world. the yellow line is the yield on 10 year treasuries, just over 2.1%, next in line the u.k., bund further the german under 1%. the red line is japanese 10 year treasuries, giving you zero at this point. understandably why the chinese would see u.s. treasuries as attractive. by 28inese increased billion in march to 1.1
trillion, the biggest increase since 2014. haidi: this remarkable treasury rally has confounded a lot of explanation, particularly with these record equity highs as well. how much of that has been china resuming its bond purchases? >> they have coincided, and maybe the change, the rethinking a month after the election, maybe donald trump camp reflate the u.s. economy. north korea, the tensions there, the rush to safety, another thing that drove the u.s. treasury rally, and softer u.s. inflation and doubts about how be thisve the fed can year. today, 10 year yield hitting its lowest level in six months, 9088, it shows what a lot of technical traders are looking at, gaps in the chart, so the question is does it break even lower than 2.1%?
we will have to wait and see there. one interesting point, if the chinese will buy treasuries, maybe it helps the fed, reducing the balance sheet and putting pressure, upward pressure on yields in the treasury market, so maybe they are doing the fed a bit of a favor here. rishaad: the r.b.i. reserve bank in india were pretty hawkish, weren't they? given the recent data, well, a dovish tilt. going to beis is more of a change than we atected, but let's look information undershooting the r.b.i. india's target, and this is a big consideration in terms of going from hawkish to neutral and maybe even dovish, 5834 gives you the picture. the headline and core and india are falling. the vertical line showing you the 4% target.
one of the lines is resting right there, the other inflation measure even lower, so this is the main thing people are looking at to say they have got to at least go to neutral when they communicate. sharply. has slowed it was 7% in the fourth quarter, down to 6%. that is an issue. economists are looking for the r.b.i. to stay on hold, but bloomberg intelligence has a bold call. its say the r.b.i. will cut key rate when we get the decision hours from now. we know that the head of the r.b.i. has been prone to surprise markets. that would be a very big surprise. sticking intelligence to its guns, so we will see what happens. thank you very much indeed. right, still ahead, two can be
haidi: this is "bloomberg markets: asia." i am haidi lun in sydney. rishaad: i am rishaad salamat in hong kong. japan is a hard place to win when it comes to doing business, but our next guest got panasonic to raise its offer and toshiba to return cash from its systems division. ,et's get more on the progress founder of oasis management. great to see you.
tell us what is going on. corporate governance is one of the things you are fond of trying to tackle in japan in particular. tell us about what you are seeing and the mistakes being made and how they can be rectified. takes arate governance long time to improve. was a norm us excitement two years ago in the markets, then got disappointed. , the stock is up 250% as result. rishaad: he put it down to yourself? that is very modest. >> company has done a fantastically great job. cases, certain things take longer time, but it is getting short. , we engage them for the past year and panasonic decided to take the company
private and raise the price 20% so far. we don't think that is enough and continue to press them. rishaad: what about toshiba? this is quite something, the state of this company at the moment. sinsshiba has had numerous , but i long opportunity to fix themselves. rishaad: they are looking into the abyss more or less? good news for tertiary is they have a great semiconductor and memory business that they will sell. if anything, japan has given them an norm us run way to fix it and they will make a sale. rishaad: what is left then of the company? remain with a nuclear power business. i was joking with somebody they should be called toshiba elevator. we think they continue to sell some of the other residual
businesses and take in westinghouse and they toshiba plant. it is the subsidiary that makes albany for power plants in japan. with the sale of the chip business come his it in the shareholders best interest for that to go to a domestic better? -- bidder? >> it is absolutely in the best interest of minority shareholders. 190,000 employees, all the inreholders and toshiba, and toshiba's case, it is in the best interest of japan itself. in terms of improve corporate governance, it is instructive nearly important for everybody, , the government to the, and important reduction in the cost of capital
across the board. improvement in corporate governance would add a large uptick invite way she. haidi: you say it has been slow going, this reform, and that is not unsurprising given that decades of history, but in proof and's and corporate governance -- improvements and corporate governance is why so many houses have become constructive on japanese equities. in do you see your victories as a one-off or a pattern that things are improving? >> it is a broader pattern. have had two successes in the fast two months. the reason is there is a need and people are losing the safety net, so we will see the exposure of people to have a vote, so we have seen people voting in terms of the interests of the companies and no longer
