Skip to main content

tv   Bloomberg Daybreak Asia  Bloomberg  June 25, 2017 7:00pm-9:01pm EDT

7:00 pm
♪ a flatres pointing to start in asia, global stocks near all-time highs. takata will file bankruptcy in japan, then the united states. toshiba hopes to reach agreement on its chip sale by tuesday. the president admits that there
7:01 pm
is no plan b. is "daybreak asia" coming to you live from bloomberg's u.s. and asia headquarters. the week and asia was too short, missing you already. bit of a jolt to wake up asia, but also central-bank decisions, heads speaking this week. let's take a look at asia, slow going on this monday morning. x 50.on the nz austria, counting down to the open in sydney, seoul, korea, and tokyo. $43, so couldve be a boost for equities. slightly higher when it comes
7:02 pm
tospi 500 futures. spi 500 futures. we could be seeing equities , a 40 point loss at the open in tokyo, so still looking pretty quiet. today. markets closed singapore,in malaysia, indonesia, philippines, and india. >> that's right. looks in thesia early going. we continue to watch headlines ,oming out about takata deciding to file for bankruptcy today in a tokyo district court. far, no comments from the
7:03 pm
company, but we will be watching more detailsy and on this bankruptcy. let's get to first word news. haslinda: south korea has joined nations buying american shale gas. year deal will see cheniere lng sold to south korea. has committed $19 billion to clean up to fail banks. the deal involves another lender taking over assets with state funding of more than $5 billion.
7:04 pm
the european commission has approved the plan and says it is in line with the eurozone. hong kong's richest man set the stage for a mutually beneficial relationship 20 years ago. ka-shing says the handover has provided stability for the city, people, and businesses, and what he called a front road row seat to the economy. it provides flexibility to chinese leaders. is gulf diplomatic crisis putting pressure on the qatari currency. saudi-lede with the gcc has created a temporary dollar storage. doha has been given a week to implement demands, including the al jazeera network
7:05 pm
and cutting ties with iran. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. the week on wall street will see investors focus on a potential deal on what we could call merger monday, not exactly point asking third for a lot of change at nestlé with his $3.5 billion investment. monday is often win investors focus on deal activity. released an investor letter after bloomberg broke news that he had taken an interest in the company. thats now been confirmed he has 40 million shares, including some options, about $3.5 billion. this is according to the investor letter. nestlé a recent chart of
7:06 pm
. it has been under pressure, as have been many food companies, particularly companies that show candy or sugar products. says that despite having arguably the best position portfolio in the package goods industry, nestlé shares have significantly underperformed u.s. and european consumer staples. tord point says it is rare find a business of nestlé's quality with so many avenues for improvement. it appears that what third point is hoping to do is pursue change with a greater sense of urgency. has a reputation as an activist investor getting involved in pushing for change, changing up the board, changing up the action. l'oreal.ns 32% of for them to get out of that and
7:07 pm
pursue more accretive additions to the portfolio. going to be busy for nestlé on monday when it opens on wall street and europe. report, andeconomic round two of the bank stress tests. >> round two is more important than round one. these were put in place after the financial crisis. round is more stringent and will show investors if the banks indeed have enough money put aside for buybacks, dividends, that kind of thing. two key economic reports. has recoveredme and a recovery in the consumer spending area. in terms of earnings, we will hear from monsanto and nike among others. and will tech stocks rebound.
7:08 pm
key questions if we kick off the trading week -- as we kick off the trading week. >> thank you. the new prime minister narendra modi meets donald trump in washington on monday, but underscoring the economic ties between the two countries, mr. modi has met with the ceos of nearly two dozen u.s. companies in the nation's capital. let's bring in remy innocence you for a review and preview of what to expect. the issue of h-1b visas should be top of mind. >> it will be top of mind. it will not be top of discussion when they meet on monday in washington. bet is because this will something where they will handshake, photo op's, then move ahead from here. each country is trying to figure out what the other country is all about, possibly more so for donald trump trying to figure out what mr. modi wants to have happened looking ahead. let's talk about the synergies.
7:09 pm
, pakistan,e defense as well as terror in south asia, as well as with china. to aer, we were talking person who spoke specifically on china. >> what both parties in the upcoming summit will want to avoid is any sense or impression of combining and anything that appears to be an anti-chinese alliance. both parties are concerned about the rise of china come increasingly strong, more assertive china, and particularly from india's perspective the way that plays in the pakistan. >> i want to show you something interesting. we are talking about avoiding any anti-chinese alliance. this is the trade relationship with india and its top trading countries. number 1, 72 $.3
7:10 pm
billion in 2016. the united states at $66.5 count on themey as their top trading partner, but mr. modi speaking about donald trump said india's growth presents a win-win partnership with united states moving ahead. we have already been seeing some kind of warmth, something we have not seen with donald trump and other world leaders, china, australia, middle eastern it has beennd it via twitter between both leaders are donald trump and mr. modi growth have huge followers on social media. take a look at what mr. trump has been saying in advance of mr. modi coming. he is saying, looking forward to welcoming india's prime minister modi, important issues to discuss with a true friend. it is important to note this
7:11 pm
will be the first dinner for a foreign dignitary at the white house. mr. modi replied saying, thank you potus for the warm welcome, looking forward to seeing you here. people are wondering whether it bro-mance, but we will see. >> we have some more breaking news on takata, the tokyo stock exchange will be suspending shares of takata at a: 20 local time. -- 8:20 local time. less than 10 minutes from now, suspending shares of takata come the tokyo stock exchange, also issuing that investor alert for this chunk on this bankruptcy report that we had from the nhk, saying they would be filing for bankruptcy and a tokyo district court, so we will be watching shares of takata after that suspension is released.
