tv Bloomberg Markets Asia Bloomberg August 7, 2017 9:00pm-10:00pm EDT
9 a.m. in hong kong. 9:00 monday evening in new york city. like the good times maybe finally overly. japan return -- recording a 36 consecutive return to surplus, trade turning positive. haidi: i'm haidi lun in sydney. coming up, now is not the time. sluggish inflation has put new rate hikes on the back burner for the fed. this is "bloomberg markets: asia." ♪
rishaad: we are a leading an important trade day out of china. looking at july numbers, expected to be up about 11% from a year ago. that would be similar to what we did see in june, 11.3% gain. early indicators are positive. let's have a look at what is going on. this is trade, remaining resilient. administration, trade seems more and more likely, are also looking at steel. steel exports rank 2.5% of the total to china. this is what we have currently. we see have exports and imports are down from elevated numbers we had great other than .3 is the big number from exports in dollar terms. imports, 17.2%.
that's what we are looking for when it comes to trade numbers. could be out anytime in the next couple hours. on thethis will build back of the fx reserve numbers we had late yesterday suggesting that there are six straight months of building reserve expectations for the yuan. you have to take this with a grain of salt heading into congress. it is the consolidation of power and policymaking following the congress we are looking ahead to. we will be getting analysis on china trade numbers. in terms of market, a great session on wall street. yet another day of record highs for the dow and s&p. let's go to sophie. 30 minutes ahead of the open in southeast asia. taiwan also coming on board. sophie: after that light trending session on wall street, have crumbled. losses deepening in sydney, soul, and have you -- tokyo.
we are going to be getting the latest inflation for taiwan. asian equities for the most part set for a third day of losses. bonds are looking the next -- m ixed. china july trade figures are up later. japan's latest trade numbers showing the trade balance turned positive in june, but soft in tokyo, joining the retail downturn. softbank on the biggest drag in terms of index, after it's reports say nikkei paints a complex picture for softbank. come a currencies space next bag. this is the dollar, little softer after dubnation -- after dovish comments from bullard. the kiwi, the worst g10 performer losing about a 10th of a percent, losing ground ahead of this week's r.b.i. policy meeting.
this comes off a two-week low of 73.48. offshore yuan holding onto gains. southeast asian currencies are keeping steady. we are seeing the rally continue when it comes to base metals. aluminum up 2.5%. steel continuing to extend after reaching a four-year high. copper is high about 8/10 of a percent. oil is continuing to decline. losing about 2/10 of a percent. base metals are having a moment in the sun, but crude is on the retreat as opec talks in other down the are ongoing. rishaad: $50 a barrel is proving to be a little bit of a resistance line. thank you, sophie kamaruddin. let's get you up to date with first word news headlines. china's reserves size six
straight gain in july. there's a bit more momentum in the economy. stockpileay they climbed almost $24 billion to a $3.08 trillion. -- do later, shipments up 11% in dollar terms in july. haidi: north korea has condemned new u.n. sanctions saying it won't negotiate over its nuclear plans. state tv denounced america for what it calls its hostile strategy and says it. would pay dearly for its crimes . pyongyang plane that claims it needs weapons. rishaad: the u.s. in a sanctions against venezuela, freezing the
assets of of up to 20 people close to president maduro. we are told an announcement could come tuesday, although it could be delayed well watching and a coordinated international response to the new constitutional assembly. venezuelan lawmakers are ignoring the sacking of the amidst thecutor creation of a so-called truth commission. haidi: softbank beat estimates in the june quarter, reflecting a transition to a company that invests and makes deals. $4.3ting profits was billion, a return to the black for the first time in three years. the dealmaking is set to continue, back in merger talks with t-mobile. softbank has been up and down, but shares remain in the positive. >> we are talking to several different companies about sprint's business tieups. i can say the final announcement will come very soon, but i can't
give you a timeframe of the moment. sprint is now in a much healthier financial state, and i have become much more confident that the deal will be successful. haidi: global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. up so far this year. the world's biggest stock rally is losing a little bit of steam. ever grand group leading among chinese developers. china rock -- markets regarding. has this got investors worried? reporter: yes. there is increasing concern about china's tightening measures. this has been escalating since july. announcedrnments tightening measures to curb the purchase on amendment. on the other hand, there has been liquidity tightening concerns in china as well.
