tv Bloomberg Markets Asia Bloomberg March 28, 2018 10:00pm-11:00pm EDT
asia." ♪ haidi: asian stocks are having a slightly better time than what we saw for u.s. stocks overnight. grow whentinuing to it comes to u.s. market equity. sentiment here about to go off and put the weekend into a long one. the end of the month as well. some of that end of the month demand seeing that jump in dollar-yen demand that the two week high. that was leading through into the positive touch we are seeing in the market. rishaad: it is the end of the quarter and you just alluded to that. is hugely dominant. one thing that has been on our radar is the bond market.
it is at 2.8% handle there on the tenure. what is that telling us? let's get to what is happening market wise. for theturnaround there hang seng, which is something. haidi: we have seen fluctuation. -- losing 6/10 of 1%. shares in china also fluctuating here. the gauge down 7/10 of 1%. the picture is looking fairly mixed in equity markets. easing as the yen has her play some of its overnight losses. over in sydney b asx 200 has at the worst quarter since 2015. the korean won rises to a two-week high as the two koreas hold top. check out the vietnamese dong. it is around here after the in the first quarter. pushing it out to check in on bonds and commodities. we are seeing how bonds are mostly lower in the commodities
space. we are seeing a metals on the move. upwards of attempt of 1%. oil is rebounding. a prolongedgested deal. brent at 79 pounds. as we round out quarter one, i want to round out what has been leading gains in asia. using the rig down grr to show you how the asian benchmark has fared so far this year. health care is leading gains here. despite having one of the lowest ratings on the benchmark. adding over 6% year to date. has rotation out of i.t. spurred along the sentiment. ins a wave of mma deals writing interest. perhaps they are seeing the busiest start for harris -- health care transactions in over a decade. a quick look at stocks in the region. we have beijing water group leading losses. citing over 8%. china falling after missing its
estimate and downgraded to hold at cicc. is the worst-- performer as investors speculate how it plans to finance a potential takeover of panasonic following the most since november 2016, with a few possible catalyst them play. laptop recall in japan. in seoul, the dominant theme is restructuring. wiia, weeing leah -- will see moby this most into clovis. let's check on stock leaders to see how hyundai globe is share price is surging. gaining 9% in seoul. the most since 2005 for better profitability. have's winning seasons wage high-power jumping 1.3% after forecasting an increase in first quarter profits. rishaad: something here.
again in tech. let's have a look at what is aspening in a bit more depth we cross over to asset management. tracy, this seems to be all about the tech issues. it does. one thing to keep in mind is , underpinning all of this volatility that we have seen in markets recently, it is not just -- we have seen some in credits as well. we are seeing bond sales being pulled. one thing that is underpinning all of this is that what we are confronting is the end of easy money. central banks pulling back that stimulus. the rate relative to risk free rate, it is now at the highest since 2008. 10 years.
it is just becoming a lot more difficult to fund and borrow. you are kind of seeing a stress estimate of these different sectors of the market. tech is coming off the worst because these other guys that led the rally. if you look at that nasdaq 100, over the two years to mid-march, the nasdaq 100 was up more than 60%. it just has that much further to fall as people start to question can some of these risk assets continue to outperform as a have the past couple of years? another major factor. a number of questions have arisen over the past couple of weeks about whether these mega-caps is, they are now being called, really justifies those have evaluations given the threats to their earning streams. you have increased scrutiny in
the united states and europe over privacy concerns. you've got questions about whether the technology behind autonomous driving is quite as thed as people thought in wake of that unfortunate death in arizona. you have tesla bleeding cash. all of these negative headlines that have come out at a time when it investors are already jittery because of that increase in borrowing costs and tech is leading the way lower. they probably also have some month and quarter and positioning as you indicated before. suppose we are seeing geopolitics adding volatility to the hostel mixing. headlines out of the korean peninsula think the north is wanting to hold a summit, japan as well. sounds like kim jong-un will be busy over the next few weeks and keeping fx traders busy. that is right. geopolitics was the source of
tension and volatility last year as tensions escalated. we had the atom bomb test and countless missile tests from north korea but it is now gone the other way. we are in this period of some a tearing with kim jong-un collecting whatever frequent flyer miles the north koreans have. korea, to china, south then we got the trump summit, wherever that is going to be, potentially even sweden. ,he important thing here is negotiations are taking the heat out of questions and tensions in an outbreak on the korean peninsula. that has seen a retreat in the yen. biggest big drop, the since last september as people took those haven traits off -- trades off. weakness forral
the dollar, we are seeing some of the weakness in the offshore bounce. of a slight chris: that is right. the dollars moves this week have been hard. one narrative that we are hearing is that there is month inflows, easter is coming up. in japan you've got the end of the fiscal year. u.s. treasury yields are not giving the dollar much help. to read any fundamental narrative into what is going on with his dollar. on the yuan risk, goldman came out with a note overnight that was interesting. they had been anticipating some medium-term weakness in the yuan overtime. they have actually switch their call and said, we think that the yuan will be stable, maybe even
appreciate a little bit over the coming year. they think trait tensions will mean that the chinese do not see a weaker yuan. they think that would be too aggressive a posture to take with the trump administration. they do not think that china would use the yuan as a tool in the trade disputes. thank you. assets manager chris in tokyo. a lot going on in the markets. thehe meantime, let's get first word news now with paul allen here in sydney. paul: reports from japan say kim jong-un may meet prime minister shinzo abe as soon as june. he has told party executives that kim is willing to talk after meetings with moon and president trump. it is the first time he has
shown interest in having talks with japan since he took power in 2011. the possibility arose after he returned from a trip to beijing. the wto is warning for the first time about a trade were between the u.s., china saying it could derail the cult -- the global economy. the director general told the bbc that they have the first indication of a commercial stand off between washington and beijing and could have much wider implications. china said it does not want a trade but will protect its interest. slumping in tokyo after confirming it may make a bid for shire appeared to cater said the -- takata is at exporter he stage. it also says that it is by no means certain that any move would be to a deal. inre leaped on the news london closing 4% higher. takeda has until april 25 to make a move or walk away. -- has been hit.