7:12 pm
back to the meeting, what are some of the potential deals might we see coming out of this meeting? >> it looks like there is near certainty in terms of drones or do looking to a california-based company called general atomics. there will be a sale of 22 unarmed drones that india could use to patrol its borders. that is worth an estimated $3 billion. there is also a potential deal in terms of armed drones. not sure if that will happen because there is a security issue with pakistan and china, but we will see what happens there. , thisher thing unprecedented move to make f-16s ta.india through tak this is also part of mr. modi's
7:13 pm
make in india program, trying to make it real. , we haveited states make america great again, and mr. modi has his own make in india. we will see as we go ahead on monday. >> thank you. we will be following this historic meeting tomorrow. we will have more on prime minister modi's washington visit just ahead. fred newman joining us to talk trade and that bilateral approach. >> later on, i health check on president trump's plan for a obamacare. we will look at what is ahead in this week's vote. this is bloomberg. ♪
7:14 pm
7:15 pm
>> we are counting down to asia's first major market open. we are watching japanese futures closely. in the wake of these headlines that have come out, futures a
7:16 pm
touch higher in japan. , theng these headlines stock to open, headlines out of takata, the tokyo stock exchange suspending shares in less than five minutes on the tokyo stock exchange on this report from nhk , saying the company will be filing for bankruptcy today in a tokyo district court. there have been some wild swings in the stock ending this bankruptcy filing. the bids asook at well, expected to open 30% .igher for takata we will see if it stays that way. aboutshares suspended 7:20 hong kong time. modi says he is looking forward to meeting president trump monday in washington. trade and fees are roles high on
7:17 pm
the agenda. let's look at what is at stake with fred newman. he joins me on set. good to see you. a very important relationship between the u.s. and india, a $60 billion trading relationship, the second-largest trading partner. ,hey also have similar agendas both nationalistic in their approach and want to bring jobs in manufacturing home. is there common ground between these two nations? >> that's right. want to raise job growth in the manufacturing sector. that is not complementary if you think about the relationship. on the other hand, you have strategic considerations here. ,ndia is a huge power in asia and so trump has a broader agenda to look at, which is to bring india into the broader security umbrella with the u.s.. >> is it because of the rise of
7:18 pm
china, the u.s. taking a bit of a retreat now? could this be seen as an alliance between the u.s. and india? , india as ane angle counterbalance to the rise of china, but also the terrorism agenda. india grapples with some of these issues, and so does the united states, the terrorism angle. with theou can also argue expected growth for india that india is a friend the u.s. has to have. what degree do you see this growth prospected elevate ties? big to ignore. apple just opened a manufacturing plant in india, so big u.s. companies are looking to india as an increasingly promising market. it used to be everything was china, but now it is clear that india is gaining that critical mass as well as a big consumer
7:19 pm
market, smartphone technology companies are looking at india, and defense companies as well, and on this particular trip, there might be something in that realm as well. >> i'm curious about this whole h-1b visa situation, that being a thorn in the side of this relationship that seems to be going swimmingly well between the two. know the reforms being put in place on the h-1b visa. we don't know what the in will be, but how much of a hit is that towards the elite tech executives and folks in india? >> certainly a bit of a headache in the short-term. you have a lot of indian i.t. workers in the u.s. with restricted visa access, they will have to shift some staffing back to india, but why and
7:20 pm
large, indian i.t. companies are very flexible, and nowadays physical location is not all that important anymore, so we expect the indian i.t. sector to adapt to lower visa quotas in the u.s. and to ultimately grow. it is as you say a thorny issue in the near term, and an important constituency for prime and the i.t. sector, the professional class of voters in india that feel they are impacted by this. then?uld he bring that up given what she said, they are very adaptable. should he bring this up? >> it is such a big issue within india politically that certainly raising that issue while he is at the white house, i would be surprised if he did not broach the topic at all just because it is a big issue in india. mightically speaking, it
7:21 pm
not be material for the next several years, but certainly on the agenda. >> i'm kind of curious also. we have been talking quite a bit these last few hours about this relationship, personal chemistry, the prime minister modi had with obama, and it seems the so far in the beginning that he has with trump . how do you think from mr. modi and other asian leaders are dealing with the transactional nature of the trump administration? this is a president who is all about transactions, you give me something, i will give you something back. is that working as well as he says it? asian policymakers tend to be open to that approach. soy are very pragmatic, transactional politics plays reasonably well in this region. if you think about the chinese leadership for example understands that there is a give and take, and that's probably
7:22 pm
one of the reasons the mar-a-lago meeting went reasonably well. a longer strategy, or what is the longer strategy behind this? there are still open questions. terman have short successful summits, but the long-term strategy is still not entirely clear. indian policymakers are wondering where india fits in in this new asian security arrangement that is being developed under the trump administration. >> you mentioned china. i want to talk about one belt, one road. of this aseen wary well. they did not send big representatives to that meeting. how big of a hotbed issue would that be for india? there is such a glaring need for infrastructure across all of asia, including south asia and india. >> you think they will jump in? there will bent,
7:23 pm
some projects rolled out in is a more it difficult relationship between india and china, and there are still other issues that need to be ironed out. here perhaps the u.s. angle is also interesting because it helps india maneuver a little bit away from china and use the uss perhaps a counterweight to what they perceive as growing influence of china. >> great to have you. one feature on the bloomberg we like to bring to your attention is our interactive tv function at tv . you can watch us live and see previous interviews and dive into the securities are bloomberg functions we talk about. all those have links on the right side of your screen. you can also become part of the conversation by sending us in his message during our show. this is for bloomberg subscribers only. check it out at tv .
7:24 pm
this is bloomberg. ♪
7:25 pm
7:26 pm
>> this is "daybreak asia" in new york. >> let's do a quick check of the business flash headlines. softbank's vision fund looking in possible investment quantum computing, searching for new technology to replace current computer processors. withnts to back the group quantum computing hardware or software. are alphabet, and microsoft the big names working on quantum technology. >> the bid for rio tinto's coal mine leaves the group with the dilemma, except less money or risk upsetting its biggest customer. a proposalfering larger than its competitor.