property firms usually carry high levels of debt. that also worries people. rishaad: when we look at it, wey and talk about don't talk about it quite as much. what is the state of the property market at the moment? the bloombergave intelligence index tracking the sector. it has reached record highs in july. after recent declines, it is still outperforming the market. double the benchmark of the hang seng index. if you look at the leading leading stocks, it has been up as much as 400% through july. haidi: will some companies do better than others? reporter: yes, when we talked to
people, they said there could be diverging performance within the the ones that are lagging behind the sector would be favored, and the ones that have relatively lower level of debt would be favored. the ones with high debt are the ones that would outperform a lot and would be underselling pressure in the future. it's part of that potentially policy uncertainties on the horizon? , there isyes increasing concern about china announcing more and more measures to curb home purchases like the ones we had recently, that encourage people to rent a house instead of buying a house.
haidi: this is "bloomberg markets: asia." i'm haidi lun in sydney. rishaad: i'm rishaad salamat in hong kong. as we check in with business headlines, alibaba beating up its fledgling travel service by teaming up with marriott. they created a joint venture featuring mary has entire -- marriott's entire lineup. they will link their loyalty program. china is the largest source of tourists in the world. regal has sold the this
tribute or "spotlight". it bought confirmed open road films without naming is some. they say it's part of a larger half $1 billion expansion project underlying china's continued interest in hollywood, despite crackdowns on outbound investment. rishaad: tesla making its debut at the corporate bond market, as elon musk bolsters his bets on more affordable electric cars. it is planning over $1.5 billion in unsecured notes, and he proceeds will help test lateral out that model three, the cheapest -- the model three, the cheapest car yet. haidi: china plans to cut steel production during the winter, and this is driving a rally in metals. i'm next guest says these curbs
should not be taken lightly. he's a in your commodities strategist at anz. simply, the broad commodities rally, how much of it has been supported by a weak dollar? >> we are seeing that have been flow over the past few years. the correlation does the breakdown at times. there's been a bigger driver behind it. we have seen it benefit the wider sector as opposed to expectations of commodity demands. haidi: i want to throw out this quick chart on iron ore in particular. in australia, it is correlated with chinese policy. it has been a roller coaster ride.
concern that the policy momentum coming out of beijing may change after the party congress says it sees a collapse back to $50 a metric ton? said in't see the steel china being sustainable beyond this year. >> a couple dynamics there. for us, we do see that the environmental issues now driving embedded inreally the decision-making of the chinese government. i think that will be an ongoing multi-year type of trend, which i don't think will go away. certainly the issues about capacity closures themselves outside of the environmental usue could certainly weaken those after the party congress. i think those driving forces are environmental issues and will keep the constraints on steel capacity. in china.
rishaad: what does that mean for the outlook in 2018 and 2019 for the iron ore producers? we heard earlier this month, pretty positive on the outlook in china for the coming two years. positive?ight to be 's iron ore going to continue to define the predictions of a price,? -- price collapse? >> we think so. certainly we are not expecting to see strong double-digit growth like in the past, but certainly does expectations are falling. large these long-term, infrastructure projects really driving the growth and demand versus steel at the moment. in the housing sector, we are certainly seeing inventories whittle away, which certainly present a much stronger platform for potential growth in steel
demand for that sector as well. we feel that into 2018, we could still have a broadly positive backdrop in china. with the issues around steel capacity and lower growth in output from some of the major exporters, it does present a market,tight iron ore which should keep prices where they are at the moment. rishaad: when we look at iron ore, we look at other base metals and the various players in them. which of the companies do you think of right sized themselves after these years of pain? board, they have been under investments as weaker assets across the board. they have refocused on quality versus quantity. margins improved across the board. somenk that has benefited
of those bloated commodity markets as well, where they chase for growth -- the chase for growth in terms of volume has subsided here that represents a bit of a change for the industry, compared to the supply at all costs mentality over the past decade. i think that's why we are starting to see the markets tighten up, even with relatively low growth and demand. reporter: over here in kalgoorlie, there are many gold producers meeting. they see things driven largely by what the fed does. they seem pretty optimistic on return, especially with the trend of declining minds supplies. -- mine supplies. movee price is likely to higher on longer-term?
