near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. ♪ rishaad: is all about markets with asia-pacific climbing. federal reserve pledges only gradual interest rates hikes threat the course of this year. stocks for every -- two stocks for everyone full or. and the u.s. treasury secretary weighing in. higher wages won't trigger higher prices. in hong kong, i'm rishaad salamat. haidi: i'm haidi lun. also coming up, the state of tech in china. .he big players

we take a look at their global ambition. this is bloomberg markets asia. ♪ rishaad: looking positive out there, just seeing what's going on. it does seem as though chinese equity markets could be in for a positive year. the first trading date for the chinese new year, it's positive. it leads to a positive year to follow. look out for that one. haidi: astrology might be as good as any other indicator, technical or otherwise, to engage sentiment. the dollar off to a good start. we are 30 minutes out from the market start. not much of a lead from wall

street, just finishing in positive territory for the benchmark there. but the selloff suggesting we are -- when it comes to sentiment on higher inflation. singapore, taiwan, and malaysia just coming online. asian stocks set to end the week on a positive note as investors debate the impact of rising bond yields and direction of inflation. stephen mnuchin offering more comments. did a highlight this morning was japan's latest inflation reads. it posted a challenge to kuroda's reflation efforts. from taiwan, we are waiting on the fourth quarter balance. the index is looking to a second

weekly event thanks to the jump we saw on wednesday. in singapore, we are awaiting numbers. recovering from the losses we saw on thursday and we are watching reaction to the weaker profit update in the fourth quarter. stocks are losing some ground. with have an earnings update. drop.darby posted a that's continuing in australia. sidney shares are rising for a third straight day. woodworth is falling despite showing stronger profit. last look at the yen, which is 107 handle.d the it gives pressure on the yen as the currency strength pushes the inflation goal further away. the dollar-yen pressure could remain intact and it could be at

the 105 handle. rishaad: look at the yen. anyway, let's look at special counsel robert mueller as he ups the ante in the russian probe. let's get the first word news with all allen. paul: former trump campaign chairman and a one-time associate have been indicted a second time on new charges that includes failure to report to tax authorities. afort and rick gates were accused for -- millions of dollars. they face new charges of tax evasion and bank fraud. hoursa may held an eight brexit session in an attempt to win unanimous backing for her divorce plan. it foresees keeping some eu roles while dumping partially or totally regulations and other areas. the european commission printed the meeting by saying what is

heard of the plan won't work. ecb communications are back on track with a summary of january's policy meetings. the euro stayed relatively calm after a location. that rocked markets by suggesting the bank might accelerate its withdraw from stimulus. u.k. growth has been revived down in the fourth quarter as business and consumers digested rising inflation. ship transfer can violate sanctions on north korea. it showed a north korea flagged tanker alongside a smaller vessel that appears to carry chinese markets. -- markings. it agreed to impose strong measures on north korea. 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.

u.s. treasury secretary steve mnuchin has told bloomberg that president trump's policies would raise wages without feeling in broader inflation. kathleen hays is here with more. the question is, is this how it works? kathleen: that's the question everybody wants to know. how does it work? what are the reserve concerns? what are the bond markets concerns? they get very tight as growth increases and this will not only boost growth, but boost inflation as well, for better or worse. here is what he told reporters in the last hour. there are a lot of ways to have the economy grow. you can't have wage inflation and not necessarily have wage concerns in general. when bondsa time

selloff in the last couple weeks, stocks to sell off even though they have come back, even though one important measure of wage inflation took a big jump recently. stephen mnuchin is also rejecting any suggestion that anything the white house is doing could have a downside. bondeven with big increases in sales by the treasury, this could be an issue for the treasury. is it very good for the economy? he says absolutely. one of the reasons the president won the election is because the most middle-class americans have very little wage growth. the u.s. is no longer fully dependent on foreign oil so the price maybe won't go up as much. it's very interesting because it seems to be the message we are hearing more and more from trump's team. rishaad: how far are his comments valid at the same time,

how much is it really justifying his bosses arguments for tax cuts? and i have been watching these policies want enough to remember previous debates. they can grow without inflation. it's also interesting that the head of the council of economic advisers, kind of like making president trump chief u.s. economist says the in --istration is let's listen to what he said earlier today. policies arer going to create growth for the economy on the supply side of it that's good for -- supply side. that's good for inflation. we think we can get to the 3% growth without a big pickup in inflation. kathleen: let's go back to the bloomberg for an objective look at what could put the numbers in

perspective. hourlyld see the average earnings, the broadest measure, the blue lines went from 2.6% year-over-year in january, jumping up to 2.9% in this is one of the things -- two point percent. the white line is that deflator. it's back down to 1.7%. say yout least, you can can have wages rise and not have more inflation. it's interesting we are getting the supply side. faster wages, faster job growth and lower unemployment, you are going to get inflation. but they say not necessarily. it depends on how growth occurs. on the same question,

it's interesting the ceo tweeted this a short while ago. it will raise wages without inflation. there going to expand buffalo argument without making it bigger. he said was without inflation concerns, not just without inflation. said nothe also necessarily. there are many caveats there. guest: the other important thing is that inflation expectations can be anchored even as wage inflation goes up, as long as you see a monetary policy response. i don't think he meant that, but that's critical that if the fed sees that grow up -- go up, it has to keep it anchored and yes, you can have wage inflation without growth concerns. if by miracle, which is group without inflation, not

good for profits, or not good for bond yields,. . yields, full stop. rates if real interest breakout to what we have seen, that's something that affects earnings expectations and so on. and real interest rates are a response to what the fed does which increases. haidi: they have been pretty much wage bound the last five years. what do you expect to be the impetus? do you see that happening anytime soon? guest: i think it could happen over the course of 2018. obviously a pickup and wage inflation and a demand for wage protection could lead to an increase in rates. but the fed decides they can't be behind the curve and they raise rates more quickly than

the market expects. to me, that would be the most obvious impetus. i just want to throw out this chart to illustrate what we are talking about. this is the tenure inflation link to yields trapped within that range. they have yet to pose a big threat to stocks. let's talk about this 3%. is this a ceiling? is this just the beginning? does it start falling back? that's a signifier for the markets to get back in terms of demand. guest: that's a good question. we have been having discussions with clients about the level of 10 year treasury yields, where real money investors start to see the value in treasuries. there are people that say 3% is more than you could wish for. the nature of markets is that we

tend to overshoot and we could get to 3% and the people who said they would buy 3% will step back and wait to see what happens. we could see and overshoot in treasury yields beyond 3% before typical buyers come back in. one thing we are watching is japanese investors. they have stepped back from buying u.s. treasuries. u.s. tenure treasury yields are close to 3%. they might start stepping back in. that's likely because it's close to fiscal year and rather than right now. rishaad: should we not be worried about this, particularly looking at the bond markets? ultimately, we are getting back to normality and that's what we want. guest: i think normalization is sensible. rishaad: why do we keep pontificating about it? it's supposed to be like this. guest: lower than it was. rishaad: exactly. guest: particularly in asia bond

markets, if you start the year thinking treasury yields won't get to 3% and suddenly you are at that level, you have to think about risk premium and local bond markets, whether india, indonesia, and so on. people have an and talking about yields being at 3% and now they have to assess the risk premium. rishaad: stick around with us. more from him after this bank. also on the way, china's internet giants close to correction levels. that and more. this is bloomberg. ♪

♪ this is bloomberg markets asia, i'm haidi lun in sydney. rishaad: i'm rishaad salamat in hong kong. the dollar is being snapped. the yen is slightly weakening.

we are back. weakness that is happening is being predicted. people are seeing -- saying we are bearish here it does seem like -- bearish here. it does seem like we could be coming out. how does the dollar figure that? guest: the base around the dollar has to do with cyclical versus structural area -- structural. our focus is turning to the cyclical aspects. growth is likely to pick up. the fed is going to tighten a bit more. that's what the market is underestimating. if we see growth numbers tick up in the u.s., that will be positive for the dollar and that's something reflected in our forecasts. we expect the dollar to reflect the asian currencies over the next three to four months.

