tv Bloomberg Markets Asia Bloomberg July 31, 2017 9:00pm-10:00pm EDT
rishaad: 9 a.m. here in hong kong. 900 evening on monday. i rishaad salamat. foreignme to check out assets. insurers being asked to sell out and bring money home.more turnout -- turmoil in the white house . scaramucci is told you're fired. haidi: i'm haidi lun in sydney. coming up, the fed numbers taking up on the turmoil. the uncertainty and lush intent is harming growth in the u.s. and abroad. this is "bloomberg markets: asia." ♪
rishaad: it has been quite a seven months when it comes to the hang seng. seven straight monthly gains for the index here. the chart gives you an idea of what has been going on. we have a 23% gain since the start of the year. january.p in july was also a pretty healthy clip as well, gaining about 6%. can it continue? canada tech stocks, which have been driving things up, and also money coming in from mainland institutions, partly responsible for the drive of, as we see the hang seng performing. also, can the emerging
market rally continue? it is extending gains into a seven month, even as we see a little steam coming out when it comes to the u.s. stock rally. session as weg get the asian trading day underway.30 minutes away from the open in china and hong kong. we are really seeing this continued rally when it comes to commodities.iron ore up over 7%. copper surging to the highest in two years. good data out of japan. pretty solid out of south korea as well, driving positive sentiment at the start of the session. singapore, taiwan, and malaysia are coming online. sophie: with that backdrop of it isobal equity rally, coming along. commodities really helping support gains. we have steel continuing to surge, rising for a third day.
forshare is continuing asian stocks. a little bit of a blight in singapore, down for a third day in the lion city. ahead of the rba decision, key on the agenda today, the aussie gaining 2/10 of a percent above the $.80 u.s. level rising for a six day and seven days. the euro slipped. wonre seeing the korean stronger for a second day. gaining after inflation trade data out. the nikkei 225 is up 2/10 of a percent. above 110 per dollar. we kick off a risk filled week. keep that in mind. we've had the longest losing streak for the dollar since
2011. as the dollar has sunk this year, the lines in white on the chart, this is gains for the chinese yuan in blue. a steady chinese economy has helped the yuan this year. this has prompted the bfa, merrill lynch and work ways to strengthen their year-end forecast. i want to quickly check on market movers this morning across the region. sumitomo mitsui rising 2.2% in tokyo after its first quarter profits surged 31%. kawasaki is falling the most in nine months after its profit but we have start today, an online fashion retailer, soaring. we have a lot of earnings to digest today in asia. those are a few of the highlights.
rishaad: thank you for that. 1.5%, the hang seng in the session. at least in korea, it is about strong economic data. let's get first news headlines. paul: the korean won jumped after july exports eat expectations. shipments were up 19.5% from a year ago against expectations of a gain of 16%. imports rose 14.5%, leaving a trade surplus of $10.6 billion. south korean inflation narrowly beat estimates for july with consumer prices rising 2.2% from a year earlier. u.k. consumer confidence is studying after the in conclusion -- inconclusive election in june. gauge ofd looking
household finances fell for a fourth month, while the house value metric for the next year -- dropped to the lowest since may 2013 give president's communications director has been fired just 10 days into the job. the white house says anthony scaramucci has been removed. this gives the new chief, john kelly, the ability to make a new team. criticized john kelly's predecessor, reince priebus. the leader of new zealand's main opposition party has stepped down less than two months from an election. andrew little pointed to slumping opinion polls and says he takes full responsibility. little will support as deputy as the leader. global news 24 hours a day,
powered by more than 2700 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. rishaad: china is said to be raising the heat by asking anbang insurance to sell assets, a hotel in new york. is this the end of chinese insurers and others overseas shopping sprees? >> i'm not sure about the other sectors, but definitely for insurance companies, i don't think the investment up the tight -- appetite will stop here. they are very keen on helping insurance companies to lock in overseas deals. they are allowed to invest up to 15% of total assets, but at the end of last year they are still only around, 2% or 2.5%. rishaad: if anbang in the end is