7:27 pm
it's reserves are running out, making rio tinto's minds and attractive proposition. detainedresort staff in china will appear in court today, charged with illegally promoting gambling. the case is seen as beijing's most public warning yet to foreigners trying to lower chinese citizens abroad to gamble. including the head of high roller operations go on trial in jail, if convicted. an hour away from the open of trading in japan. toata will be the key thing watch at the top of the hour on news from nhk that they have decided to file for bankruptcy. this could hate the way for that sale to key safety systems. the big question is how the stock will perform and what this means for the replacement and recall of those auto parts. question formajor
7:28 pm
automakers, tour yoda to the big three in detroit, and also tesla. what does that mean for the recall? up next
7:29 pm
7:30 pm
♪ my -- in hongn kong. weekend withecent a little bit of rain, not a lot. a decent monday overall. p.m. in new 7:30 closed mixedkets on friday. the s&p did finish a little bit higher. look at this dutiful summer evening. i am betty lou. yvonne: i am yvonne man. you are watching daybreak asia. posco to haslinda amin. haslinda: the director of the
7:31 pm
civ has said russia did investigate the american election. mike pompeo said he could not provide details of the intelligence, but the evidence is there. the white house has downplayed this involvement, and some think that trump campaign colluded with the kremlin. disabledttack communications in the parliament saturday with access to emails disrupted. a bunch of britain signal intelligence agencies, this came days after the password for employees and othera bunch of os were seen on russian hacking sites. 150 people were killed when a fuel tanker exploded in pakistan. does not knowue what caused the truck to crash
7:32 pm
and villages are cleaning up spilled oil. the death toll will rise as many see extensive burns your this happened on the eve of eid. people are still missing after a landslide in southwest china. this happened in a village in the sichuan progress that included 61 homes. manydies were found, but may not accounted for. the local government says an estimated 8 million cubic meters of earth and rock fell from the mountain. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪ we finally get confirmation from takata as they have filed for bankruptcy in the u.s. after this airbag recall fiasco. they entered the u.s. bankruptcy with a plan to cut deficits. we have yet to hear from that
7:33 pm
announcement, who will be the buyer, but sources have told us it will be a safety system. they have filed for bankruptcy in delaware and listed $10 billion in liabilities. the u.s. bankruptcy filing includes the likes of takata in mexico as well as china. let's get the latest from bloomberg asia companies editor joining us from tokyo on the latest on this. we were expecting this as early as today here. what is the sense you will get this from the next couple of days, what is next for the company? we have questions with the recalls and production and replacing of parts. lot: as you say, there is a left up in the air, so investors will be drilling down the statement and looking for key information.
7:34 pm
who will pay the recall costs? they will touch on $5 billion globally, and that is to replace the airbags and to deal with the -- $5 billion, there is an estimate that 2 million of them takata covered by itself. $3 billion could be by the automakers that make supply. one of the key questions, looking at the numbers. billion ined $100 liabilities, that is a massive number. they have got to see who will cover the costs. this -- how does this make way for the takeover by key safety systems? establishes who is going to cover the liabilities and how much of that will be by the buyer. the bankruptcy process, you have
7:35 pm
a situation where some companies will not be paid. they will shed some of that, and others will take over the company without thinking. it is necessary for carmakers because they need this company to continue producing those airbox. -- airbags. they need to replace the insiders with one's network. usey: so many automakers takata airbags, what does this mean for the recall? if you are the ceo of gm or toyota or any other trucking company, any automaker, what is your question after the bankruptcy on how this will affect the recall? exactly, my question is who is covering that $5 billion? takata could be in for $2 billion of it, who has the other
7:36 pm
$3 billion, how will they cover? those have to be replaced, and somebody is holding that. who will it be? hopefully with the bankruptcy proceeding, we get more details on who will pay here. thank you so much for joining us. we have gotten the headline takata is filing for bankruptcy. we are less than 30 minutes away from the tokyo open. looking at the new york republican health care bill, five gop senators opposing it, this may be in jeopardy again. krasny. this is not a unified voice on the republican side for health care, so could it even pass? ros: it is not a unified voice,
7:37 pm
and there is opposition from the preservative wing of the republican senatorial delegation and from the moderate republican senators. how you get to threaten the needle between those two needles --thread the between those factions is anybody's guess, but we have the whiplican senate with -- say that he and mitch mcconnell will move ahead on the procedural the. mr. mcconnell might have tricks up his sleeve. he is a violent parliamentarian. he has not put everything into his bill, the draft bill that came out on thursday. he could let the republican senators be seen influencing the legislation, getting with their voters. it could move ahead. betty: not his first time at the
7:38 pm
rodeo by any means. what about president trump? what might he do to get the bill passed ros:? ros:we heard from president trump's syria -- senior counsel that he is working with phones, having meetings with legislators. he also tweeted yesterday some of the things republicans -- republican senators would let him. he is doing some arm-twisting, and you will expect that to continue. he wants a win on this issue. yvonne: he also wants a win on the travel ban. he is expecting an outcome in the next several days. how will this play out? the court has several options. ros: the key things the court has been asked, whether they
7:39 pm
will hear an appeal about the travel ban in their new session they will and whether keep the lower court ruling that with the travel ban on ice. arehat consideration, there two tracks. one is constitutional, whether this constitutes religious discrimination, and number two, whether the overstepped his executive authority making that. there is a lot to consider, certainly two or three options the supreme court could do. and andld even take it not rule out on it this week, but we will expect something to come out in the next day or two. yvonne: do they have to act given all the options? do they have to have a result this week? ros: not at all. the expectation is they will do
7:40 pm
something. the supreme court could decide to hold it over until the new term. that would be probably the less likely move, and one interesting ce anthonyjusti kennedy may announce his retirement at the end of the supreme court session. we came into the new supreme down.term with a justice we have a new justice on the way. a lot of things are in play. yvonne: we appreciate your insights. expect they, what to supreme court. nestle becomes the target as dan love turns to airport. -- europe. this is bloomberg. ♪
7:41 pm
7:42 pm
7:43 pm
♪ betty: this is daybreak asia. i am betty lou. yvonne: i am yvonne man. we are counting down to the first major market open. let's get more from the bloomberg markets reporter, from focusing on australia, halfway through the year and australian equities are underperforming in the grand scheme of things. always seeing any upside? upside? seeing any adam: it has been interesting this year because there is no shortage of global investors. it is queuing up to add to the failure. withis a risk in prices
7:44 pm
the huge underperformance with the global index this year. australian equities are unchanged on the year, being able to make plenty of money across the board begs the question how the second half of the year intervals this. there is a feeling of a lot of potentiallyributing further weakness or underperformance on relative terms. that hangs on the consumer. there is plenty of worries about the australian consumer, dipping into their pockets to continue to help the economy tech blog. -- tick along. house price growth continuing to nudge higher. the rest of the economy looks in tough shape. it is difficult for australian equities and will continue to be so for some time. betty: i know you are also looking at this look for asset management on u.k. bonds. what is your analysis on the