it might be driven by the market shifting focus from the twin deficit argument to the cyclical argument. rishaad: that brings me nicely onto why that would happen, surely with interest differentials as the become more pronounced, that leads to a positive dollar story that should have been there in the beginning. our people looking at the weak dollar pronouncements from the trump administration in time with the twin deficit arguments? they are sensitive about it, aren't they? guest: it's amazing for something like that to be included in the final minutes of the discussion. stephen mnuchin's comments caught them off guard and i think it's probably harder for them to be too explicit about a dollar policy and other central banks, maybe the bank of japan, given what's happening to dollar-yen. from the u.s. policymaker point of view, the weak dollar is desirable, but beyond talking

about it, there is not much they can do if it starts to recover. it's something they would tolerate as long as the dollar is strengthening alongside strong data. they would be ok with it. haidi: talk to me more about where the yen goes. the best performer when it comes to last year, there is this speculation about self tightening, that we know kuroda is going to be around for five years, it essentially a continuation. does that mean we are going to seek further yen weakness? we haven't seen that so far this year. guest: we have had a confluence of factors supporting the yen, art of it is the boj expectations, part of it is the risks offset we have seen and only have dollar-yen moving toward a level few people expected, ourselves included. what i think turns the yen is

the bank will maintain yield control, but far more important our portfolio flows from japan. when are the japanese investors going to buy u.s. treasuries again? unhedged purchases of u.s. bonds could begin. i don't think that happens in february. i think we have to wait until the end of march, when they start setting their plans and maybe until april 1 it starts happening. there is a risk it could test 10 in the medium-term, it's a great buying opportunity to -- opportunity. haidi: i want to throw out this quick chart. in the aussie despite record lower rates down under. a lot of the arguments go toward

that. 73had this call saying points by the end of the year and they are talking about rate differentials. we know it tends not to play out very well for currencies like the aussie. do have a call on that? guest: is quite simple. i think it will state wage found and i don't buy the argument that just because it collapsed that the aussie is overvalued. if you look at the equilibrium model that includes interest rate differentials and of the terms, which is considerably higher than it was 10 years ago, the aussie dollar is actually very close to fair value. in fact, it's the closest it has been for many years. it's probably not going to be a sort of volatility -- source of volatility for australian markets. just a quick word to

finish on the you on since we are starting the new year. move a bitould higher towards 640, 650 in the next couple months. the important thing to watch would be the chinese economic data. we had the chinese government release some data over the chinese period, and the year-over-year growth rates declined compared to the previous years. you see a slowdown in data. it could be drifting higher in the next couple of months. haidi: always a pleasure. we are looking ahead, taking a closer look at japan in light of the latest inflation numbers. not bad, but pretty much stuck. this is bloomberg.

♪

♪ counting down to the end of the trading day right here in hong kong. second trading day of the year. this is what it looks like. we are moving to the upside after the steep declines we saw yesterday which took at below the 30,000 level. futures also replicating what's going on. who's going to drive? let's have a look at the free market and take a look at the sectors and what they are doing. this is what we are doing in terms of the imf. consumer staples did stop things from going back off too much. the information technology side of things, is that responsible

for the state decline on the honk saying -- hang seng yesterday. haidi: we are looking for more strength in tech stocks. rishaad: absolutely. correction we saw. this is that come back of the titans, as it were. some of these companies are back to where they were. 45, but iack to about don't know why it's not going back. looking back here, alibaba in white and in yellow there is a baidu. a significant discount being behind the curve. being garnered by a couple of factors. in terms of the surge, the unproven monetization of the new initiative such as ai, whereas alibaba and tencent, those things have been ignored to some

point. at -- going to be looking a little bit later. he's up with us talking about the risks and opportunities in china. ♪

♪ rishaad: 9:29 a.m. as we are on the verge of starting the last trading day of the week, looking as if we are seeing a positive start to the trading day, tokyo moving to the upside. aspc i trading, showing pretty much of flat picture. we have the impact of higher treasury yields in the u.s. playing out. thedoing much today, dollar. toy as she goes as it comes

-- we could have hired wage growth coming out of the economy, not necessarily higher inflation. ecb making its way into the policy statements, as well. in markets mood looking fairly poignant, rising .2%, extending the gains we saw on thursday. we will see some pressure coming through in the chinese index in tech stocks. take a look at the mood in hong kong. we are seeing the hang seng index getting back some of the losses we saw, raising about 1% so far this morning. out what'sck happening with the offshore yuan.

it has a greater tolerance for a relatively stronger yuan, especially if the dollar is under selling pressure. here's what's moving in hong kong so far. we have developers leading the charge like country gardens moving up 2% and we have energy stocks on the rise. i want to take a look at what's happening with when china, keeping an eye on that after casino regulators in massachusetts saying the sexual harassment allegations is a priority. flipping the board to take a look. the company will be seeking a shareholder approval for the disposer of -- following a lockup period. operates --

haidi: thank you for that. major news when it comes to the chinese conglomerate. one of the more exuberant conglomerates in china. the chinese insurance regulators saying that to take control over them for one year, saying the organization formed a channel -- former chairman has been prosecuted. was unables ago, he to fulfill his duties. as well as reports of his arrest, the insurance regulator violated --g we know this is one of the many conglomerates and the acquisitions with jared kushner, as well, the former chairman had been in talks when it comes to

tech. rishaad: absolutely. sinking is talk - -president xi is talking about this. it is threatened to hinder the economy, lending a problem by the shadow bakes -- shadow banks. also hna. there we have it. let's move along and have a look at what's happening out there with the u.s. treasury secretary steven mnuchin. let's get that story and the rest of the first word news with paul allen. paul: u.s. treasuries secretary steven mnuchin says the administration's policies will raise wages without triggering broader inflation. he brushed aside signs that

investors are concerned about rising prices. that withspond to some derision. and we are going to expand the buffalo art museum without making it bigger. inflation stalled in japan last month. , albeitnchanged at .9% higher than analysts expected. it on his is the bank of japan's view that outlook is improving and undermines market expectations that the central bank might be considering halsey monetization. -- policy monetization. the u.s. subsidiary will pay $650 million to reimburse for their investigations into the problem and to resolve claims on behalf of consumers. takata has recalled millions of vehicles. the defective airbags are linked to 20 deaths around the world.

president trump called for teachers to be eight bonuses -- paid bonuses. hire enoughcan't security guards to ensure safety and teachers would undergo rigorous weapons training. he also celebrated the nra as hatred that would help american -- as patriots that would help make america great again. 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: let's get back to our breaking news story. chinese regulators take control of anbung for one year. question i suppose, if an bang is being targeted, others

have to be shaking in their boots. signal, think this is a and something market participants need to pay a lot of attention to, that the deleveraging process that policymakers in china have announced that's going to take place over the next three years, it's a very serious initiative. it's not something -- rishaad: a shot across their bows perhaps. guest: and many other things going on, but it's generally is a -- generally to say, we are in a period of two mystic liquidity in the economy. -- of domestic liquidity in the economy. it's positive for the medium-term growth outlook. rishaad: does it worry you in spite of what's going on? it could be positivity in the chinese markets. guest: i think the policymakers

have the very strong hand and they are giving very clear direction. rishaad: so -- guest: those other things we look for. i don't think there is enough attention being paid to the fact china has two deleveraging. the global economy is doing much better, so it's a good time to be doing these countercyclical type measures. that's what china needs. i'd say that even though the economy has slowed somewhat this year, most of us welcome that. think it probably points to one of the things we have been talking about, which is consolidation when it comes to not just the usual players like developers and some of these conglomerates, but across the board we are seeing policies and reforms being rolled out day by day. what's the upshot?

does it create greater opportunities if you look at the survivors that remain after this? guest: i don't think we need to call them survivors. i would say winners, maybe, a better term. i think you touched upon one of the key themes in the market for china, is consolidation. this is a thing across every sector. with the deleveraging underway, the financial sector is in the spotlight. there is going to be the more commercial market-driven, the existing sector leaders, they are -- in the new economy. these are the entities that will benefit. there does have to be a weeding out of weaker players. haidi: this is not really a contrarian view, but people opposed to sell off said you could be a positive investor, now you need to be more

vigilant. we spoke to a strategist this morning and he said after this would bem period, but the case when it comes to china clamp downtrying to on your risk exposure? guest: boring isn't a good strategy, so i would say look for sector leaders that are gaining market shares, whether it be through consolidation, through consumption of technology upgrading, and also through overseas expansion. there are companies building multinational does this is an growing outside of china and doing quite well. it's about companies that continue to grow even though the domestic economy is slowing down. haidi: stay with us. plenty more to talk about. we are going to be talking about china's tech giant next.

time to reboott discussions of high valuations? this is bloomberg. ♪

♪ back at bloomberg markets, i'm rishaad salamat in hong kong. haidi: i'm haidi lun in sydney. let's carry on the conversation that chinese companies, particularly an internet giant. they were not spared the last couple weeks or so, but it has been a wild ride. does this mean we are looking at potentially another rate hike? what you make of the current valuations when it comes to the big tech names in china? guest: the companies like baidu, alibaba, tencent, the kind of

sold off the last couple weeks, but it quickly rebounded and now it's almost pre-correction levels. if you look at valuations of these companies from price-to-earnings ratio perspective, alibaba and tencent are creating at or above three-year highs. in many ways, this is justified. rishaad: let's bring up this chart, actually. it fits in beautifully with what you are talking about. it shows tencent valuations. walk us through this. you have 43 p/e ratios for tencent. white line is alibaba. this is limited opportunity to search. there you go. guest: as you rightly mentioned, baidu surge growth is mature. ai initiatives investments have come to fruition. it's not trading at levels that are much higher than what it used to trade at.