asked to sell and repatriate these funds, what does that mean for investors, or the insurers' appetites? we know i'm buying paid a pretty hefty price on the properties they bought, including the waldorf-astoria. i think historically, a lot of the assets are aggressive. it may not be a bad thing if you take a step back for people who are interested to buy these assets. it may not be one single company or investor, it could be a consortium. but at the end of the day, the concept of buying solid, reputable overseas assets is still intact. i we likely to see a selloff when it comes to online holdings in china or elsewhere? how do we see this playing out when it comes to any sort of disruptive effect? >> i think the key to think
about here is the size of the anbang assets with the country. we take a look at the funding -- holdings at the end of last year. they are pretty large, about 6% of the total market. they are actually 14% of the stock market in china. it may have some impact if they need to sell, but if we take another step back, the cash and deposits are held by angering -- anbang, are multiple size of the stocks. they could liquidate the liquid assets like bonds as well. deal: we are seeing this level fall from the record highs of last year, and the last couple years. do we expect this furthering tightening of the news, is it going to impact other conglomerates as well?it seems
kind of inevitable. >> the trend we have seen, we have done a little work in the first half of this year. recently, we see a -- basically, we see a slowdown. the chinese insurance companies snapped up about 9 billion dollars. this year, they have locked in around $2 billion to $3 billion in terms of overseas properties. the key to watch is that instead of going for the anbang style flashy type deals, the chinese insurance companies actually want to go for the lower key stuff like parking lots in the u.s. haidi: parking lots, not quite so glamorous. [laughter] to this point, it has been more vanity investments. thank you for that. still ahead, no rate change expected from the rba today. we are looking at the signals.
rishaad: panasonic out with earnings, pretty much in line with the thinking. they were looking generally for a forecast of $767 million. pretty much bang on. panasonic maintaining the forecast seeing growth in the auto related is this mrs. is increasing profits.let's at the bloomberg data. surging by the most in more than two months. shares are recovering somewhat after plunging more than 7% on monday as its results were released. the food and flavorings company says first net quarter income came in at $146 million, an increase of 18%. they did not change any of their forecast. rishaad: trade ministers and
delegates gathering at shanghai amid today, talks coming rising trade spats and border tensions between china and india. let's look at what has been going on with investing in this part of the world was lack rocks head of active investment for the asia-pacific. what do you make of the numbers? how does it compare to other years and different seasons? >> thank you very much for having me here. this year has been interesting. we called the reflation trade one of the big themes this year. reason, that plays out positively. we were concerned after the u.s. election that it would be negative for asia and emerging markets. in fact, it has not played out that way. we have had seven months of street gains in the asia-pacific, and we see further upside. we think relations are attractive, and even though we
have seen some inflows, it is different to previous years where we have not seen sentiment change. this is actually a positive story. rishaad: how does the weaker dollar play into that? callst was one of the that surprised us. at the beginning of this year, we thought we would see a gradually appreciating dollar. -- it may at where we be a tactical change in the short-term. there are two reasons for the weaker dollar. i think confidence in the u.s. is deteriorating. and the converse of that, we are seeing a stronger confidence in europe. secondly, we are seeing faster inflation data.for those reasons, we don't see that changing in the short-term, so we are remaining with a range.