>> we are bullish on longer-term issues, less around some five -- supply constraints, less around physical demand in asia, where we think it will be a bigger component of the portfolio that physical gold investors have in the area. we think that is going to be the ongoing trend longer-term for the gold market. certainly in the shorter term, that cautiousness is warranted. rate hikeshat, fed have not been a significant hindrance to hire gold prices -- higher gold prices in the past. they increased in value during the cycles. -- those cycles. it meets a level of concern, but it is not a significant headwind.
curious have a bit of a question as to the mood. you suggested caution when it comes to the gold miners.i want to throw out this quick chart. this two-year slump in commodities prices finally starting to reverse. the miners have seen share prices at the lowest in more than a decade, and we are starting to see that recovery. are you feeling kind of optimism where you are? is it cautious optimism, or is there a sense that the party is on and a good time is here to stay for a while? i think you are right. we have seen some of those prices really flow through cash throw. cash flow. it's not quite the party, but --panies are turning
1990irst dividends since five yesterday. we are hearing companies talking about dealmaking and growth, but there is a note of caution. they are scarred by mistakes they made in the past. they know that money was destroyed in the past. the party is on, but there is still a hint of caution. rishaad: last question to daniel. this is a look at the oil market. why is wti finding it so hard to get any traction above $50 a barrel? >> it is certainly caught in a rut. i think at the moment, we are at a part where large movements in the price can have a big impact u.s. industry in the shale oil producers. if we see significant push into the 50's, there's no doubt we will see a reaction from the particularly, considering the drilling and level of expiration activity they have been undertaking in
the past six months. they are looking and hoping for much higher prices to continue the pickup we have seen over the past six months. for the moment, we need something outside of that to really tighten the market up and push prices higher. it looks like for the moment we just have to get used to these prices around at $50 a barrel. you,ad: great talking to senior commodities strategist. and of course, david stringer in kalgoorlie. was the hong kong rally built on solid foundations? we will check in on developers that have started to sink. we look at the prospects, this is bloomberg. ♪
this is what it looks like for the hang seng premarket. pretty much flat. the futures just up a fraction. record 10 straight days. what has been supporting the hang seng gained this year? it has been property developers. ever grand is up. sunac as well. a little down transfer country garden, but up to july the 27th, evergrande was up 400%. evergrande up almost 400%, about 189% forsunac and country garden. that is really what is behind the hang seng.
can these companies go too far too fast? it will be about investors. it's him off like you just added a next her zero by accident -- it's almost like you just added an extra zero. wanda story is getting interesting. to developments, one of the gold coast, and one officeme in sydney, and multiuser building.there is speculation they are fielding offers for projects.lopment they are underfunding pressure. bang was told to
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rishaad: victoria harbor and the icc. 9:29 a.m. here in hong kong and singapore. we are counting down to the greater china open. given theflat start premarket here in hong kong. we are looking out or trade data out of china. on top of that, we are looking at the fence and private -- inflation. we've got u.k. factory output as well. industrial production for italy and france this week. i am rishaad salamat coming to you from bloomberg's asia headquarters.
haidi: i'm haidi lun here in sydney. we had one of the largest trading sessions of the year when it comes to wall street overnight. some of that uncertainty passing through to the asian session, which is looking decidedly mixed at the moment. we are looking ahead to trade numbers. that will be. the key macro event nab businessthe sentiment conditions confidence data coming through for the month of july. unchangedng in a 15, compared to june. business confidence at 12%, picking up from the reading of 9% in june. it is still very robust. these are conditions to the highest level since early 2008. signs of new divergence comparing with certain industries.
pretty good on both of those france, business confidence and business sentiment. rishaad: we have the open. let's go straight to sophie kamaruddin. speaking of moving parts, we are waiting on the dirt i -- july trade figures. the consensus forecast is for an exports.in chinese stock falling about a 10th of a percent after rising half a percent monday.hang seng is losing a 10th of a percent after a two-day rise. in the currency space, check out the onshore yuan, up slightly - thet this .7175 -
offshore rate is extending gains. home,g chinese money at that has helped to stabilize the yuan. that plus the broad decline in the dollar in recent months has helped push the yuan higher by around 3.3% in 2017. the line could be set for its first annual gains since 2013. this blue circle marks the surprise devaluation we got back in 2015 for the yuan. a quick check on what's happening in hong kong. the hang seng is on the back here. we have consumer discretionary stocks up about almost 1%. keep a close eye about what is going on in the property space. real estate owing to tenths of a percent -- falling to tenths of a percent.