, they areencent trading at historic highs. in many ways, this is a reflection of their profile. the growth of tencent and alibaba has been accelerating in the past few years beyond the traditional call of online games and businesses. it's been driving revenue growths. the revenues in the fundamentals for these companies. a lot of what we have been seeing is double selloff do not affect these companies because a lot of it is domestically. haidi: how is this shift in strategy? you see them making off-line acquisitions, online to off-line rather than off-line to online. is that positive? guest: the last couple of months, these off-line acquisitions have been accelerating.

we have seen that with commercial properties. i think there are several reasons for internet companies doing these things. one is that it expands interest for the market. they can target off-line customers. a tool for alibaba and tencent encourages mobile payment systems. in the process, they collect valuable off-line consumption data. the integration of online and off-line consumption is a value to customers as it makes their experience better. but at the same time, it's useful for internet companies because they have a more complete picture of what the customer is usually spending online and off-line and with such data, they could potentially have a better target at advertising, then they look at credit scoring. there's much use for that data. haidi: what are the trends when

it comes to online advertising in china? guest: the result from online advertising have been robust. as reported two weeks ago. a lot of that is interestingly driven by a big data. -- by big data. it's more relevant to the user. it keeps them more engaged. they did at and artificial intelligence can be used as advertising and it's more targeted. the return on investment actually improves and we will see this trend growth for the next couple of years. market, doe chinese they need to have global ambitions? guest: i think it's the logical next step over the last couple of years, come edition has been intense. by now, they are all dominant in the respective sectors.

it's a natural progression to move outside of china. we have seen a lot of that action from alibaba. are -- gains i think we will see a lot more going forward through the form of acquisitions and so on. rishaad: stick around with us. where do these companies fit into your strategy? the of his cushion to ask you. the obvious question to ask you. pointhink that's a valid that they do need to expand outside china and they are well-equipped to do so. i think the key point for us is what you touched on at the beginning, they have a lot to live up to in terms of valuation. we are not worried about father metals with the companies, but

this year is not a year we will see an upside in share price as they run far ahead of where current earnings are. they just need 12 months to live re, so not a sector we are focused on. rishaad: what do you see when you talk to fund managers? is the height from last year from lastg -- hype year dissipating? guest: valuations have always been high at every point and a lot of that is because future earnings have not been priced in yet. these companies are innovative companies. they come up with new businesses that drive their earnings up. with tencent, past valuations have been high. they have exceeded expectations in most cases, driving the p/e ratio down. rishaad: that's the thing, they keep on defying gravity. they are getting to a scale

now and with a their share, they have eradicated their competition in china. are new businesses, there are the overseas market. this year is the year with a have to live up to their, rather than bursting up to new heights. rishaad: consolidation date, right? guest: that's likely at least for the next couple of months before we start to see new earnings streams coming from perhaps overseas this is, perhaps some new gains. businesses, or hats some new games. they are under monetizing now. this is a crowded trade. then you look at other traditionally crowded trades. things like health care, for instance. how do you perceive that? >> is important in every sector to be selective, delete this

year. let's -- particularly this year. let's talk about pharmaceuticals. there is a wide variation in companies in this sector. you can apply that logic across every sector. if the domestic economy is slowing, there is a deleveraging process on the way. look for the companies that can keep growing through that. i think we can apply that, whether than a goring -- rather than ignoring whole sectors, stick to the market. rishaad: it kind of makes sense, doesn't it? that's just it. thank you very much indeed. of course, hong kong senior fund manager, as well. you can catch up with all our interviews. you can also watch us live.

all the options on the bloomberg terminal we use and b part of the conversation and send us messages on our program. have a look at it. tv . this is bloomberg. ♪

♪ this is bloomberg markets. and hong kong, i'm rishaad salamat. haidi: i'm haidi lun in sydney. a quick check of the business flash headlines. comparable sales jumping 5% in the fiscal second-quarter compared to just over 1% at coal. there might be some moderation in food sales growth in the second half. woolwroorths jumping 8%. rishaad: this is after the

decision allows a pullout of the key loans facility after they sold their $1.1 billion credit line. a fresh blow to the trade that means ing is the only one of nobles lenders to support the restructuring. haidi: india's plans fell, 49, 26ng keeping of percent, and 24% stake. a fourth option would be to sell its entire interest. they said there government should quit if there is any involvement about government interference post privatization. rishaad: barclays admits it pays female bankers under half of their male colleagues. bank toe first major

disclose such information. a treasury committee described the pay gap as "shocking." haidi: the enterprise elite after hours after the sales revival and projected profits of that topped estimates. revenue jumped 11% and profits will be 29%'s -- point nine cents to three cents a share. there are efforts to reshape the company after the new ceo takes over. rishaad: what do we have to say so far? 26 minutes to trading. fairly steep drop we had in the session there thursday. china looking positive for the second day of the trading year, the year of the dog, moving higher at .25%. let's have a look at what's going on.

if it continues like this, it looks like regional stocks are looking to end a fundamental lackluster week on positive and. investors continue to debate the outlook for what happens with the central banks. we are looking at policy normalization and having a look at higher bond yields and how they play into this. >> never far from investors minds and very interesting coming into play, these comments from stephen mnuchin made to bloomberg. higher wage inflation doesn't necessarily translate to reflation. at gains when it comes to the sydney session, about .7% higher. kiwi stocks also benefiting from those sales numbers for the fourth quarter, which were a nice debate. elsewhere around asia, we are seeing taiwanese stocks at 1% there.

and it's driving some of the energy names in the singapore's section. japan, this is bloomberg. ♪

♪ banaad: the chairman of an willg be removed and prosecuted. facing the boj, the 2% target as far away as ever. steven mnuchin and saying higher wages will not as a surly trigger high -- will not higherrily trigger hyphenatio inflation. i'll boxming up, office record for chinese movies this lunar new year. this is "bloomberg daybreak: asia."

♪ wasi: we knew there pressure and things weren't and theght at an bang former chairman had been detained. aggressively acquisitive conglomerate that holds assets worth $320 billion, including ones like the waldorf astoria hotel in new york. the breaking news we have had over the last hour, a cluster of chinese regulators will take over for one year. it does not look good when it comes to the chairman's fortunes. this is the regulator,

operations may seriously in danger the solvency and the statement going on to say the operations remain stable. that's what we have from the see , a shot across the bow for some of these other companies of spending profitably. let's kick it out to sophie kamaruddin. there we have it. sophie: asian stocks set to end the week on a positive note. we had some jitters in chinese markets following lines around an bang. we are seeing them reverse losses, the shanghai composite up .5%. for the hang seng and h-share index.

energy stocks leading gains in hong kong and korea, where the kospi is one of the best performers today. in tokyo, gains across the board for the nikkei 225 and the topix , following the latest inflation data. quickly at the currency space. the korean won rising for the first time in four days as the dollar is little changed. we had some movements following stephen mnuchin's comments on inflation impacting broader inflation. we've had doubled line capital site not so sure about that. volatility will likely remain as we await jerome powell's address to congress next wednesday. theyen keeping steady below 107 handle. some pressure from the inflation numbers earlier. number are expecting dollar-yen to continue, but the pair

looking for honorable. no more saying a retest of the 105 handle cannot be ruled out. haidi: continuing to watch that. thank you for that. the latest when it comes to the an bang insurance story. china saying they are restructuring and taking control for one year. tom mackenzie has more on this story from beijing. we know there was an unsuccessful attempt for a stake sale as early as the end of january. what do we know? absolutely. there was this attempt to sell part of the stake, then we heard and reported on like stone entering discussions bidding for those assets. as you said, in this dramatic development now, these

regulators have said they will be taking control of an bang insurance, and the list of regulators involved in trying to rewrite this ship -- re-right this ship. they will have officials within the business trying to shore it up. as you said and have been talking about, the chairman detained in june last year, which kicked off this investigation and pressure on an bang, he will be removed from his post and be prosecuted. we wondered what had happened to him because he was detained and we did not get any more information about that. theher important line is government will be injecting capital into the business. we are waiting on more details on how much that will be and what impact that will have. the regulators saying the debt

levels of anbang remain the same and the business will continue and remain in private hands. turnaround for a conglomerate that spent hundreds of billions of dollars over five years buying assets all over the world, including those trophy assets you pointed to, whether or strategicstoria hotels and resorts and other properties in new york, so this is quite a turnaround as they have been trying to sell down those assets. we will have to see how much work the regulators will have to do to shore up this business. rishaad: you just said it, they are not the only ones who have been spending. what about the rest of these chinese conglomerates and the wider crackdown, how does all this fit into that? on part of you touch this wider crackdown on financial risks and concerns

that these conglomerates have been overly aggressive using cheap credit to buy up assets, sometimes at inflated prices. other conglomerates involved group.en hna state-run banks have been told to support hna group and continue to offer credit. chere was a report that citi bank had offered a credit line, so that is potentially significant support. have been under pressure to sell off properties, and we have seen that in sydney, london, and hong kong. to be the mostms successful out of these conglomerates in terms of selling assets and restructuring , but one we will be keeping an eye on. politicallso the element. it comes ahead of the national people's congress that kicks off on march 5.