7:45 pm
recent turn on bearishness? is an interesting if we drill into the bloomberg terminal, we bring up a chart of the 10 year yield on those bonds. you can see bloomberg is expected on move higher up to 2% in the red dotted line. that is a lot further than the rest of the markets expecting. it is interesting because the call is on the u.k. government going to scrap its austerity plans, going for more fiscal easy-to-follow for desk easy fallout from the exit of the union. as the talks continue with may exit, itels around the is interesting someone with a large amount of money, $50 billion on the management. they have a decent chunk into
7:46 pm
this call. they said a lot about the economy. this is something we will watch closely to see whether they are getting this right, market suggesting to where they see the 10 year yield. betty: thank you so much, adam haigh on the market. a quick check on the business flash headlines. we are following takata finally for chapter 11 bankruptcy protection in the united states, shares suspended interview where it will file this day. the company said its liability talked $10 million, 100 million cars in chapter 11 filing will not relieve takata of its obligations. but carmakers may have to cover the difference. yvonne: toshiba is expected to seal the sale of its memory chip unit. the are striking a deal with a
7:47 pm
group led by mj and they. -- mjm bank. toshiba is being devoted to the second session of the tokyo stock exchange and have asked for a third extension to the earnings report. shares held for five weeks friday. >> we think we can reach a final agreement on the chip unit as plans by june 28. we are making huge inventory to reach that deadline, and there is no backup if we don't. yvonne: warren buffett has a lifeline to this embattled canadian group. with theot help much housing market. while the rising house prices make him cautious, home capital is not a short-term investment. stock has stored since he decided to take a 38% stake last week. investor daniel
7:48 pm
lowe has set his sights on billionnd bought $3.5 in the biggest food company. with more, we are joined by beth james from san francisco. we broke this is a couple of hours ago. is it that he meant when it comes to packaged foods. what does stand love hope to -- do leob hope to achieve? anyhis is very large for activist. it came out a few years after they planned outage teaching ideas. they want to encourage management still at stake in l'oreal. bloomberg said it was in excess of $27 billion. they want them to review their portfolio.
7:49 pm
the food and beverage company has so many brands, some of those could be sold. they could use those resources to consider bold acquisition and higher growth, more expert areas in the food and average industry. they want the company to set up operating margin targets of the hundred percent and 20% by 2020, and they want them, we see this a lot, increase leverage or consider getting more money to increase share buyback. we got the news a couple of hours ago, but how likely is the ceo going to adhere to these demands? he is quite new to nestle so far. is he the guy to turn things around? remains tovery much
7:50 pm
be seen. we heard the news today, the confirmation of the strategic plan they put forward, probably not new to the management and board of nestle. loeb released his letter and mentioned they have had productive conversations with management, and they want this to continue. it does indicate there has been a dialogue going on for a while now before they went public. betty: talk to us about the actual investment. is there anything unusual about how he set up the money? ? this a fewve seen times, but the investment went directly and also set up a
7:51 pm
special kind of vehicle to bolster the state which explains how they got as much as $3.5 billion u.s. dollars worth of nestle quietly. what that means is the hedge fund had other investors already aligned who bought into this. betty: very quickly, we know dan loeb has gone into many companies, sony and others. put this in perspective with the other companies he has targeted. beth: right. japan,y he focused on the 7-eleven holding company. to u.s.has recently, management people. medical device management in the u.s., but hasn't done a lot in europe.
7:52 pm
he has a vitamin maker. quarter, he was seeing more opportunities in europe, the economy improved, elections past us by without -- passed us by without incident. he is looking at general long investments. the clue was there in the april 27 later -- letter that he was looking at opportunities in europe. betty: our bloomberg news reporter. we will talk with the hedge fund and talk with this, dan loeb investing in nestle. much more between a rock and a hard place, rio tinto with a dilemma. this is bloomberg. ♪
7:53 pm
7:54 pm
7:55 pm
betty: we noted takata filed for bankruptcy. they also filed for bankruptcy protection with the tokyo district court. that is why they expected to be filing in the u.s. and that the home market in tokyo. we are waiting for the shares to begin trading. then they are suspended as of now by the tokyo stock exchange. yvonne: we got a little bit of a glimpse from the filing about a half hour ago out of the u.s. $10 billion in liabilities. that is not what we were expecting. it could be as much as $9 billion. this for takata. quite a lot for takata.
7:56 pm
who will cover that cost, offerslly as we hear the from key safety systems later this week? problem as well , after expressing room and did -- glencore has arrived last minute, and even better offer. paul allen joining us with more. rio tinto could take the bigger offer, but they could risk alienating an important customer. paul: yes. bid has been recommended to shareholders. it represents rio tinto repairing his relationship with china. saidin 2010 the iron ore they would they suspected
7:57 pm
espionage. moree case of glencore, money, $225 million more. the compensation if the deal does not work out, glencore is keen on the affects because they would link up. a lot at stake. forward? t is the way paul: they are going to review the bid. there will be an announcement for the shareholder meeting tuesday. what they recommend could be delayed. you will see time to respond, and there is an expectation this company will match that offer. the investor handles that this happen.xactly what may they may reject the glencore offer. yvonne: we will be watching rio tinto shares when the aussie markets open in a few moments.
7:58 pm
much more to come including another check on the oil markets with morgan string list -- strategist. why high valuation is a risk. this is bloomberg. ♪
7:59 pm
8:00 pm
♪ >> $10 billion in liabilities for takata as it files bankruptcy. >> still hoping for a takeover, shares suspended in tokyo. weeks of falls, any chance of a rally in oil? >> toshiba hopes to reach an agreement on its chip sale, the president admitting no plan b. ofthis is the second hour
8:01 pm
"daybreak asia" coming to you live from bloomberg's u.s. and asia headquarters. the big story we are following right now is in japan. officially filing for bankruptcy in the u.s., also filing in tokyo. the shares are suspended, trading in japan is already underway. is, who paysion for these liabilities and what happens to the carmakers who use these airbags? $10 billion is not a small chunk of change. also, they reach the agreement to sell the business to key safety systems, which was expected. we are still getting figures on how much it will be worth, but they have been throwing around numbers like $1.6 billion, still not enough to cover these
8:02 pm
liabilities that takata still has to deal with. saying the tokyo court has accepted the bankruptcy protection filings. come expected to see quite a bump on shares. at the other market openings in the asia-pacific with shery ahn. shery: the markets right now seem pretty quiet. currencies barely moving. we have seen holidays across the india, indonesia, malaysia, philippines, and singapore, so a quiet start across asia. afteraland gaining ground two days of gains for three consecutive sessions, the nikkei barely moving, the same thing for the asx 200, although we do have the kospi gaining.