and cio of oasis management company. we have been focusing on japanese corporate governance and reforms. activists funds come what more of april can they play in pushing this forward? >> activist funds can spend their time holding people's feet to the fire. inre are in almost tools japan in particular, proxies, voting, holding other people to vote, and fiduciary responsibility of directors, which directors have not been held accountable in the past. we have been holding people accountable with success, so i think other activists players can use the same playbook and hold people to account. been, people have suggesting better corporate governance come up but in our case, we have taken people to court, in the court system is
extraordinarily effective for shareholders, so you've used the tools available. haidi: how does legal recourse work when you have to rely on it? when you go into these companies wanting to shake things up, what is the reception you get from japanese management? >> the best management, we get a warm hello. we have, what are your suggestions and a serious engagement of our suggestions and a dialogue and debate about the value of those suggestions, and we are perfectly happy to remain quietly interested. the scepter known come on going to talk about a company doing all the right things. i am going tooon, talk about a company doing all the right things. the best company say these are great ideas, let's talk about them implement some of them and add value to everybody. the thing is, you are
also invested in hong kong. what about activist shareholders in this territory here? what concerns do you have? >> look, governance is extraordinarily important. some recent victories for shareholders when they have had votes, a gas company recently where you had a robust shareholder battle, and shareholders won and put the best management in place. corporate governance has a long way to go here. the small and medium companies they have families at the heart of them. the viewers question has come through saying are you prepared to take on these families who effectively run the companies for the families benefit? >> the answer is yes.
seehe families don't thinking about all investors come up at families increasingly have an understanding that the old hong kong is out and now you have to think about corporate governance for all shareholders. technology, 8% up, a good example. >> yes, there was a short report two weeks ago. they went through a very robust process, in the market seems to give that process credit and the stock is up a result. rishaad: it had been absolutely panned before. any idea of what territory? >> today i'm going to talk about japan. rishaad: thank you very much indeed. seth fisher from oasis management. we did have some sluggish growth or gdp readings.
rishaad: that his statue square in the heart of hong kong. 9:29 here at the moment. count you down to the start of this trading wednesday. i am rishaad salamat coming to you from bloomberg's asia headquarters. haidi: that is say much clear day you guys have than we have in sydney. behind me, it is cats and dogs as we await the release of this gdp number. read comes on the back of a
slew of soft indicators, retail sales, consumption, which is 57% net exportand some numbers as a component of gdp looking soft as well. hot property markets like here in sydney, wage growth, softening inflation, things are dicey when it comes to this 26 year stretch of a recession-free australia. rishaad: indeed. haidi: we are getting these numbers out. rishaad: carry on. haidi: we do have these numbers out. bang in line with expectations, .3% for the first quarter as expected. that gives us an annualized figure of 1.7% him and we are seeing the australian dollar climbing off the back of that good news. it could have been far worse.
a number of economists revising downward's those payment showed a big drag on gdp , declines in net exports. national australian bank, capital economics were all forecasting a contraction comes so .3% is a look pretty good. haidi: there were quite a few he said hels, but still expects even if this quarter is soft, ongoing were not be bad. why he isess that is sitting in the governor's chair. he did reaffirm his expectations that growth will improve.
it is good news for the country as a whole, 26 years without a recession remains intact for at least one more quarter. it looks like that record is safer 2017. rishaad: thank you a lot for that. strained gdpat are figure, spot on estimates, looking ahead to the british election, ecb, and next week's fed meeting. sophie: let's focus on the reaction to the aussie data. the sun is coming out for the aussie dollar. you can see that spike following that gdp update. just to recap, the estimate was 4.3% quarter on quarter rise, in line with that forecast. on its standing pat policy rate, slugging off the slowing growth in the australian economy.