2/10 of a percent. rishaad: premarket was up slightly, but they could just be taking the brunt of the hits. let's get the first word news -- bankmonwealth tank scrapping bonuses for its chief afterive and others, allegations came about that the company breached financing laws. cba is being sued over reports of suspicions of deposits of work half $1 billion at 8:00 --.'s, which was transferred at atm, which was transferred abroad. haidi: russia began talks about oil in abu dhabi.
they are meeting separately with iraq, the uae, kazakhstan, and saudi arabia. last month, riyadh said it would turn up the heat on producers you are not complying with the deal to cut the global oil glut. rishaad: chinese foreign minister has set a council meeting with the vietnamese counterpart. we are told beijing was irritated by a communique that expressed concerns that trust had been lost over land reclamation on a disputed island. china sees the and him as pushing for that land, which should be included in the statement. prosecutors in korea's wide-ranging corruption inquiry are demanding 12 years in jail for the samsung executive. he's accused of authorizing millions of dollars to the ex-president in return for favors.l
he denies the charges. park is also in detention accused of corruption and abuse of power. she has refused to testify le trial.rial -- at lee's rishaad: samsung is developing a shatter resistant phone, with military grade middle. rightmaking its debut before the new galaxy note eight, the first redesign since the note seven debacle last year. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. haidi: japan's current accounts shrank in june, as exports grew slowly and imports gained ground . kathleen hays here with the numbers. reporter: i was a current account surplus did shrink, however, it has been in surplus
for 36 months in a row. some ups and downs, but definitely staying in the black. important for an export dependent country. -- thisttribute to this to a stronger economy and the quality of products attracting foreign buyers. the current numbers are a broad measure of trade. on the broadest measure, it fell to ¥934.6 billion from 1.6 5 in may. when you adjust the current account surplus for payments on interest payments having to do with currencies that need to be purchased, then you get the trillion, ¥1.52 slightly beating forecasts. surplus stood at 518.5 billion yen in june,
versus a deficit in may. exports are up 9% to more than ¥6 trillion. imports of 15%, up to 5.8 trillion.en -- ¥5.8 overseas investments are paying off nicely. the chinese surplus totaled billion.07 let's look at this chart to put this in perspective. you can see that for the recent time, at the far right-hand side, you can see how the yen, that is the yen dollar, not dollar-yen. a little bit of strength we had made have people concerned about where the latest set of numbers on the trade balance would come in. they did come into the stronger side. looking ahead, bloomberg intelligence saying there are risks.
one of them is a more severe reversal, but also just what happens on the trade front, as donald trump looks to remake trade agreements with countries like japan. this is something else that the japanese have as a risk. nevertheless, everything out looking good. rishaad: moving closer to where fed,re, comments from the jim verbal a is no longer on board with another rate hike this year. the chances have receded. reporter: they have certainly gone down in the markets desk dubnation -- estimation. bullard is an influential voice, and has changed his position. earlier he said he's not keen on a rate hike, but the deal with it. now he says not to do it. inflation is on the downside and he called into question that the u.s. inflation is returning target.
the current level of the policy rate is likely to remain appropriate over the near-term. let's look at the chart. you will see that the lines underscore what jim bullard is saying. the white one is the pce core deflator, down to 1.4%. it has only been above that once in the past five years. jim bullard is concerned it has gotten line -- lower and is staying there. he also, however, is not for a rate hike, but is for unwinding the balance sheet. here's what he said. >> i think we are going to>> get going on this process. it's going to be very slow. i don't think there will be impact on markets, but i think it's the right thing to do, and i would support getting going on this process. reporter: in fact, he made it very clear he thinks september
is one the fed should get started. neel kashkari echoed what jim bullard said. concerned that the fed is not near its target. raising rates now when you are so far from target he things would set the wrong -- send the wrong signal. that.d: thank you for speaking to a gold and nickel miner, that and more on the way. ♪
a quick check of the latest business flash headlines. hna group singapore partner in an overseas property trust is exploring ways to scale back ties to the chinese conglomerate. the management is said to be waiting reducing involvement. wants to be back by the $734 million worth properties from the two partners. rishaad: first quarter profits jumping, driven by rising prices and production as it sold off unprofitable british operations. income, up just about $29 million from a year ago. tata is helped by a from chinese steel industry. haidi: bitcoin extended gains to a record, despite last week's
split in the underlying technology, jumping by as much as 21%. whileupport a solution, backing a different solution mechanism. bitcoin cash has plummeted 62% from last week's record high, bolstering the appeal of its older cousin. happy ifyou would be you were buying copper in nickel -- and nickel since early may. cases arising -- prices are rising since then. let's get back to dealers. a mining conference is taking place in kalgoorlie. us.k you for joining you were there last year at the same conference. tell me something. what is the mood like? is it more upbeat? what is different, if anything, this year?
view, the mood this year is a lot stronger than last year. there's a lot of talk about the , andto increase commitment that's always a good monitor of the mood. rishaad: ramping up to full production at the copper and nickel mine, so you must have confidence. do you get to the point that you start looking at new sources, new mines, perhaps? >> very much so. over the last two years, we have been building the nova product. this corridor we transitioned through to full production. the 2018 financial year will be our first full year of production over what promises to be an initial 10 year mine life. we've been building over the last 12 months.