8:03 pm
is gainingwon because it was one of the biggest losers when it came to last week. in commodities, keep an eye on oil. brent and wti gaining ground. keep an eye onmetals. competition, heating up for rio tinto's coal assets. executives are thinking about matching the bid or improving the bid from glencore. we do have that to watch out for. when it comes to treasury yields, down in the last session. we are seeing yields falling across asia markets in early trade. >> i will pick it up from here. making a run after entering
8:04 pm
the bear market. is that a signal for where oil is going? >> it is three consecutive sessions of gains. noteis interesting to about oil is that since the start of the year, it has been diverting from equity markets. a few years back, you had energy and oil prices leading declines or gains in equity markets. that does not seem to be happening. seeing the msci world at the highest level on record, equity markets across the world. we are seeing msci emerging markets trailing that, but still that divergence with oil seems to be growing, especially this year. >> thank you. let's get to first word news with rainy inocencio. narendra modi visiting the white house letter with h-1b
8:05 pm
visas high on the agenda. the president described the prime minister as a true friend and is looking for two talks, but fundamental differences such as the h-1b visas, as well as the paris climate accord, which india supports and mr. trump has abandoned. diplomatic crisis is putting pressure on the qatari currency, a third week of trading outside the central banks preferred range. the dispute has disrupted markets, creating a dollars shortage. doha has been given the week to implement demands that include shutting the al jazeera news network and cutting ties with iran. haswhile in europe, italy savetted $19 billion to two failed banks. the deal involves another lender .aking over there good assets
8:06 pm
the european commission approved the plan and says it is in line with eurozone state aid rules. spacex has launched its ninth rocket, beating last year's total. we are not even at the end of june. 10 falcon craft is caring satellites for iridium communications. the blast off in california follows another launch on friday. it is the first time that spacex has sent two rockets into orbit in such a short period. great photos there. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. i am remy inocencio. thank you. more breaking news out of takata , confirming that it will be selling all assets and businesses to keycorp systems, worth $1.59 billion.
8:07 pm
what most of us were reporting earlier this week. that should help in terms of funding and when it comes to the production of replacement parts. we have heard from experts that estimated the cost of these recalls as well as production of replacement parts could cost as much as $5 billion. let's get the latest. we continue to see this trickle of news coming from takata. $1.6 billion for this deal, not to do much in terms of resolving the replacement of parts. when itnext for takata comes to customers and owners of affected cars? next is a looks into who will ultimately pay that gap between what takata
8:08 pm
cash on hand may receive from this transaction and what it's costs are. you mentioned the $5 billion figure. that is just an estimate. we don't know what the total cost will be for replacing all of those airbags found to be faulty, so looking ahead, we can see a situation where there are lots of costs related to lawsuits against takata. some of them in the u.s., and less money will have to pay those off than it would have if it had remained. key safety systems, the company taking that over, they are not accepting any liabilities, so takata would be saddled with those, and how they will pay those and how much they will pay remains an open question that will now be settled in the court. >> so who will likely cover that shortfall? will it be the carmakers in japan? >> exactly.
8:09 pm
the carmakers are in a tough position because they need takata to remain open and functioning and producing these airbags so they can continue to replace them in the vehicles they have sold to customers, so they have to provide the cash to keep that flowing. they are not legally liable for those costs, but have to provide them and hope to get a fraction back from takata. will have tostems produce the bags and provide them, but they are not the ones holding those liabilities that have to be paid back to the automakers. >> we know the loser out of all of this is the takata shareholder itself, but are there winners out of all of this? >> key safety systems, they are faster growing, china-based auto-parts maker. this brings them into the global industry and makes them a very key player for all of the major
8:10 pm
automakers. they are supplied by takata airbags, so they become the number two provider of this most important safety feature in , so itard that is sold is a big win for them. it won't be clear sailing for a while. this will be a real struggle to keep up with the recall demand and the troubled industry in general because of these liabilities, but does put them on the global stage, so a big win for them. ofand how to deal with one the most complicated recalls in automotive history. thank you. ahead, toshiba, the latest in a line of disasters. up next, as supply climbs, prices fall, what is ahead after oil's fifth week of declines. this is bloomberg. ♪
8:11 pm
8:12 pm
8:13 pm
a fifthrices fell for straight week after slumping into a bear market on concerns that rising production will offset opec's output cuts. let's get an update. we are seeing support around $43, but has the narrative really changed? rig counts rose again, hedge funds still less bullish, so what has changed? apart from modest support around these levels, not much. supplied level still the same. >> it is short covering then? >> possibly. priceslast year when fell to below $30, the price
8:14 pm
doubled, so there might be room to move. at the supply situation in nigeria, the u.s., and brazil, adding extra pressure to the market. it is not changing the supply situation, but putting pressure on the market. the rig count up, the longest ,un of adding rigs in 30 years so all this fundamental pressure adding to the market, but holding at the moment, so there is a little bit of positivity there. >> we were hearing last week in the midst of that route, the iranian oil minister saying some opec nations are considering deeper output cuts, but will that work? is opec losing its relevance? >> they put a lot of work into getting the deal to cut exports with russia and the other non-opec countries, so the expectation is deeper cuts are hasired, but russia
8:15 pm
essentially said they will not do it. saudi arabia and russia are probably the two countries you need on board for that to happen. at this stage, it looks like it will be a deal to cut through to the end of march next year, but a lot of people are saying be patient. demand is climbing, although incrementally. they are hopeful in the second half that we may see stockpiles declined even further. >> thank you so much for that update on the oil price. let's look at further analysis. good to see you. we have seen this debate among some of the banks, talking about where does oil price will go. some are saying that technicals are trending towards the $30 mark for wti. what do you think the moment? >> i think you have touched on it, it is about supply, not demand. some of the demand numbers
8:16 pm