one person has deep connections sothe communist party come it is interesting in terms of the political machinations as well. resident xi jinping and his government and team are not afraid to take someone on with the political connections, so the politics of this and financial impacts are both significant. haidi: definitely worth noting given the personal and political and affect in the business space. he is married to the grand daughter of the great reformer himself. politics, thee other thing worth touching on is his connections to the u.s. side of politics. well, that is interesting as well because there were conversations that were had between the anbang group and kushner, jared kushner and his company, which of course

did not come too much in the end , but there were conversations toward the end of last year about some potential dealmaking there. there has also been questions about some attempts by the kushner companies to sell one of their b-1 b visas to get investment in new york. there are links between the conglomerates and the kushner companies come so that is something else that developed, but seems to have quieted down. certainly anbang has connections both here and china, and internationally as well. the implications of this move are going to be significant. rishaad: thank you a lot. tom mackenzie in beijing. wages mean ultimately down the road that the cost of living goes up? it is a question many are grappling with this morning.

here is the rest of first word news with paul allen. u.s. treasury secretary steven mnuchin says the administration's policies will raise wages without triggering broader inflation. speaking to bloomberg, he brushed aside signs investors are concerned about rising prices. capital ceo respond to do that. a former trump campaign chairman paul manafort and a one-time associate have been indicted a second time on new charges that include failure to report correctly to tax authorities. manafort and rick gates were accused in october of laundering nguyen's of dollars while acting as unregistered agents of ukraine. they face new charges attack evasion -- of tax evasion and fraud. an attempt to win unanimous

backing for the eu divorce plan, theresa may put fortis strategy that foresees keeping some eu rules, while dumping partially or totally regulations in other areas. the european commission preempted the meeting by saying that it won't work. communications are on track with a summary of january's policy meeting. the euro stayed calm after publication. markets after september's meeting by suggesting the bank could accelerate its withdrawal of stimulus. u.k. growth has been revised down in the fourth quarter as consumers and businesses digest rising inflation. china is investigating claims of a ship-to-ship transfer that could violate sanctions on north korea. japan released pictures of an alleged oil handover that show a north korean flag tanker alongside a smaller vessel that appears to carry chinese markings.

to imposes agreed tough measures against pyongyang and has banned maritime cargo transit. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i am paul allen. this is bloomberg. for that.nk you more on the tensions on the korean peninsula later with the olympics coming to a close on sunday. we will be talking about sports diplomacy and whether there will be long lasting affects when it comes to the issues on the korean peninsula with the former foreign minister later in the show. rishaad: up next, japan's inflation stalling in january. it highlights the challenge for governor kuroda as he embarks on a new five-year term. that is on the way. this is bloomberg. ♪

haidi: this is "bloomberg

markets: asia." rishaad: woolworths having a tough time in sydney this by winning the great food fight against cold. the second quarter jumping to the previous quarter. the supermarkets business generates the bulk of the company's profit. that is after a jump in earnings of 38%. haidi: a veteran australian fund manager is rowling out. -- and out. he won't handover the role of ceo in july, although he will remain part of the company's investment team. the stock soared 84% after a difficult period. sawaad: snapchat's parents

more than $1 billion wiped away after kylie jenner said she is giving up on the platform. shares sank more than 7% after a tweet that said she doesn't open snapchat anymore. citigroup cutting the stock to sell pointing to a rise in negative reviews of the mobile apps recent redesign. haidi: the chickens coming home to roost for the maker of angry birds. it lost half its market value after saying sales and profit would be far below previous expectations this year. thursday's selloff follows a report that it has left investors wondering how bad things are at the company as it failed to replicate the success of angry birds. japanese inflation stalled in january, highlighting that challenge for governor kuroda as he embarks on another five-year term. let's discuss this with our next

guest who joins us now from tokyo. strength tohts some the argument you are hearing that maybe they should scrap the inflation target overall. we are looking at two different growth stories. inflation is where it has been, but eight straight quarters of growth, so what is compelling to you? that inflationary pressure has been subdued. inflationrvice sector only 0.1% in january. underlying inflation is not high. it is contained. the economy is rising at a robust pace. what is happening is companies are in a better condition right now. they have successfully contained

labor costs, and they can have then doinvest more, and economic activities. it is likely to continue over the next 1-2 years at least. they clearly have room and money to invest more, raise wages, when you look at their cash piles, but they are not. byproduct of the deflationary mindset over the past 10-20 years? is true. however, we have seen they have thed 2% more workers over past 2-3 years every year. are suffering from a shortage of labor. they need to hire more people. overall wages they paid to

workers have been rising. about 2.5% or even more. so consumers have more purchasing power now, but since the companies do not have enough pricing power to raise selling prices, we have the situation. had all sortsve of anecdotal evidence of prices going up, restaurants jacking up the costs on their menus. why is that not being reflected in your view in the official stats? >> well, that is a very good question. deliveryave seen service prices and other prices areg up, but we know there about half a million people coming to the labor market every years,er the past 4-5

and these newcomers have kept the inflation from writing -- rising to sharply. we know the elderly population have increased their labor dissipation rate. we have noticed people over 70 have entered into the market, and we expect that generation is likely to contain the inflation pressure. i'm flogging a dead horse to some extent, because that is exactly what inflation seems to be in japan. how did the latest round of wage negotiations go? is -- how did this wage negotiation play out? do you anticipate that to translate into higher inflation in the future? >> well, in the medium run i

think that will provide some inflation pressure. at this time, i think this spring negotiations should be negotiations between workers and companies. abe is demanding 1% increase for the base salary, but i think the companies will be less aggressive than he wants. believe there is a chance that the companies are if we see theore continuous rise in domestic economic activities. if we see more demand from consumers, if consumption picks up further, that activates the mind, andaggressive

more investment leads to higher efficiency and productivity, and that should lead to wage pro bust, so that is a growth scenario, and the boj wants to see that, but we are still looking at that situation and the prospect is not so high at the moment. rishaad: always a pleasure. thank you so much. up, former donald trump campaign chairman paul manafort facing fresh charges. we have the latest from the mueller files. that is on the way. this is bloomberg. ♪

haidi: this is "bloomberg markets: asia." rishaad: i am rishaad salamat in hong kong. , bit more coming through

facing prosecution on alleged fundraising fraud and embezzlement coming from the number one branch of shanghai prosecution service. this is the man in charge of anbang insurance. saying theythe circ will take over the company for a year. removed as chairman and facing prosecution for the --sons the prosecution prosecutors gave, anyway. more on that story. former trump campaign manager paul manafort and associate indicted on new bankes, including tax and fraud. let's bring in jodi schneider. it seems that the moment the screws are tightening. is that the real significance? this is a fresh legal attack against mr. manafort and

his associate, deputy, rick gates. these are tax and bank fraud charges added to the october indictment. what is interesting is this actually removes or supersedes some of the charges in the earlier indictment, which had to do with money laundering and failing to register under the foreign agents registration act, thinking this will make it easier for prosecutors to prove their case against them if there are not any money laundering charges, which are harder to prove. haidi: in terms of the specific charges, what are we looking at? >> bank and tax fraud charges. the allegations are that mr. failed tossentially inform the department of justice and the treasury department, the tax authorities, about funds

that he had received from overseas and failed to essentially inform them of, $30 million worth of funds, so that's where the tax fraud charges come in, and also that mr. gates had been involved and that is well to the extent of about $3 million. by changing the allegations in the indictment, they think it will be easier to get them come at to make the case against them in court. one would have to also think that if they are hoping to get mr. gates, for example, in a clean agreement, it would be easier to do that with this fresh indictment. it is a new legal attack. haidi: thank you for that. coming up, we will be taking a look at china. president xi jinping deciding the makeup of the next government. we will head live to beijing next. this is bloomberg. ♪ ♪

♪ show me the olympic winter games ♪ ♪ like i've never seen before. ♪ ♪ xfinity x1, yeah, i always know the scor♪. ♪ triple corks in 4k... lookin' so sick. ♪ ♪ stream live on every screen, every win, every trick. ♪ ♪ 2000 hours of coverage, get your mind blown. ♪ 50 olympic channels, yup, you're in the zone. ♪ ♪ and if there's something that you want to see, ♪

pick up that voice remote and just say "show me..." ♪ experience nbcuniversal's coverage of the olympic winter games like never before with xfinity. proud partner of team usa. >> it is 10:29 in hong kong, 1:29 in sydney. inflation stalled in japan last month, the key price gauge unchanged, a 10th higher than analysts were expecting. the absence of acceleration tarnishes the boj view that the outlook is improving and undermines market expectations the central bank may be considering policy normalization. with thel changes president stepping down. he will be succeeded by the first woman to lead one of russia's largest commodities

companies. the u.s. treasury recently named him as one of the oligarchs close to president putin. appealis broadening its to incorporating some long seen as the enemy and highlight hotels as part of the way it matches people with accommodation, aiming to attract business from online travel agencies by charging much lower fees. airbnb has raised $3 billion since 2008 and is under pressure to go public. said to be bolstering its wearables business with an upgrade to its air pods, saying it intends to introduce frequent improvements. air pods version could come later this year and feature a more powerful wireless chip. we are told a subsequent model for next year aims to be water resistant. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i am paul allen.