coming back to how that plays out in the region, we know a strong dollar would be a headwind for asia and emerging markets. i want to talk to you about india specifically. what a year and has been for indian stocks. they hit the 10,000 milestone. is this the point where we start looking at fundamentals and think, earnings need to start catching up with pretty lofty prices? >> india has been very interesting. this is a consistent overweight position for us. what we have seen this year is the market getting a little ahead of that. we are seeing some loss of momentum. try to remember that the reform in india, whether that is demonetization or the isroduction of the xp
positive in the long run. credit, bothve in across the spectrum, and also positive in governments and local currency. we remained very positive and it has been consistently overweight for sometime now. haidi: interesting you are saying you are positive when it comes to fixed income in india. what does the implication of lower rates and looser policy in india mean to you? if you look at the bond market expectations, this week's cut is pretty much a done deal. narrow?going to plus, you have potentially less opportunities in the market. do you expect to see a slowdown when it comes to foreign influence? >> we would expect to see a slowdown going forward. the cut this week is priced into
the markets. but we still see the growth trajectory as being very positive. i know you don't look at the mainland much, but the , the 11th ofing 2016, what do you think is going to be the catalyst for any change upwards or perhaps to change in reverse? there was a suggestion we would see sharp declines. what would be the catalyst for that? the stronger dollar would take time. >> correct. i think what we have seen this quarter, real gdp markets surprised market expectations on the upside. when you think about the pace of economic activity, we expect that to continue. -- better than
market expectations. retail sales has been very strong. we think it is strong for china going into the end of the year. rishaad: thank you, belinda. activeck head of invasion -- investments for asia. up, we talk hsbc predicting a $300 million brexit bill. how the stock is reacting in the market. this is bloomberg. ♪
communications director, and has now been fired. this is the latest in shakeups. joe subject has the latest from washington dc. white house communications director anthony scaramucci was ousted hours after retired marine corps general john kelly took over as the chief of staff. calley was given the job to on disarrayorder the white house. scaramucci's arrival in the white house wanted the departure of sean spicer as secretary and reince priebus as chief of staff. that followed the resignation of the -- former communications chief. it is a sign that trump is empowering kelly, at least for now. he was given a job as chief of staff to put order into what has been a chaotic organization in the west wing, and was promised full authority over the staff. the practical effect is he will be filtering who gets trumps year and when.
some senior officials who are used to walking into the oval office may lose a direct line to the president they once enjoyed. kelly is said to have support from the president's daughter and her husband. are privileges will be trimmed. kelly is unlikely to have any more success than his president -- predecessor in curbing the president on twitter. trump delivered sometimes conflicting messages about what he thought congress should do in the middle of debates. bloomberg news in washington. rishaad: let's tell you about the open here, looking forward to the start of the trading day in hong kong. pretty much flat. looking at the next stocks -- mi xed stocks. the futures contract putting in
a little bit more of a claim up, 1/5 of 1%. reject apoised to pharmaceutical group. a is trying to take over company called gland pharmaceutical. it would have been the biggest chinese acquisition of an indian company. it would have been worth $1.3 billion. the cabinet committee on economic affairs, chaired by the prime minister, decided to block this purchase. that is according to people familiar with all of this. .aidi: yet another setback other conglomerates in china have had a rough timely -- of late. at the stock in the premarket session. a nice rally for the hong kong shares yesterday on the back of the earnings. the turnaround story is
continuing. revenue is up, cost are down. confirmation of the rumors we heard to a return to billion dollars cash in investors. we are looking at the brexit cost now. is facing up to as much as $300 million in legal and relocation fees in its efforts to relocate thousands of staff to paris. this is an indicator of how much the brexit bill will be flooded by major financials in the u.k. it took a $4 million hit in the second quarter for these costs associated with the uk's exit. the outgoing ceo says it could rise to $300 million. are reiterating the warning that the fragmentation of the european banking industry is going to mean greater cost and responsibilities, and a burden when it comes to major lenders. coming up, worlds apart. trade meeting gets
look on thes is a other side of victoria harbor. global equities at the moment near all-time highs. on,ington fixation going with changes, the communications director, anthony scaramucci gone on the first day of chief of staff john kelly's first day in the office. gone after 10 days. we have the reserve bank of australia out with an interest-rate decision. we had the bank of england also. don't forget, the most important data point of the month. haidi: the front end of the week
has been positive. slower, but still pretty robust. japan data also coming in better than expected. u.s.ding it off with the jobs numbers. in terms of the markets, asia is doing much better than the lackluster session we had, low volumes, and not much momentum when it comes to wall street. over here, we are seeing that commodities rally and the renewed u.s. dollar weakness driving the emerging-market rally higher. shanghai and hong kong are just getting online. sophie: looks like we had stocks on the mainland as well as hong kong extending gains. the hang seng rising about 1/10 of a percent higher for a second day. yuan rate morning's
was set at the strongest sits october -- since october 2016, we are seeing gains for the yuan both onshore and offshore. the onshore rate is up about a 10th of a percent stronger. let's take a closer look at what is moving in hong kong. . energy players up about 1.3%. petrochina is on the rise in that market. seng'sd see the hang biggest monthly advance since january. inflows are expected to continue as chinese regulator dial-up curbss on right -- the hang seng knocking off 41
points from the benchmark. i want to check on financials in after hsbc led gains on monday after its second-quarter results. the stocks are marginally lower by the 10th of a percent. insurers are in focus today after the industry watchdog spoke of more scrutiny, and anbang insurance is in the spotlight. on chinese telcos. ofs after the premiere spoke opening up the industry, opening players to increase broadband fees. a mixed bag. china mobile if marginally higher this morning. -- india is said to block a billion-dollar acquisition of gland pharma from china.