picked up on friday at of the u.s.. range of leave us in a trading for the year and moving back to $50 a barrel on average. it is easy to make the parallel with 2016. you are not seeing that same reflection this time. markets are still moving higher. seeing a selloff in high yield, but not to the same extent. there is scope for oil markets to tighten as prices they weak , then company start adjusting outlook for investment and capex. you will hear a lot from the opec pr machine, but that is talk and it's not helping in the near term, see you need them to strengthen their commitment to making sure production cuts they have planned really are believed by the market. >> possibly further jawboning
8:17 pm
from opec. #394t to throw up a chart, , when it comes to correlations between oil and the stock market , the s&p 500 basically that relationship has broken down to zero now. given that this is more of a supply-driven story than demand, there is limited contagion effect, but what about the value story right now? we have seen a rotation from growth to value. when you don't have higher oil prices were higher yields in the market? >> in terms of what i mean for the inflation outlook, people are seeing that rotation away from the growth or cyclical to the value, but right now, you will see that inflation number which has been weak out of the u.s. for the last recorder quarter start to build over the rest of the year and these
8:18 pm
impacts will be transitory. oil price close to $50 a barrel, we will get that inflationary impact not so great. for us, we believe you want to be in the cyclical parts of the market in the u.s. and europe and will still move higher. that the inflation outlook starts to dent some of that. that starts to weigh on sentiment, but overall, the mobile economy is growing. we are seeing some inflation, but not a huge amount. provide that idea of a goldilocks position for investors, because of where valuations are, this is a fairytale for many people. we are cautious towards the u.s.. we still like this cyclical parts of the market based on where growth and earnings are going. >> moving away from oil, i want to look at technology. you have not only seen the tech
8:19 pm
selloff, but around the world in fact. 410ant to bring up a chart, # . it shows you the volatility diversions we are seeing in technology if you look at the msci all country world i.t. index. look at how much it separates from the rest of the world. volatility, isa that a big concern for you? is that a huge disruptor towards your outlook? are think the movement you seeing in certain stocks is making it more difficult when we think about the index and performance across the markets and the concern that it is being driven by just a few companies. highs, valuations are very , richer than they have been in the u.s. what you invest would dictate returns in a stronger way than
8:20 pm
just owning the index. the facty low reflects the index is moving, but there as people reallocate between defensive, cyclicals, technology, and other growth stocks. markets have moves such a long way, valuations are high, so it's hard to provide those returns. this particular sector does not worry me too much in terms of what it means for returns. it just alters our approach to the market. thehen it comes to finding best value, where would it be? >> we prefer to look at europe in terms of the growth recovery there and relative violations compared to the u.s. we look at emerging markets where you are seeing relative i you wish and's. -- relative valuations. to thoseortant to look parts of the world to deliver equity returns and combine those
8:21 pm
with income ideas, oil, high yield selling off, a decent coupon their relative to what you see in government bond markets. local debt, so having income stability against the performance on growth and europe and emerging markets will be more key for investor positioning, but we like the european story and see the recovery coming through in emerging markets and a strong way. those markets have a lot of catch-up to the u.s. >> thank you so much. you can get a roundup of the stories you need to know to get your day going in today's edition of daybreak. bloomberg subscribers go to dayb on their terminal. it is also available on mobile and the bloomberg anywhere app. you can customize the settings so you only get the news on industries and assets you care about. this is bloomberg. ♪
8:22 pm
8:23 pm
8:24 pm
>> this is "daybreak asia" in hong kong. onmore headlines coming out takata around key safety systems confirming are saying they plan to keep substantially all takata workers and does not intend to shut takata's japan's plan. they will be holding a bondholders meeting on june 28. too, this is according bankruptcye takata is the largest ever in manufacturing history. to key safety systems will close in the first quarter of 2018. we will be waiting for this press conference from kyoto, a press conference with takata executives in tokyo at 11:30 local time in japan.
8:25 pm
out for those headlines. the stock still suspended on the tokyo stock exchange. >> i don't think it will trade today. we will see how things trade in the next couple of days. bounce on theto news of this bankruptcy filing and the announcement of this takeover offer, but a lot of questions about where the global recall goes from here for takata , as well as for key safety systems. for now, key safety systems will keep the operations in japan. again, you can look at the stock , a brutalt week or so couple of days, 60% down, losing more than half that value in the last five sessions, although we a great deal of volatility in the last year
8:26 pm
since the news of this recall. another chapter when it comes to takata as we move ahead with this bankruptcy. a quick check of the business flash headlines. crown resorts staff in china will appear in court, charged with illegally promoting gambling. the case is seen as beijing's most public warning to foreigners trying to lower chinese citizens abroad to handle. -- to gamble. citizens go on trial and phase three years in jail, if convicted. 's fund has its sights set on nestlé. it sees strategic changes, including the sale of l'oreal. it is now looking more closely at opportunities in europe. one of the people who helped
8:27 pm
to create modern-day macau is taking a backseat. stanley ho stepping down and be replaced by his daughter. monopoly with huge numbers of high rollers from china. it was the largest casino operator until 2015 when it was surpassed by sands china and galaxy entertainment. next, we are following the sale ofpping its chip unit, possibly tuesday. the president admitting that there is no plan b. this is bloomberg. ♪
8:28 pm
8:29 pm
8:30 pm
>> 8:30 in hong kong. an hour away from the open of trading. >> looks very pretty there. you are watching "daybreak asi " ." more headlines on takata. the company will be delisted from the tokyo stock exchange on july 27, so in about a month. now,a suspended right delisted from the tokyo stock tohange on july 27 the sale
8:31 pm
key safety systems will go ahead as planned and likely to close in the first quarter of next year. you understand why this is happening. trials and tribulations of this company run deep everson's we did hear about these tragic accidents that stem from these faulty airbags. #4752, take a look at the struggles it has had. we are seeing from the market $436 million in the red. if you look at how much it has come down in terms of the fall that takata has had since this acall globally, we have seen fall into $3 billion market cap company.