this is bloomberg. thank you for that. lots of corporate news. the broader markets holding up well given we did not have a strong hand over from wall street. we have this pattern of fading into the close for the u.s. as investors get taken up by this yield rises and inflation coming into play for equities. let's look at the session for asia. sophie: investors aren't making up their minds regarding the impact of higher yields. asian stocks set to end the week on a positive note. china, investors overcoming jitters over regulators taking over anbang for one year. the shanghai composite adding .6%, the h-share cage rising 2%.

we do have the earnings parade continue elsewhere. in sydney, a third straight session. inflation data from japan, gains across the board for the nikkei 225. we look at what is moving the regional index, tech stocks leading the charge. we had several lines coming out around samsung, including planned investment to expand a chip plan and sales data showing samsung coming out on top come although global sales did fall for the first time ever. energy and mining on the rise. commodities, oil on the rise, set for its second weekly advance after a supplies -- surprise drop in u.s. supplies. set is on the back foot, for a third weekly loss. the latest fed minutes supported

the dollar and treasury yields this week. check it out. benchmark yields, the line in eighth weekly an rise come at the best run since 1994, and emco is saying it is good time to add exposure to u.s. debt as a flood of supply hits the market. rishaad: let's take a look at president xi jinping, a communist party in the next few days to collect china's new government. china economy editor is with us now. what are we looking at? >> basically naming the top jobs that it will be dealing with china's ongoing deleveraging committee risking, and monetary policy. these are some pretty big jobs for china, but also the global economy. we won't necessarily know who they are until the national people's congress, which begins in early march.

that should be wrapped up by then, but we know behind the scenes that all of this is being hammered out right now. more political power, they say, than any leader , so how much of this will be a government in his own image? >> as you have seen today with the taking over of anbang by the insurance regulator, even though the machinery of china's fluxcial regulation is in and we don't know what the future of the pboc is, the government is still very much in introl, the party is control. so we can expect that whoever ,ets installed that the pboc the regulators, it will be someone close to president xi jinping. that is pretty much a given. analysts have started to talk

about the idea that the person could be the person who is economic the top policy adviser. he could have a clean sweep in the sense he becomes pboc governor and leads the economic and financial stability effort on the other side as well. that would put him in a pretty key role. haidi: clearly the one to watch. we are also looking at another person as well? >> that is something that has been rumbling in the background, that he could have a future role in government. the xiave seen, lieutenants look like they will be kept close to the center of power. haidi: do we expect much out of this huddle, this political gathering come on the policy side? about this is pretty much

names, about who will be getting those posts. policy will come a little bit later in march after the national people's congress. we should see their some more signs about china's economic policy for the rest of 2018. haidi: you mentioned this extraordinary developments with anbang insurance playing out. tom mackenzie took us through some of the myriad connections when it comes to the political world that are taking place in this company. thatdoes that say to you we are seeing something like this happened when the former chairman has the strong connections going so far back and so personal? party isn see the taking this effort to the risk the economy very seriously --

de-risk of the economy very seriously indeed. this is a very muscular development. normally anbang is a private company and there are shareholders. being involved in the private sector but being involved in trying to de-risk the economy, and it has been seen that anbang has flown to close to the sun and it is now stepping in. haidi: a word of caution for other conglomerates in similar situations. thank you for that. china economy editor in hong kong. coming up, the diplomatic power plays perhaps just beginning in pyeongchang. we will look at the new sporting diplomacy on the korean peninsula next. this is bloomberg. ♪

rishaad: we are back. i am rishaad salamat in hong kong. to sendorth korea plans a high ranking to the closing ceremony of the pyeongchang winter olympics in a step towards better relations with the south. let's talk about this with a professor emeritus at seoul national university and a former south korean foreign minister. great to have you. that games are coming to a close. on thee your thoughts significance of the north participation and whether this sports diplomacy that has been popular for the last 10 days, does it have longer-lasting implications? >> yes, i think it was an important event in the sense that there was high to mention -- high tension on the korean peninsula. ofe estimated the potential

war on the korean peninsula as high as 50%, for example, so we monthsave at least three of reprieve, which is very precious. and i think that was the positive impact of the olympic games. i think there will be a continuation of this calming down of the convention -- down of the tensions on the korean and then slow, even after the end of the olympic games. significantf the overtures was the invitation for the south korean president to hold meetings in the north and have a visit. first of all, do you think this is likely to happen? what with the negotiations be and what does it tell us about potential sanctions and talks over de-nuclearization? >> if the summit meeting can

happen, the most important issue will be de-nuclearization of the southa, and from korean perspective come up the most important thing is how to persuade the north korean leader to change his mind on his strategy of developing nuclear and missile technology. , how toion to that settle peace on the korean peninsula is very important considering the high tension before the olympics, so we think that tension in the dmz area will be another important issue, and probably another issue will be read union of separated families -- reunion of separated families. that has been a longtime agenda for korean people. they have been separated for decades without beating each other.

if our leader can achieve those goals, that would turn out to be a successful summit meeting. stake on theat personal, human front. think realistically trying to get around this point of de-nuclearization is a realistic goal? from what we have seen so far, pyongyang is not willing to talk about that, and the united states has been unwilling to go to talks without that is a precondition. >> yes, that is an important question, because actually we don't have other alternative than trying to persuade north strategy,hange its because if north korea becomes a nuclear state, this region, i mean northeast asia, will become a more dangerous region because

there will be some possibility of nuclear proliferation in this region. the beaters of south korea and japan may think twice about nuclear policy. for example, they may seriously consider nuclear option, and this will be very dangerous , alreadyhis is highly has been high tension in this region. so we need to continue our diplomatic efforts and persuade the north korean leader to give up the nuclear option. so there is not much alternative than continuing our diplomatic efforts. izinglear themselves would be a safeway

for north koreans, i mean giving up your options would be a more safe strategy from their own perspective, so had to do that is the important issue. rishaad: as a former foreign minister there for south korea, you just alluded to two some of the things the north koreans are thinking. what was it like to do with them as a foreign minister, and how do you think that has changed, or does a leopard not change its spots? change theirow to nuclear policy or something like that in terms of negotiation? no, i'm talking about whether they are in any way looking towards peace or détente with the south here. has anything changed in pyongyang in your view? >> actually after almost

finishing their nuclear program, i think they have begun to take a peace initiative, and they seem to be trying to give the impression that the outside world, the international society, can coexist with nuclear north korea peacefully. i may call it a kind of enforced peace, but anyway come and they seem to have decided to pursue that way, so that may be the reason why they decided to come in ae olympic games and few months this kind of propaganda work will be expanded to the outside world as well, so we had better be ready to the

changes in korean policy. been heree have before. is there anything different is my point? >> anything different from before? in terms of previous strategy? rishaad: exactly. previous dialogue and rapprochement. think there has been no fundamental change in their strategy of pursuing nuclear option. there may be some technical change. for example, taking peace initiative, but i think there was no fundamental change in their strategy have aiming to be a nuclear state. that is my judgment. that is one thing that would indeed lead to more leverage over the dialogue with

washington, d.c. and with soul -- so, korea as well. how do you think beijing is looking at this? >> i think their attitude has changed since the beginning of the trump administration in the united states. they are much more cooperative than before and have been cooperating in terms of applying heavier sanctions against north korea, and that is kind of a positive change. i think they will continue to do so because president trump seems ofbe very fond in terms applying strong sanctions against north korea until they come to the table to discuss de-nuclearization, so i suspect china will continue to cooperate with us, the united states, south korea, and the west.

haidi: they don't have much of a choice, do they? be significantly concerned about the possibility of a humanitarian crisis if this takes a turn for the worst. >> i think so. they are concerned much about ,he possibility of, for example massive outflow of north korean refugees if something happens inside north korea. of theirs one concern , and that is the reason why they have been emphasizing the importance of stability on the korean peninsula, etc., yes, they are concerned about the humanitarian aspect of this issue. haidi: professor, thank you so much for joining us.