in the equity markets, the asx 200 down .1%, falling for a second straight day. taking a look at the open in shanghai, a marginal drop their, but shen shen little changed. we do have a rise of .2% on the hang seng. ke shareve china van suspend and. -- suspended. we also have the fix for the yuan coming in stronger at 6.7 858. saying that is key to the ongoing rally given its recent stability. at aacake a look technologies, up 8%. short sellerthe that spark its tumble says it plans to address the points
raised on tuesday. that same day we had another short seller, anonymous analytics, issuing a rare buy , and theation for aac stock could rally 36% from its last official close. we have muddy waters on the radar looking to update us on his latest target at 2 p.m. hong kong time today. right.: the political drama in brazil, let's get to first word news. rosalind: the brazilian president faces a new threat has a top court debates whether he and his former running mate took it legal financing. he could lose his mandate if the verdict goes against him. he has been under rising
pressure since corruption allegations emerged. lloyd blankfein is echoing calls from jamie dimon and calling for the u.s. to spend more on infrastructure. he tweeted come always impressed by the condition of the airport, roads, cell phone service, etc. the u.s. needs to keep up. tim cook says any tax on u.s. companies overseas earnings should be mandatory with the proceeds going towards upgrading infrastructure. apple has $267 billion in cash reserves, most outside the u.s.. he says he supports the proposal for a one-time 10% levy. be a our view, it should repatriation that should be a
required tax, and so you are not asking the people that have had earnings from their international subsidiaries if they would like to bring back money. must payaying that you the government experts in now over some time. haidi: indian stocks fell ahead of the central bank's decision. in april, the governor raised the repo rate to 6% while keeping the benchmark repurchase steady at 6.25%. that is global news. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg.
rishaad: policy and investors are trying to answer a $100 trillion question. why is inflation so low at the time factory prices are growing? do you have the answer? this is a huge disconnect. >> i won't pretend to have the answer. obviously there was a significant expectation that inflation might recover, a positive thing for a world economy awash in debt. we are seeing half of that equation, factory prices in china, doing well, factory prices in the eurozone in positive territory come in the u.s. also doing well, but it is not translating into the consumer. rishaad: it is seen as a leading indicator of ppi, is it not? that is what happens. >> the correlation isn't
perfect, but that is the expectation. it is not happening now, and that is why there is the omicstations around trumpon could be failing. -- fading. perhaps thee that reflation story is not quite what we thought it might of been. haidi: what about the trump effect? we are seeing some sort of indications policies are going to come through shortly. the question is whether there is a political appetite to push through his policy agenda, but is america going to provide an answer there? thealf the equation was reflation story in china as one of cooling growth, so the ball is back in president trump's court.
to talk abouted an ambitious infrastructure program. his administration continues to talk about tax reform, so the expectation is the u.s. may be able to deliver something that might provide a growth in polls for the u.s. economy, which would provide a reflationary impulse for the rest of the world come up at at the same time, expectations are not as high as they were at the start of the year and are gradually being reined in. haidi: thank you for that. there are a lot of concerns globally over the strength of this reflation trade that has been driving these record highs after record highs when it comes to equities. is isolation of qatar deepening, airlines canceling flights and ports closing to ships. there are reports mediation efforts are underway. yousef gamal el-din has the latest from dubai. reconciliation efforts are
underway to resolve the worst diplomatic crisis. is en route to try to patch things up. last time in 2014 when there was a crisis in the gcc, the worst that happened was the recalling of ambassadors. that took seven weeks to resolve. this time you have the shutting down of air, land, and see links. links. they are saying nothing short of capitulation from qatar will arabiaatar and saudi back on the same page. we are seeing moderation, a brief return to gains for qatar stocks. also, credit default swaps, nothing like we saw yesterday. some opportunistic buying moving back into some of the traits as well. indeed, he was
mentioning buying there. people as soon as this embargo came out, diplomatic ties being severed, people went into the supermarket to grab what they could get a hold of. importsa country which virtually all of its food needs. this is where it comes from. thecan see 15% comes from uae, 14% from saudi arabia as well, and the qatar government is eking to concerns of possible food shortages after these diplomatic and trade links work cut as well. authorities taking steps to ensure a regular supply of food. at the moment, this is talk, and they have been releasing videos of fully stocked supermarkets. some of the images are quite compelling, aren't they? haidi: yes, that's right.