we've consolidated 12,000 square kilometers of land around nova. hour and edition -- our ambition is to find the next nova. haidi: what is your longer-term outlook when it comes to base metals? there's a lot of speculation now that with copper and nickel having done what it has done over the past few months, positions are getting stretched. is it going to be a volatile ride going forward? what's your outlook? we make nickel, copper, and cobalt. those metals are at the heart of electric vehicle batteries. over the next 10 years, we are going to see a disruptive impact in all of those supply demand dynamics for those three metals as the world transitions from internal combustion engines into electric vehicles. ubs good research by
published recently. they predict an additional 10% to 40% demand on nickel over the next seven or eight years. haidi: there's been a lot of discussion in the industry and monks analysts -- amongst analysts saying it is too heavily weighted towards race metals and you should add more gold to your portfolio. you agree? >> our mantra is that we are a diversified miner, gold and days metals. the nova project will give us a ghting towards mental, but our focus is what we call high quality, long life assets of scale. the nova project is all of that criteria. is a high-quality project, 10 year mine life, and the losers -- and delivers assets. is a prizeow that
asset. you are looking for another nova. suppose a company wanted to buy nova.would they have to buy the whole independence group? >> two ways to answer. the first one is i don't think anyone can cut a big enough check. would wed is, why contemplate that transaction when we are only at the very beginning of understanding the value of nova, and the potential, and finding the next nova? rishaad: then tell us, where are you? you say you continue to find the potential. what have you been finding and what is your current view of the potential of the mine? at nova, we have consolidated
12,000 square kilometers of land. this year, we started the expiration of that with a $25 million commitment into the expiration of that broad area. time will be the judge of whether we make the next critical discovery. the discovery of another nova billioniver another one to 2 billion. haidi: a timing is interesting. with high production out of nova, that should happen around the same time as high output out mine. gold with the additional cash, what are you planning to do it that -- with that? >> our cash frannie mining company is one of the most important criteria.the old adage cash flow is king is correct.
with higher flow out of tropicana and first production from nova, we will have very good cash flow years. we look at allocation of cash across several backers. the first of those is retirement of the debt we put in place to build nova, some $200 million of debt. we have the capacity to repay that quickly. secondly, it's about finding the right allocation between distributing money back to shareholders, and also investing in growth, because any mining company that stops investing in growth starts today. die. haidi: is it fair to say it will be a cautious approach to investing? the best way for us to add value for shareholders is through discovery. in the coming 12 months, we will spend $50 million on expiration
on our projects, with half of it going into expiration around nova and the fraser range. that is the best way we can deliver high growth to shareholders. realists, so it can take five to 10 years. we are also looking at opportunities that we may be able to transact on that deliver near-term growth to the company. that is about recognizing opportunities at an early stage in the discovery process. you mentioned you have the largest landholding. are you optimistic it will be successful, what you found? it's a discovery process. what we can do is consolidate the land positions, target the
best lands, put in place the best people with the right capability to do the expiration, use the right science to unlock the discoveries. ultimately, it is about what mother nature put in the ground. this is a highly prospective area. no was only discovered five years ago. in the commodity doldrums since then, none of the previous landowners have had the capital to invest in the range to unlock the potential discovery. we will start that unlocking process. haidi: thank you so much for your time. best of luck with the rest of diggers and dealers. plenty more to come. this is bloomberg. ♪
its wings into more diverse investments. the chairman is keen to get further into the u.s. ride hailing market. the idea overall? reporter: softbank has been investing in right hailing in a number of markets. it took -- it has invested in didi, and grab in southeast asia, and now it wants to get into the u.s. market. it looks like an anti-uber he said, but yesterday he's interested in getting into the u.s. market whether it is through uber or lyft. he wants to look at both companies and look at both opportunities. he's expressing more broad interest in writing hailing, including possibly goober..
-- ride hailing, including possibly uber. haidi: this is a complex set of numbers. what do you make of them? reporter: that's right. the company beat handily on the operating profit line showing it was able to generate profits,, but the company is becoming more complex. in the past, it was pretty straightforward. a wireless company with some telecom operations.now it looks like an investment holding company, so the losses and profits are coming from different areas. one example is the company lost more than ¥200 billion through a derivatives contract, meaning it in alibaba.a share it is looking more like a holding company at this point, which makes earnings more complex. rishaad: thank you so much, from tokyo for us. we are taking a break.
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