a former south korean foreign days of, the closing the winter olympics and looking at the implications for diplomacy between south and north after that. there is one feature we would like to bring to your attention. it is our interactive tv function at tv . us live and died into any of the securities or functions we talk about on bloomberg. you can join in the conversation by sending us in's messages -- us instant messages during the show. this is for bloomberg subscribers only. check it out at tv . rishaad: on the way, a smashing success, lunar new year setting china.ords in so are the good times back? we are looking at that and more. this is bloomberg. ♪

i am rishaad salamat in hong kong. haidi: i am haidi lun in sydney. have group is now said to one bank to support its planned restructuring after society general holdout. sold its stake in nobles $1.1 billion revolving credit line, dealing a fresh blow to hopes of g is theg and means in

only core lender to support the restructuring. rishaad: reports saying india's plan sale of its state own flag carrier include keeping a stake. a fourth option would be to sell its entire interest. it has said that government should quit their india as any continued involvement could deter investors and lead to concerns about government interference post-privatization. haidi: hewlett packard leaping after hours after reporting a surprise sales revival. revenue jumped 11% in the first to 33r, and profit rising persons to share. there are signs the effort to reshape the company is beginning to work as the new ceo takes over. china has set another box office record for cinema with local films sending lunar new year's tickets to $850

million. let's get the details on that with our gadfly columnist. two films grossed more money than black panthers u.s. take. this number is quite surprising considering china's box office numbers were pretty much stagnant in 2016 and had a mediocre 2017. these are very mouthwatering numbers. they are having a lot of speculation. china'sple are saying economy has improved so much that people feel richer. or maybe people want to go to the movie theaters because there is heating there. it is also possible the movies this year are better than last year's movies. threestance, the best-selling movies come at two -- one has an 8.2 rating

and the other has a 7.1 rating, whereas last year the movies were quite terrible. that is the speculation possibly. haidi: does that mean we will -- theye theater stocks kind of missed out on the hong kong rally last year. are we looking at a catch-up trade? >> it depends on whether chinese can make good movies or whether hollywood can make good movies. point, monster hunt two , which is a sequel film come the fourth highest grossing movie in china. it opened very well last week. days, the review was terrible, so basically chinese people stopped going to that movie to see other movies instead. it really has to depend on the quality. the catch-up trade may not

happen at all if the chinese cannot take good movies. haidi: thank you so much for that. i might just spend friday night at the movies. our gadfly columnist there. david updating you on the big stories of the day so far. >> yep. two guests. one talking about markets. people are saying by your debt, and he is saying increase your petitions -- positions in gold. later tonight, the sec will publish its ruling on -- fcc will publish its ruling on net neutrality. we will talk about that later on. this is bloomberg. ♪

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haidi: tgif. it is almost 11:00. david: it is friday. we are entering the last hour of the morning session here in the city. welcome to bloomberg markets sia. ♪ david: upheaval. leaders take control of china's embattled chairman is being removed and prosecuted. has linda: inflation stalls in

japan. as far away as ever. david: stephen mnuchin says higher wages won't necessarily trigger higher inflation but one prominent critic begs to differ. > the end of an era. obama administration rules. rolling back net neutrality. david: the last hour of trade here in hong kong. it wasn't really a very eventful week. we're a little higher on the m.c.i. benchmark. today is not all that different. looking at a little bit of strength coming through in the u.s. dollar down to the fact that we are getting some weakness in the yen. we're mostly catching a bit here. quick look at the bloomberg. a lot of the index basically

flat a the moment which speaks to how uneventful so far friday has been. we'll take it. >> we're also keeping an eye on treasuries. mnuchin said policies will help rate increases. don't bet on inflation. u.s. 10-year at 2.93 inching ever closer to 3%. 10-year, 2.96. we're keeping an eye on the markets. more to come. ow the news with paul allen. higher pay n said on't cause higher inflation.

inflation stalled in japan last month. .9%. higher than what analysts were expecting. the absence of any acceleration in inflation tarnishes the bank of japan's view that the outlook is improving and undermines expectations that the central bank may be considering change in policy. indicted a second time on new charges that include failure to report correctly to tax authorities. manafort were accused of laundering millions of dollars. he faces new charges of tax vasion and bank fraud. takata's u.s. subsidiary will pay $650 million to reimburse

for the cause oover their investigations into the lethal problem. takata has recalled millions of vehicles. its air bags are linked to more than 20 deaths around the world. david: thank you. breaking news out of australia right now. australian deputy prime minister said he will be standing down as the national party leader. that's what we know so far. we're not going to speculate more on that of course. that's just what we know. coming on the back of all the issues that have been raised in recent months. there you go. bottom of your screen. the australian deputy prime minister barnaby joyce will be standing down as the national party leader.

>> complicating the situation here, china is to take control of conglomerate insurance. talk about taking control. what do we know? >> this is a significant development, of course, in china's trackdown of financial risk and pressure it is putting on the conglomerates. what we know is that the regulators know they are going to be taking control as of today for one year. as you said, the chairman is going to be pushed out of his post. he is going to be prosecuted for economic crimes is what they are saying. they also said that the reason they are having to step in is because illegal operations at the company were testing and putting pressure on the solvency of the company. that's why they have to step in. of course the chairman was

detained back in june of last year. we have been waiting for more information on that. it has been one of the most aggressive, swaggering conglomerates in the last five years or so. it has about $320 billion worth of assets, not just the flagship in new york.dorf and also ranging from the nether lands to korea. this is significant. a lot of those acquisitions were fueled by cheap credit. they were selling insurance projects that he would yield high interest rates and funnel a lot of cash into their operations and help them leverage and buy some of these assets. they paid sky high evaluations and prices for some of their assets as well. it is going to be a long process of trying to unwind some of

these problematic purchases for the leg lators. the pboc and the foreign exchange commission and securities and regulators. david: how does this fit into this wider crackdown? -- some of our viewers are learning about this. why is china doing this? >> so yes, this is part of a broader crackdown on financial risks. they have been concerned about the assets, the leverage that has been used. capital outflows are less of a concern now because of the strength of the yuan. there were concerns about the outflows. that was part of the equation. ou have ambang under the spotlight and h.n.a., we have been reporting on that company.

they have been under pressure to sell down on their assets. they are facing linalts and creditors they need -- liabilities and creditors they need to pay off. potentially a bit of respite for them though they are trying to sell down some of of their property portfolio. one has sold off and is slightly more successful. restructuring its business. it is a problem. its ownership is murky. the "new york times" has done reporting of this on the past. owned by 100 different companies with links to the chairman. it should be pointed out he has deep connections to the communist party. politics is at play here as well as the financial implications. this is a company that employees 30,000 people. now regulators say they are going to continue as normal the business and its external liabilities will not be affected. david: we'll see what happens from here.

lots more coming up here on the program. in the next few minutes, the breaking news story out of australia with the deputy prime minister barnaby joyce stepping down. net neutrality is set to end in the united states. the ruling coming in friday. what message does that send to the rest of the world? >> we'll have investment strategy from pu yonghao. this is bloomberg. ♪

david: let's get back to that breaking news we just heard out of australia. the resignation of national leader barnaby joyce. paul, it has been two weeks, sustained pressure, i guess for joyce to reach this point. >> yeah, that's right, david. there is a few important

distinctions to make here. barnaby joyce has resigned as leader of the nationals party, this is the junior coalition partner in the government. he resigns as deputy prime minister. e said he will remain as the m.p. from new england. the national also hold a vote and elect a new leader and by extension a new deputy prime minister. two weeks since the news broke that he had had an extramarital affair with his former media advisor and he has a child on the way as well. barnaby joyce indicated that he intended to go nowhere and that he would tough that out, however news broke this morning about a sexual harassment claim by a woman in australia. it was at that point that barnaby joyce's nationals colleagues started to say all bets are off even though he is

calling the claim spurious and defamatory and that it should have been referred to the police if it has any substance. as a it is important circuit breaker, not just tr the parliament and for his ex-wife. haslinda: it will ease the pressure on turnbull. what does it mean for the aussie dollar? any implications there? >> if we take a look at the aussie dollar, there hasn't been a great deal of reaction here. he is stepping down as leader but he is remaining in parliament. so the government's majority slander as it is remains intact. we saw more interesting moves on the dollar when questions were raised about his dual itizenship status.

the government's majority remains intact despite all of this drama. also importantly, as barnaby joyce said it is a circuit breaker. this has been a huge distraction. it sucked up all the oxygen on the news story the government has been trying to tell on the economy. while there is no danger of the government falling or standing because of all of the scandals surrounding barnaby joyce, it will buy more breathing room when it comes to getting the narrate i out there. barnaby joyce gone as deputy prime minister. we'll have to wait and see who his replacement is. david: back to markets here. just have a look at where we are. the market started out very late this week.

we are on second day, into the weekend. have a look at the bloomberg chart. is the rally in the shanghai composite as healthy and as widely shared? let's put it that way. as it seems when you look at the price of the index, which is at the top. you look at the advance decline line. that is the bottom part. long story short. the rally was not shared widely across the index. you only have a few large cap stocks pushing that thing higher. you look back 12 months, four out of the five constituents there indicate a downward sloping. where does this take us? pu yonghao is with us here in our hong kong studios. very nice to see you. we're talking about this rally across the shanghai composite

perhaps doesn't look as solid. is that what you feel as well? >> well, i think as you said, it ooked like some sector or some blue chips has been doing a good progress. if you look at the macro environment, we detect some sign a slowdown. mr. jinping was focusing on the financial risk which obviously is going to have a lot of impact on the asia market because you know that the sum -- asia listed a company, they tried to borrow he money, use to their -- as a -- and those companies have been suspended. i think this kind of phenomenon is not very, very limited in the way -- it is quite common in

asia markets. this deaveraging process is going to put a cap on the -- stocks, let's say. >> there is also the factor of when you look at where we are cyclically. on the chinese mainland. we are expecting a cooling there. then you add to this, of course a tightening and deleveraging that you mentioned. do we see a meaningful impact on growth this year? >> i think you remember in the 19th party conference the growth rates are no longer a hard rget, but it has become more focused. it says slow down. cascading into the economy. in a way, it is no longer a hard target. you need to achieve a certain growth rate. i do detect the slowdown.