it throws up the question of who is going to occupy this vacuum left by this key market, other opportunities for particular asian markets like india, analysts saying it might be a couple of months as we get this new normal situation for exports , imports of food in the country. we are looking at this change in the energy mix and reliance when it comes to lng exports coming out of qatar. tracking what japan imports. energy reliants in terms of its energy needs come in port reliant. it need saudi arabia more for gas,han it needs qatar for substantially more when it comes to that share of oil imports coming from the saudis. , #9178 brings in south korea, showing the imports to japan and south
korea have been slowing. we had a child when it comes to gas prices that has sharply come off as well. when it comes to the energy mix, region these key asian in= depend on them for their energy mix. we will look at how the u.s. cooperates and competes when it comes to the tech space. this is bloomberg. ♪
technologies jumped almost 12% after a three-week trading halt. anonymous analytics has offered a rare buy recommendation. below the one year consensus target price. os considering listings from conventional oil and gas assets to bring down debt. santos has been battered by cheap energy, taking's billion dollars in write-downs. for onehina's market billion consumers has long had global brands licking their lips. it is say t two-way street.
there are mainland firms looking to crack overseas markets. really great to have you. take us through what your business is and what you do. csoft is in the global communication space. we offer localization service to companies. brandsslate products, across multiple industry sectors for over 100 different countries. that is what we do. let's get to your note. you call yourselves the uber of the language universe could what on earth is that? -- universe.
what on earth is that? >> we have more than 7 billion people on earth speaking more 66,500 languages. how do we communicate. what percent of the population speaks more than two different languages, so what we do is utilize that resource and through technology platforms like mobile applications. that is why we call ourselves the uber in the language universe. quited: ok, i'm still not convinced, but that is not for me. you localize, but at the same time you internationalize it that is the core of almost acting like a babel fish. >> that's true. example, for any brand, any
product, we try to reach international markets, but they have to make sure there product is properly localized. documentationse, , images that reflect local culture, a localization process. and today with internet technologies, there used to be big companies enjoying the international markets or had the luxury to expand internationally, but today with the internet technology development any size company anywhere in the world are able to compete in the international theet, and so we find out need of translating their product is accelerating. haidi: both your's nests and quests are part of this
for chinese companies to go abroad, and the u.s. is a major part of that. how have you found these concerns over potential trade tensions between the u.s. and china that have come to light, particularly after we have president trump at the white house? >> it is a very good question. for example, i started my career many years ago from boston. i actually work there for about 10 years. we started our business in downtown beijing 13 years ago. we were largely serving large chinese companies. the companies from the u.s. and globallyying to expand , and my biggest challenge is how to convince the
a servicesals to use company that largely headquarters in china. how do you deal with ip issues and all of that? our first 8-9 years, 99% of our business income was coming from outside china, but the past 4-5 years, the china market business has started picking up, so the issues become quite different. how a chinese company enters a market for a chinese brand, and north america is a high barrier for most chinese companies related to the trade issues. about 100 top brands like huawei, tencent, alibaba come all facing different issues. to --of times is related
rishaad: china it is a huge market for venture capitalism. with early investments in tencent, see trip, the founder is seen as the godfather of the chinese vc industry. >> we pay a lot of attention to artificial intelligence, and also enterprise software. data mining and cloud computing, database technology, those are
the areas. >> is the entertainment sector of particular interest for you? >> for myself, i see a lot of opportunities because by now china's film screens, the number of film screens already has exceeded the total number of u.s. screens. in the u.s., roughly 40,000 screens. china is 140,000, but chinese movie theaters are much better with better equipment and furnished better because they are all newly built. content,lly needs more attractive content. i see that is the opportunity here. >> let's switch focus to where you see the opportunities in the
tech sector here in china this year? >> we want to invest in the company's not only in china, but in the overseas market. in an internet commerce company in my hometown, over 90%, almost 100% of revenue is generated from overseas, so that is the area you want to do more cross-border investment, the opportunity to do those. also, we invested in a company circle, and we are trying to launch those businesses in china as well. >> are we getting closer to the stage where we see a chinese apple, facebook, google, a tech company that can dominate the international stage? >> i think huawei is doing quite well. if you pick one technology
collect from our studios in new york city, this is charlie rose. we begin this evening with a look at terror in london. amen crossing london bridge beard into a crowd of pedestrians. exited thet than vehicle and started stabbing them. dozens more were injured. 12 people have been arrested in connection with the attack. they have subsequently been released. it is the third terror instance since march. they have subsequently