on the mainland, we have weakness for fosun pharmaceutical. --haad: beijing is leading leaning on anbang. here's paul allen with first word news. paul: china is said to be raising the heat on a quiz acquisitive companies by asking companies to sell assets abroad. those assets include the waldorf-astoria, bought by anbang for almost $2 billion in 2014. chatg responded on we saying it currently has no plans to sell assets, and all operations are normal. the imf says the japanese prime minister shinzo abe's reforms have improved economic conditions, but not enough to achieve a durable exit from reflation. the program has not been sufficient to meet goals. has recommended
structural reforms aimed at increasing inflation, especially for reduced wages. the fed numbers as continuing political drama is undermining growth in the u.s. and abroad. stanley fischer says the lack of direction on health, regulation, taxes, and trade could cause companies to delay. uncertainty, slow growth, and aging populations have combined to keep rates low. stephen mnuchin broadly agreed. >> growth has been too low. we are committed to getting it to 3% or higher. it has been a great time for financial markets, but we are going to do things that are great for the average american. paul: the olympic flame can but it's taken to the 2024 and 2028 games. los angeles agreed to host the latter, with paris taking the event after tokyo. the l.a. mayor says it is a
landmark agreement that will kickstart the drive to make the america.healthiest in the 2028 l a proposal of go before the city council and u.s. olympic committee this month. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. ♪ we have been looking at this story for a while. sun shanghai for sun -- fo pharmaceutical group. blockinggovernment is the chinese acquisition. its is fosun looking for in acquisition of gland? chinese pharmaceuticals have been fairly equipped -- acquisitive. reporter: they have been buying assets all over the globe to step up their international expansion. the holy grail is the u.s. market.