i think partly because the real estate, the construction sector is -- the major driver. the new policy tries to cooling down the speculation or investment in the real estate sector which obviously is going to reduce the growth momentum. the other sector is also going to see some cooling down like the banking sectors. investment. also looks like that -- particularly the inventory restocking story is going to end soon. ok. export is still the main point. global demand and recovery. but then the domestic driver, the cooling down particularly on the investment front, consumption is relatively stable. we see a slowdown in first half of this year. haslinda: with the slowdown, you

say stick with quality stocks. are you referring to technology stocks, for instance? i want to bring up this chart. it shows the rise of technology cent, and the likes of 10 baidu. do you like these stocks still? >> i like these stocks. hey have a long-term growth. i think other than that, i also see healthcare sectors and the consumption sector which is since going to have a relatively sustainable growth ahead o of them. you saw the sector which i like. but of course we also have to look at the evaluation of are they merely overpriced or less price? i think the technology is stock has been growing well because

there is a strong momentum. that's why we like them in the long-term. haslinda: that's right. 10 cent, alibaba close to -- when it comes to evaluations. pu yonghao, thank you. if you're a bloomberg subscriber, you can catch all of our interviews using our interactive function, that is tv go. you can also join the conversation by sending instant messages to our team, our guests. check it out at tv go. this is bloomberg. ♪

david: this is bloomberg markets asia. david: let's get a quick check to have latest headlines.

slumped in sydney despite winning the sales. it says there may be some moderation in food sales growth in the second half. will supermarket business generate the bulk of their profits. first quarter earnings jump 38%. david: hewlett packard reported a sales revival. revenue up 11%. in the first quarter. profit at 29 cents to 33 cents per sure. analysts had been expecting 26 cents. there are signs the efforts to reshape the company are beginning to work. haslinda: reports from dell hawaii include keeping a 24% stare stake. they said a fourth option would

be to sell the entire interest. last month they said the government should quit air india completely as any continuing state involvement could lead to a chance of a government interference post privatization. david: let's have a look at chinese markets. -- itmay be taking a step doesn't mean if you stop updating it is not working. let's have a look at our bloomberg chart. this is straight out of the story here. essentially what you're looking at here no longer happening. let's have a look at the implications. why is china looking at equity derivatives now? it is already complicated to begin with. >> this is just another step to

discourage it. remember in 2015 there were a lot of trading curves on futures. another type of derivative. that brought volume down and china was criticized heavily for that. we're nowhere near that kind of scope when it comes to discouraging that kind of trade. we saw lower volumes this week. again, it is still kind of a holiday period. we don't know whethers this is having that kind of impact at all. it is a derivative. the only equity linked product in onshore china markets. it is the only way that you can kind of measure this kind of risk. you know, if you look at what happened in the u.s. with the vix and all of the products tied to the vix, they ale all went to zero. there is a lot of danger that so

much money was betting on these products. you know, china does not want that at all. it can exs a ber bait moves. it can cause -- when so many products are linked to it you have a derivative of a derivative in the u.s. some crazy inverse very complicated product. it is just another step to discourage that kind of behavior. haslinda: so, having said that, what does it mean for the china stock market? >> first of all, it means for now we can't price these products. if you're trading or if you own anything linked to this china -- to china's version of the vix and you can't really see where it -- where the price is. as i said, the volume implications of this and how it will maybe restrict trading, we

quite yet.y see that this is a where the market just reopened yesterday after a one-week break. we have not had a price -- for the index yesterday or today. officials are telling us it is because they want to update the products and they want to make it, improve it. make some improvements on it. for now, we don't know whether we're going to get a price any time soon. people are telling us that it is, you know, it is another way to restrict speculative trading. haslinda: all right. thank you so much. gains across asia at this point in time. looking at china, though, it is playing catch up right now. we have the shanghai comp up by about .2%. 3,273. pretty much in line with the

rest of the region. of course china missed out in a rally that saw the hang seng rise 3% led by financial and energy stocks. china playing catch up. this is bloomberg. ♪ retail.

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david: it is almost 11:30 here in hong kong. just the last half-hour of trade. losing a bit of magic here. the han tseng index. we were up much, much more earlier. we are approaching session lows, losing a bit of momentum as well as we head into that lunch break. haslinda: and the same story pretty much in the middle of the trading day. up by more than 1%. the e.t.f.'s have gone above 50. the 50-day moving average. we have gainers.

david: you're watching bloomberg markets asia. let's get you a quick check of your first word headlines with paul allen. paul? >> thanks. barnaby joyce has quit as the leader of australia's national party and as deputy prime minister in malcolm turnbull's government. he leaves it with news of an extramarital affair. last week the prime minister accused him of a shocking error of judgment after news that joyce is expecting a baby with his new partner. joyce says he will remain in parliament and support the government. announced high level changes th oleg stepping down as president. having long said he would leave en targets he set had been met. he will be succeeded by the first woman to lead.

u.k. prime minister theresa may held an eight-hour brexit ministers. top it foresees keeping some eu roles while dumping partially or totally regulations and other areas. the european commission preempted the meeting by saying what is heard of the plan won't work. ecb communications are back on track with a summary of january's policy meetings. the euro stayed relatively calm after a publication in contrast of december's meeting. that rocked markets by suggesting the bank might accelerate its withdraw from stimulus. separately, u.k. growth has been revived down in the fourth quarter as business and consumers digested rising inflation. apple is said to be bolstering its wearables business.

they intend to introduce frequent improvements as it does with the iphone, the ipad and the watch. it could come out later this year and feature a more powerful wireless chip. the model for next year aims to be water resistant. global news 24 hours a day powered by more than 2700 journalists and analysts. i'm paul aulin. this is bloomberg. david: our top story we have been tracking since news broke mid-morning friday, taking control of debt conglomerate, removing the chairman and charging him with embezzlement. how does this add to what we already knew about their troubles? how does this add to the incremental knowledge that we know about the situation? >> it adds a few key facts. first of all we have known since

june that wu has been detained, under investigation. now we know he is going to be charged with mainly fundraising fraud and embezzlement. exactly what that pertains to, we don't know yet. we also know there is going to be a full scale takeover of ambang. there was already a working group led by the insurance regulator that was in there since jaund pretty much making all of the decisions. it brings the ball forward a little bit and we can see, you know, what is not so clear yet is exactly what these charges against wu stem from, what specifically has he done and hopefully we'll find out more in the next weeks. david: we have the pboc, essentially all of your financial regulators rolled into one here. i guess it speaks volumes on

financial stability. >> it does. you have to look at the timing before the m.p.c. as well. what has happened over the past year or seven or eight months since wu is detained. it has been a wholesale effort to address risk. the biggest risk stemming from companies like ambang. you see others that have gotten taken down a bit. the s made very clear that biggest priority is to rebuild the economy from -- it has dampened down the engine of the economy. this reliance on debt that threatens at some point. haslinda: what now? what next for ambang? how much do we know? >> well, i think what the international markets are going to be -- very interesting is

whether or not they start selling off some of these assets that they have accumulates. stuff like the waldorf hotel in new york which they bought for almost $10 billion. blackstone has had talks about buying some of their property assets. also own insurance assets in the netherlands and south korea. the question on everybody's mind s probably going to be at what pace and when do they start to dismantle this? what gets put up for sale and what is the pricing going to look like? then you have to wait to find out exactly what happens to wu. he has had dealings well public lissized by the kushner family which is linked to the trump administration. there is definitely a few things that are going to play out other the next couple of months. for the financial audience,

probably the most important ones are what assets have come up for sale. haslinda: managing editor for asia finance. thank you so much for that. now the fight over the future of the internet has entered a new phase with the federal communications publishing its decision on net neutrality. >> yeah, there is a lot of talk about this at the moment. basically what we're talking about is the principle that i.s.p.'s or service providers must feed data and users equally. they can't base the speed of access everyone is getting whether it is payable to them or not i guess. haslinda: outdated principles and market growth. supporters say that will be detrimental, especially for consumers. let's bring in our guest right now. lim may-ann. managing director at trpc.

are there clear losers and winners right now? >> i think that honestly, repeeling net neutrality rejects the idea that the internet should be delivered as a public utility. allowing the free market to decide how the internet should be priced. cable companies, if they want to keep their commerce. the free market system, an equal system which is able to survive economically by itself. but if you ask about winners and losers, there are also obviously strong and valid reasons behind the support of net neutrality to support customer interest and ensure access. this is what they are -- for

ther purposes. abolishing may mean -- the free market and put the internet economy at risk. haslinda: the u.s. tends to set the standards for the rest of the world. do you see any ripple effects? >> at this point in time, we're seeing a muted response to the net neutrality concept in asia. i think so far that discussion has only blossomed in india. they have been upholding the principles of net neutrality. i'm not so sure if it is going to be -- where all of us -- in the u.s. it signals news that -- development, especially when it comes to the role of the regulators. -- e seeing that the f.t.c.