8:32 pm
they have decided to file for bankruptcy and this take over offer from key safety systems. >> that's right. a record recall and a record bankruptcy. that is the story. will continue to watch that one and see how things go. meantime, let's get to first word news with remy inocencio. a cyber attack disabled communications in the british parliament on saturday with lawmakers access to email disrupted. the house of commons is investigating the attack along with the national cyber security center. that is britain's signal intelligence agency. the breach came after two days after it was reported that passwords work for sale on russian hacking sites. britain is turning to emerging markets to shore of trade as brexit puts existing deals on an uncertain footing. the prime minister's office
8:33 pm
promises improved access to u.k. markets for the world's poorest countries and to maintain existing duty-free access for everything but arms for the countries. -- for 48 countries. li ka-shing says the hand over of hong kong has provided stability for the city, people, and businesses, as well as what he called a front row seat" for the opportunities on the exploding chinese economy. he said the one country, two system framework shows the flexibility of leaders. airways will replace 30 aircraft over the next five years. carrier is hoping that will turnaround performance after losses in three of the past four years. the airline chairman told bloomberg that it is votto to protect against fuel price volatility. we will have new generation
8:34 pm
aircraft over the next five years, airbus or boeing. this is the way we have to move forward. low, now the fuel costs as but the future is subject to volatility. we want new generation aircraft. >> global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> thank you. let's get the latest on asian markets with shery ahn. shery: it looks like a quiet start to the week, but that maybe for today. we do have top-tier federal reserve speakers this week, including janet yellen. that is expected to add some pressure to the dollar. the dollar index, the line in
8:35 pm
blue, is headed for its second quarterly back-to-back decline in about three years. traders are now doubting inflation outlook as the fed continues to want to hike, but inflation not there. take a look at treasury yields. this is the inflation protected treasury yield. they continue to be subdued. societe generale saying this will hamper any further revival of the dollar index. we saw some revival in june, but again, it has been coming down. affect what is happening to emerging markets when it comes to the currency markets. we also saw last week that emerging markets were some of the biggest decliners when it came to currency. we have a slight dollar pop, but that is not being sustained. the south korean won gaining, .4 percent after being one of the biggest losers among emerging-market currencies in
8:36 pm
asia following the philippine peso. you can look at the japanese yen, not doing anything. not been doing much in the last five sessions. there has been trading around 111.20, but not seeing big momentum when it comes to the japanese yen. this may be one of the reasons that we have not really seeing big momentum when it comes to the equity markets. moved in has barely the last two sessions. today, we are seeing a pop. the gains are being led by nintendo. we saw the price target being mitsukoy the pseudo--- last week. today, we are hearing their $100 billion vision fund for softbank is looking at investment in quantum computing, so an interesting one to watch. we have been talking about no movement yet.
8:37 pm
now we are expecting their bankruptcy filing, the liabilities could add up to $9 billion, which could make it the priciest bankruptcy for any manufacturer in japan. toshiba continuing to lose ground, more than 2%, as we see the fallout from delaying their earnings report until august 10. >> thank you so much. a quick look at what is going on right now as we are half an hour into trade in major markets. toshiba shares plunging in tokyo, trading near the lowest level in two weeks after it expects to seal the deal to sell its flash memory unit on tuesday. the report comes up to befirmation that takata will demoted to the second section of the tokyo exchange on august 1. tech reporter is
8:38 pm
joining us now with more on toshiba. what is the risk of toshiba being delisted altogether here? >> good morning. well, the delay in earnings and the secondn to section of the tokyo exchange is not entirely a surprise. the demotion has been coming. they will be removed from the nikkei and the broader topix index, causing institutional investors to sell, potentially individual investors coming into the market, increasing volatility, but all of these things have been widely expected. more important is is the delay in earnings, which is now scheduled by august 10. toshiba has delayed many times before, but release some of the preliminary numbers. the most important is the fact the company will have ¥500 billion in negative shareholder equity, the year ending march
8:39 pm
17. having negative shareholder equity for two years straight would delisted the company automatically, which is why the company is now selling its chip unit, hoping to get to trillion yen by the end of this fiscal and hopefully avoid delisting. >> that's right. these delayed earnings seem to be a new normal for toshiba. when it comes to the sale of the chip unit, we have learned about this preferred bidder was the consortium, but toshiba saying they are also in talks with western digital now. know,ht, so as far as we they are both financial vehicles, they are still the
8:40 pm
preferred bidder. it is not clear who will lead the bid. recent reports indicate the japanese led fund will own the majority. hynix will probably come in as a lender to an spc vehicle. the question is how will western digital respond. they have been pretty aggressive with legal action trying to bring toshiba into arbitration. so far, they have not backed off their claims. the question is can they derail the bid or can they delay it sufficiently to make toshiba negotiate with them? as far as we know, toshiba does want to close the deal by wednesday when they have their shareholder meeting, so we might see some news coming out as early as today or tomorrow. >> thank you. joining us live with toshiba shares down 3% this morning. china's overseas shopping spree curve dramatically after a
8:41 pm
chinese crackdown. our next guest says m&a will pick up again soon. we will discuss that. this is bloomberg. ♪
8:42 pm
8:43 pm
is "daybreak asia" in new york. on annese companies went international shopping spree worth more than $300 billion. that has dropped off as the government has cracked down on overseas deals. we have seen a dramatic slowdown from the $250 billion in 2016. regulators have stepped up scrutiny on buyers. for does this mean acquisitions still in the works? i want to bring in our guests. let's set things up really
8:44 pm
quick. ?s this a red flag how is this different from the latest probes? i think we are waiting to get more information on how deep this investigation will go. it rattled the markets last week and raised some alarms, but all we know is that the banks were asked to give more details about overseas lending for these five big companies we have been talking about. we will hopefully get some more answers, but what it seems like is that this is certainly going to be a warning to these companies ahead of this party congress towards the end of this year. whether it will go for it will go forward is something we have to watch for. a toughening from stance from regulators here. regulator,ies banking regulator, and insurance
8:45 pm
regulator. there are some questions that have been discussed for quite some time whether we are moving closer to a super regulator overseen by the pboc. they are sharpening their teeth, and part of that will be down to the political atmosphere in china at the moment. , whatrpening their teeth is the endgame here? do you think the probe will have any affect? i think it is already having an effect. you can see that outbound m&a has curb compared to last year. i'm not sure beijing has a real in the game in mind, of their than to start to assess and deal with systemic risks. would like to ensure that they have a smooth economy in the run-up to the party congress, and even longer-term dealing with some of this debt-
8:46 pm
related systemic risks is important to general economic health. a lot of the recent moves are done with this in mind. that anbang is too big to fail in china. what do you mean by that? >> anbang appears to big to fail. anbang controls $300 billion in a countless army of retail investors who have bought its structured products. i don't believe the government wants to do this, but if the government where intent on business,bang out of the question would be what to do with all of those people who would like to redeem their products and suddenly can't yet paid. i believe everyone is on the same page and wants anbang to come out of this whole and deal with its obligations. >> what is interesting is that when you talk to people who know anbang and know the chairman and
8:47 pm
who watch and observe this have seeney problems for years and noted they did not want to do business with the company. i want to read you one quote from hank greenberg, the former ceo of aig. says "people buy life insurance because they want benefits to be there when they and it, not to be used by organization that is gambling with their money." he is highly critical of how anbang was ron, so what took regulator so long? ok, but that is an insurance guide taking on a company that is technically in the insurance business, but for all intents and purposes is just in the fund raising business. these people who are buying these "life insurance policies" don't expect life insurance.