what gland has is not only a portfolio of injectable generic drugs, but also facilities that are licensed to make drugs for sale in the u.s. rishaad: what is the backdrop, and why would india reject this deal? it is primary -- is it primarily geopolitical? reporter: they have not specify the exact reasons yet, or formally notified companies. the backdrop is happening since mid-june.there has been mutual distrust between china and india for decades, but ever since this borders that in -- border spat in june, they are looking more skeptically at chinese investors. ordi: so much has changed, worsened, when comes to the outbound investment climate. definitely the chinese government is less encouraging
of overseas investments than before. in this case, it is the indian side that will block it. the climate at home has changed it as well. they are not being encouraged to go abroad as aggressively as they used to. haidi: thank you for that, certainly on both sides renewed reluctance.talking about the potential collapse , it serves to highlight the tensions between india and china. this relationship is in focus as brics trade ministers meet in shanghai. tom mackenzie joins us from shanghai. will the progress the overshadowed? >> the indian and chinese delegations are meeting in a room behind me at least week, so maybe we will get -- as we speak, so maybe we will get answers. it clearly overshadowed some of the discussions going on. trade relations between china
and india, the volume has been increasing. in 2016, it was worth about $70 billion, but there was a big trade deficit for india. of tradese kind tensions as well as the geopolitics that are playing out that will probably have some impact on the discussions. as you mentioned the geopolitics, we are looking at probably one of the worst sets of tensions, the worst relationships when it comes to since 1962 dispute in theey fought that war himalayas. you literally had indian and chinese soldiers facing off against each other in the region. we have not seen any concrete moves yet to calm those tensions. that is something people are looking for. last six months, has taken 12 trade actions
against china. china'sso including soda industry. tensions a number of that they are hoping to be ironed out. they are hoping for concrete actions, because we have the brics summit in september as well. they want to get traction and movement, deepening the trade relationships before that summit. rishaad: overall, what is being achieved there? >> the overall aims are to broaden trade and investment across brics nations, and to work and commit to trade liberalization's and the , with theal trade chinese hosts hoping it would take more of a priority. they say they would work on things like i.t. and intelligent
manufacturing. we will see if they actually come out with details if they can make any progress on that. it isn't just the india china geopolitical tensions. you have brazil and political chaos, and brazil itself is looking at trade tensions with china. china has taken actions to have impacted brazilian sugar imports. china wants bric nations to continue to invest. clearly there are diverging paths for many of these nations. many say they have unusual bedfellows given that china is embedded in the global supply chain. russia and south africa are still dependent on commodities
to drive their economies.we will get more answers and and alsolater on, russia's economy minister will talk.plenty more from the brics trade summit in shanghai. rishaad: tom mackenzie in shanghai. coming up, holding steady to the economic factors weighing on the bank of australia. we discussed the cash rate with the commonwealth bank of australia. this is bloomberg. ♪
haidi: this is "bloomberg markets: asia," i'm haidi lun in sydney. rishaad: i'm rishaad salamat in hong kong. let's look at the business headlines. first-quarter operating profits more than doubled to what it was previously.looking for a figure year of about $1.2 billion.shares have been surging in the company since
smashedan: homecoming," projections. they also have cameras, streaming, and playstation games. they spent $143 billion on a 95% stake in distributor automation -- funimation. suppliers are trading lower amid concern about potential holdups when it comes to the new iphone. theyy chain data suggests will announce when it comes to oled screens. it could put the initial shipments back to october. rishaad: china's third biggest search engine expecting to launch a u.s. share offering -- worth $5 billion, trying to close the gap on baidu. the name means search.. it is running about 10% of the company by the end of the year. it is backed by tencent.
they want to use the money to improve search through artificial intelligence. we are expecting breaking news out of china. yesterday, we had the official china manufacturing numbers for services as well as manufacturing. they came in a little weaker. let's take a look at the numbers, given that we have a better gauge when it comes to what we will be getting and some of the smaller companies. let's bring you some of the numbers coming out at the moment. manufacturingfor coming in at 51.1. that is actually markedly pretty strong.we were looking for 50.4, which was unchanged from the previous month. a smaller, privately owned company often has a little more of a struggle when it comes to funding.
nice gain. is a very we have had reasonably good numbers out of china and japan, and south korea now, and the private sector in china completing the picture somewhat. back to australia. rates are decided in a couple hours. the rba was expecting to hold at 1.5%. the next guest is one thing to watch out for is the indication of how the forecasts are evolving. joining us is the chief economist at cba. it is the case most people are looking at the projections and saying they are pretty optimistic, even though we have inflation that has fallen below. inflation back up to target is a struggle.we saw that with number of last week dipping below the rba target.
we will get a hint of how the reserve bank is viewing the world today. forecasts for inflation may look even lower. atdi: if you want to look the conundrum facing the rba, i like this chart. i bring it up every time we talk about rba decisions. this is a household debt at record highs, wages at all-time lows. fair, when you ask where is the inflation and wage growth, isn't that a structural issue? > yes, we struggled to get wage growth around the world. every indicator says growth should be stronger in the rest of the world. it is not happening. inflation remains low as a result.it makes it difficult for central banks to get on with a task of normalizing policy settings, which most of them would like to be doing right now. rishaad: michael, what would it take for the central bank to tighten?