-- a tricky shift. regulators were in the role of risk managers. in today's economy, they are hard pressed to balance this need against need to become economic enablers for the economy. the ripplefect might be more far reaching than we assumed. it may go beyond. david: the anti-net neutrality argument is if you remove the ability of i.s.p.'s to control the speed or access or price, the risk is innovation. if i can't reasonably extrapolate how much cash flow i get in the future, why will it put in the -- right now? you're on both sides of the fence. how do you think an argument will be countered moving forward now? >> right now we're all working on hypotheticals.

do you want to have the -- be the group that protects your interests or saying ok, that is a free market society. telecos and the i.s.p.'s can keep the free market alive. at this point in time, both of them are hypotheticals. david: i think you brouppingt capitalist. it is almost an argument of capitalist versus socialist. you work with both sides of the fence here. is there a common ground that the world can work towards, i guess? or is this as most people say a zero sum game? >> right now it has been pitted as a zero sum game. inoo vegas, -- innovation, the support of a healthy ecosystem. support for smaller media

enterprises. this is common ground we need to discuss. instead of pitting people against each other in this zero sum game. i think it is wrong to structure n this manner. haslinda: let's take it a step further. what does it mean in the era of big data, enterprise mobility. will that be cut short, i suppose? will there be any implications from that? >> i like to believe in the spirit of innovation that it will overcome any of these policy limiters. i think there will be a win. we can definitely overcome it. we can say that just because of these rules and regulations. i think we will find a way

forward. i know i speak with a lot of the regulators in the first instance. we definitely want to be moving towards helping the internet economy and ensuring innovation doesn't die. i'm looking forward to a lot more discussions between the business sector and private ector. haslinda: all right. thank you. india about to come online to join the rest of the asian region in its trading day. asia is up. well, it looks like they are showing signs it may be higher as well. futures up by .10%. this is bloomberg.

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david: happy friday.

hopefully it gets clearer, sort of mid-morning there in mumbai. we are just seconds away from the open of cash markets in the city. if futures are any indication, we would like to get a pop at the open. we'll see in three, two, one. the market is open there. let's get the opening numbers. >> checking out the opening numbers, we have it adding .2%. also on the rise. when you take a look at the weekly performance of indian stocks, they are set for a weekly decline. we are seeing pressure coming through for bonds that we do have the yield retreating from a two-year misme i want to highlight what's happening with the rupee as well. thursday above the 65 handle for the first time since november but now we're seeing it recover from that now at 64.86. now it has been a tough week for the rupee as well as indian bonds. the hawkish tilt from the r.b.i.

minutes given inflation worry. some reckon that it is over and done. coming below that 7.8% level as you can see by the line on this chart here. d.t.b. banks said higher yields. haslinda: indian bonds set for the worst week in three. putting in the worst performance in indonesian debt. what's happening there? >> they have been going to head-to-head in terms of which of asia's highest yielding bond markets will be the worst this weekend given the long-term outlook in indonesia, it looks like they may have the upper hand. the finance minister said the jump in the 10-year yield is temporary. they will keep their bond issuing plan for 2018. inflation remains under control, especially when compared to india. david: and compared to the philippines.

that is not the case. what is that doing to demand for paper? >> investors are demanding higher yields for philippine paper to comp assist sate for the weaker peso. this is the first time since 2012. this blue line here is the philippine 10-year yield while indonesia is the line in white. inflation in the philippines has picked up. haslinda: thank you so much for that. we have a story that popped up here from reuters. the u.s. is set to announce now north korean sanctions. we don't have details on that as of now but we will bring them to you when we have it. meantime, volatile any the financial markets have prompted investors to be more cautious when assessing the outlook of emerging markets. bloomberg spoke to developing

necessary asia which are stacking up to be the most resilient. our guest joins us from manila. carl, tell us more about the measures for emerging markets. >> we spoke to a few analysts. we got the reviews for the next few months. now that volatility back. it is usual things like credit card balances, fiscal deficit. he strength of the reserves. haslinda: why are we saying that e.m.'s and asia are the least volatile? >> take a look at current balance for example. if you look at the charts that we have there, you know, it would show that most economies in as i gentleman have -- except for india, nearby and philippines. taiwan, south

korea their services exceed 5% of their g.d.p. david: i guess what we're seeing here is from the -- from an external balanced point of view, a lot of these economies that were once considered during the paper transfer not as robust or not appearing healthier. on the fiscal side, which economies appear to be led by -- as far as that measure is concerned? >> based on the information that we have from moody's, brazil comes out on top. it is forecast to have the worst deficit this year, around 8% of its g.d.p. it will also have the biggest government debt load, 80% of its g.d.p. something that maybin vestors should be looking at. david: absolutely. carl, thank you so much. coming up here on the program.

oh, snap. kylie jenner manages to wipe out more than a billion dollars from social media. we'll tell you what happened. what was said and how it happened. this is bloomberg. ♪

haslinda: this is bloomberg markets asia. david: let's give you a quick check of your latest business flash headlines. barclays admits it paid female investment bankers just under half of the males. when you look at the bank's international unit. the bank is the first major bank with u.k. operations to disclose this type of information. the chair of the parliament recently described the pay gap at barclays as shocking.

the nda: nielsen is bowing 68-year-old will hand over the role of c.e.o. to andrew clifford in july although he will remain part of the company's investment team. their stock price soared 84% from its low in may after a difficult period that saw international funds lose out. caitlin: support after socgen pulled out of a key loan facility. they have sold their stake for $1.1 billion. i.n.g. is the only one of their core lenders to support the ompany's plans to restructure. haslinda: and the chick reasons coming home to roost for the

maker of angry birds. it lost market value in helsinki after saying profit will be far below previous expectations this year. it follows a third quarter report. the company failed to replicate the success of angry birds. david: yeah, that is going to be a very hard one to top. we all remember, in my case, how addictive that game was back then. down 50% on the stock. speaking of declines, have a look at our bloomberg charts. we are entering the latter part of our trade session in asia. it may happen within the next few hours or on the weekend into monday. so the yield premium of australia over the united states paper, the 10-year debt there has disappeared this week and at some point we're very close to that point. the bottom part, new zealand is

also approaching that disappearance level here. three basis points is what we mains. for the first time going back to 1994. so i imagine at some point we'll need to start talking about it if not already the concept of relative value here because really, i mean, the u.s. 10-year yield, a lot of these revisions have been measured back and have been revised, 3%, 3.5%. it is really very hard to imagine? a world where everything else is static and range bound that u.s. 10-year yields can go up that quickly and in a straight line. it brings to mind at 3%, on the u.s. 10-year yield, that is a fairly bargain for a lot of fixed incomes. haslinda: some are saying 4% and even higher than 4%. who knows?

you really have to wait and see and how soon that will happen. i know you're active on social media. the power of social media was evident when kylie jenner went to twitter and she said i haven't been using snap and down, down, down snap stocks went. it went down 6% wiping out more than $1 billion in market value. i'm just saying, david, since you're very active on social media and twitter, especially, the power is with you. david: well, not exactly with me. me and my billion follow s. some celebrities there like kylie jenner. this really comes to the core of the issue. there have been questions, especially in recent months, if i'm not mistaken, a few months back, facebook came out and said they are changing way the home feed looks million more personal, less commercial. what they said back then is that people will eventually spend

less time on their platform. not saying that applies to everyone else. when someone come out, someone looked up to like miss jenner saying she is not using it that much, that supports that view. this might be an abrupt way of crowbarring the bond story into you d social culture, if want to put it that way. there is a function on your bloomberg. rader notes. i recommend that you subscribe to that. there was one write up this was from richard breslow. he came out with it at 2:00 or 2:00 overnight. he said it is not a big deal. so what if the 10-year creatures 3%. the kardashians will still live in big houses and all of us will still be able to buy bring when

that happens. -- bling when that happens. haslinda: the world goes on. happy friday. this has been bloomberg markets asia. this is bloomberg. ♪

♪ i am alisa parenti in washington and you are watching "bloomberg technology." let's start with a check of your first word news. president trump suggested today that a crackdown on extreme content in the u.s. could help stop school shootings. he spoke at a meeting with state and local lawmakers inside the roosevelt room. pres. trump: you are having moving -- movies come out that are so violent, with the killing and everything else, maybe that is another thing we have to discuss. alisa: earlier, the president praised nra executives. they are reviewing whether they have the authority to regulate bump stocks without action from congress. en