8:48 pm
they expect short-term cd-like instruments. i believe everyone is aboveboard in terms of what is happening here. in the waynsurance hank greenberg would look at it. probes,ve seen these days after the msci decided to add a-shares to its global indices. it is a stamp of approval from msci, but you also have regulators tying conglomerate's hands in terms of overseas deals, doing the opposite in terms of opening up. as a foreign investor, how can you interpret this? >> it is confusing. the heads of these companies, it is confusing for them as well. they were encouraged to expand and by assets overseas.
8:49 pm
what you hear from policy makers experts is the focus is on ,ational overseas acquisitions and that is what they will continue to encourage. there's talk about more m&a next year, maybe that will be within the framework of the so-called rational overseas acquisitions, so not so many football clubs and movie studios. this,eign investors read caseuys pushing the bull would say there is a push to add transparency with all the on board. help add transparency and improve corporate governance on the ground in china and help to ease rings and smooth the path or foreign investors, but clearly this is a red flag for those who see the domestic market as littered with risks. brock, i wonder if you think we superving closer to a
8:50 pm
regulatory body and closer coordination between all these regulators under the pboc, is that something likely to happen, if not before the party congress, then after? it certainly is possible, but i don't see any moves indicating it is imminent. all these moves we are theussing are all based on common belief that beijing has do something about systemic risks, and as a foreign investor, i can only flawed these moves. it is about time. i think the moves are rational, and i think beijing is finally tackling this in a reasonable and aggressive way. i am also still bullish on outbound m&a for the coming year, especially after the party congress. people will resume their prior , and no one has any incentive to tell corporate china that they should not go out and become global players.
8:51 pm
beijing is not interested in curtailing corporate china, i think. >> have the rules of the game essentially changed here? you don't see this as a seismic shift on how the east engages with the west now? financing will change, deal financing will change. it may be harder to finance deals the way that a dealmaker like anbang had been doing up until now. i would look for more sophisticated offshore financing. has been doing this and a lot of their deals, and i look on,war of that as time goes particular he the party congress has passed. >> certainly don't want to have any rough waters ahead of that. thank you so much. straight ahead, president's
8:52 pm
health-care plan, the future of his travel ban, those of against key hurdles this week. we look ahead at what to expect as washington opens up. this is bloomberg. ♪
8:53 pm
to voteenate expected on the new republican health care plan this week. gop senators are opposing
8:54 pm
it, so the bill may be in jeopardy. jodie snyder is in washington. what are the chances that it can pass? >> it is unlikely they will be able to pass it this week. they not only have the senators you mentioned who have some issues with it, republicans who are more conservative who don't think this goes far enough. weekend, susan collins, a moderate from maine comes that she had some problems on the other side, how it may affect older and poor and rural americans. she is waiting for the congressional budget office core that will tell us how it does affect people. that will tell us how it does affect people. there will be a lot of attention to that. >> do you think mitch mcconnell might take another approach on this as well?
8:55 pm
>> he may have to amend the bill. he is saying they want to get it done before the july for recess. it is hard to see how you could amend the bill and a significant way. the president likes this bill, he says, and he wants it to pass quickly, because then it has to go back to the house again, so getting something done on this is going to be a challenge, something the republican leadership in the president want. >> there is going to be a lie the agenda in washington. there is also the travel ban coming up in the supreme court. what is the likely outcome from that? >> we are watching for this to happen at any time. the supreme court taking some action on the travel ban. what the white house wants is for something to be done. the two federal appeals court half block to the band for now, so he wants some ruling on it,
8:56 pm
but also wants their to be a possibility of going forward with the ban as a place out in the courts. where does the travel ban stand in terms of the president's agenda. on when so much going it comes to health care and the pressure program. is it lower on the list now than it was previously? would like to move forward with it. i think the administration wants to get back to talking about their agenda, like the travel ban, the obamacare repeal, the things they talk about when they go out to the base, but so much has been tied up with the investigation. with the update out of washington, d.c. it is time for a quick look of what is coming up in the next few hours. rishaad: i'm looking at this takata story. we have been waiting for this.
8:57 pm
we have a news conference this afternoon in tokyo. we should get more details on that. we could see that troubled airbag maker filing for bankruptcy. right, also this crisis in the beingontinues with qatar isolated by its gcc ex-partners. with thealk about that national university of singapore in about 10-15 minutes. we are also looking at narendra modi's visit to washington. that is all on the way. >> looking forward to it. ."at is it from "daybreak asia" market coverage continues. this is bloomberg. ♪
8:58 pm
8:59 pm
9:00 pm
i am rishaad salamat coming to year from bloomberg's asia headquarters in hong kong. this is "bloomberg markets: asia." ♪ has a buyer and $10 billion in liabilities, the deal little relieved to japan's airbag maker to the world. forced to file for bankruptcy a


info Stream Only

Uploaded by TV Archive on