to seeink you would need wages actually starting to move. as it stands, the inflation forecasts have inflation running below 2%. you need something to change that inflation trajectory. until we see signs of life, it is difficult to be too worried about inflation. we expect to see much happening -- or expect to see much happening on inflation front. he said we have had said nation since 2008 and we are entering a period of stag flation. some ways fromre that. we can find sectors of the economy that are still strong.
in australia's case, the housing market is strong. you see it in house prices and construction cost. economies can still generate inflation, but to get going, you need to see it flowing into wage growth. haidi: we saw speculation over what the neutral rate is and the aussie dollar was up another -- we have been hovering around $.80 this morning. take a look at this chart. the divergence between expectations. fourth quarter, we were at 75. we are having analysts think we will be at 85 at the end of the year. it depends on the fed decision, but also it doesn't need to move, does it? that's right, we have seen more interest rates list on the
back of those changes. the aussie dollar tightening financial conditions overall. we don't much need to add any policy to that as well. haidi: to my other point about greenback and what the fed does, you look at the trade rate and the aussie is still strong. everyone thought the fed would be moving faster. we all expected to see fiscal stimulus in the u.s. it is receding into the distance. everyone is kind of picking up against the u.s. dollar at the moment. the aussie is one of the major outlets for u.s. dollar weakness. rishaad: do you think that the aussie dollar is representing fair value? >> when we look at the own fair value models, we are very close to where it should be given where commodity prices and the like are sitting.
the rba is probably unhappy with around $.80, at has to be difficult to say much, because the fundamentals should be there. rishaad: the bifurcated housing witht, strong overall, but standouts in the older and in sydney, how much does that skew the thinking in the reserve bank? >> the governor is very concerned about financial stability. it has been a big part of his career. prices isth in house something that will be concerning, especially being coast -- especially the increase in household debt. consumers are well aware of the amount of debt they are carrying. their cost of living is going up. it is putting a constraint on consumer spending. we might see a sharp pullback. haidi: that is it.
we don't want to see a collapse in the housing market, but it is that affect when it comes to consumer spending power. kind of anwe are existential crossroads when it comes to the australian economy. we have had 26 years without a recession. we had that prized aaa. is there a sense that that is really preventing policy from being done? >> i think we are seeing fiscal policy moving in the right direction. productivity growth in australia is boosting. i think we are moving in the right direction. are we moving fast enough? that's a separate question, and the answer is probably no. we should have probably started sooner. haidi: always a pleasure, chief economist from cba, commonwealth bank of australia. we get the decision from the rba in a couple hours in the
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haidi: let's get a quick look at the markets in the asian session. pretty tepid handover from wall street. low volumes, not a lot of momentum amidst political infighting and turmoil in washington. but here in asia, a solid start to the first trading day of the month. up, driven by positive earnings from a number of industry bellwethers like sumitomo mitsui. unsurprisingly,
upside largely driven by gains across energy. wti trading above $50 for the first time since may in iron ore. copper is also up. singapore,oking at just nothing much, to be honest with you. not much to talk about. let's see what's going on in hong kong. upside slightly here. up byeng being driven hsbc. market a half percent higher, the hang seng at the market. global equities remaining at near all-time highs. coming up, it is a big bitcoins split it could be. on the chart. we discussed that with the founder of ten x.
♪ announcer: from our studios in new york city, this is "charlie rose." charlie: we begin with politics this evening. president donald trump has replaced his chief of staff reince priebus with general john kelly. reince priebus's exit came one day after it was reported that the new communications director anthony scaramucci had called a new york reporter and unloaded on reince priebus. he suggested the chief of staff would be asked to resign. this cap a chaotic week for the administration, one that included the president publicly undercutting the attorney general and the collapse of the republican apf
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