the seattle time initially reported the attack phrasing concerns of production might be hit. has detected a limited intrusion, but adds that the malware has on the affected a small percent of systems. extended trade. global news, 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. haidi: still ahead this hour, he would not be raising rates. go into a year to brexit. they will be discussing the divorce with deutsche bank board member. this is bloomberg. ♪
bloomberg markets. i am in hong kong. sydney. am haidi lun in the think of english china reassure the brexit transition period will have easier adjustments. it is putting pressure on the european union to do the same and says brussels need to prepare for the hard brexit. let's discuss all of that with a member of the executive board of the bank. usat to have you joining from tokyo. do think there is some value to that there should be conviction all comfort coming through from institutions, that this will all turn out ok? say from my to point of view. clearly, a tradition period until the end of 2020 would make a whole lot of sense. nobody is interested to run any product into the ground in
increase efficiency. from a bank point of view what we would like to have is a smooth transition as possible. is smoother brexit as possible. --ertheless, the go shooters the negotiators have a lot. the agreement has been reached on the article 15 deal. we do not really know what would be the solution for the irish border. we have not yet seen an indication of what would be the payment from the united kingdom to the eu. every transition is subject to agreeing on these issues. only happen iny october of this year. we have some time to be able to answer all of this with certainty. i personally really would hope that we would have some -- personally hope we would have a transition period until the end of 2020 and see negotiations. haidi: are you optimistic that
this could happen with minimal disruptions? or do you think that corporations and companies really need to prepare for a worst-case scenario? i, it does not really matter whether i am optimistic or not in the central banking you normally pay to be careful. risks, the way i would like to look at this is that you would hope for the best but prepare for the worse. there is quite some likelihood that if you want to apply for a license, you need to do so, at the latest by the middle of this year. havemeans that banks will to decide under uncertainty. as i mentioned earlier, we may only be able to see clearer
sides of where we are going by october. banks do not like to decide under uncertainty, but there is a likelihood. what i can tell you is that many banks are looking to license their business, they are looking to things like dublin, amsterdam , paris and frankfurt. i am talking to some of those banks and i can only tell those they have not applied for a license, let's say buy and of june of this year, i cannot guarantee that there will not be any capacity constraints in either of those cities because everybody wants to go to the same narrow door at the same time in the 11th hour. there may come a point in time were one cannot guarantee that process in time. we need to prepare for the worst and hope for the best. rishaad: this is what you are
live -- are alluding to, the passport issue which will go and brexit happens. is the whole issue of passporting a redline for you? andreas: it has nothing to do with me whatsoever. businessnt to conduct and i am talking about banking, and you passporting out of london, and the united kingdom is exiting the european union, you do need a passport in order to conduct it banking service. that is very, very clear. there is no alternative to that. it is simply a necessity. what about baking supervision. what you think it will look like on your view and how much corporation should there be
between the european union and britain when it leaves? had a very have close relationship with our colleagues from the bank of england and the potential regulatory authority for supervisors in the united kingdom in particular. that would continue -- that would consider talking to the united kingdom. we have to coordinate closely and we will do so in order to make this a smooth brexit. and in order to make sure that the transition time, if we have one, is widely used. there is no way around working together. let's don't forget, london will remain the most important ,inancial center in the area even after a brexit.
it is very, very important that we work very closely. it does not go only one way. it is not only an necessity for the banks, which have passport in the past out of london. there are banks on the continent which have passport it out of frankfurt and they have to apply for a license in the united kingdom. this goes both ways and we have to make sure that we work together in both cases. really intrigued by fernando's idea by splitting up its bank into big and small or do away with the middle ones. what are your views on a strategy? andreas: he is a good friend of mine. one thing is clear, the market has to decide on that.
i am not going to leave the market and its decision-making. the market has to make up its own mine. -- mind. rishaad: there is a new government there in germany. what should the priorities be involving banking and the ways that you deal with the regulation in the eu 27. with regards to the banking union, let's not forget that we have two important parts that were installed even before the new government came in, which is the advisory mechanism as well as the single resolution mechanism. these two parts are up and running. they are working well. you can always do things better, theset's not forget institutions have been set up. i am happy with how they are and that we will have
the productivity of things. but with regards to the third pillar and the missing link of the banking union, which is the let'san insurance scheme, also don't forget and baron mind that there has been quite some harmonization across the european union. right now, each and every bank account for customer is insured up to 100,000 euros, which is a very -- in pace. you for joining us. a member of the executive board of the bundesbank in frankfurt. chances of ae deal. this is bloomberg. ♪
coming through from the chinese ministry of commerce talking about the moves to buy the united states to strap tariffs on chinese goods. just a response coming through that china will be able to handle trade protectionist measures while they say that the u.s. trade measures are typical of protectionism itself very very quickly saying that what we for here is actually waited advanced economies here. it will cast a shadow on the global recovery. is coming through from the ministry of commerce there in beijing. let's turn to japan where the drugmaker takeda is looking into a deal with shire for $50 billion. this could be the biggest deal for the world's biggest pharma company. what is going on here? that is the question that we all want the answers to.
just came out yesterday, quite unexpected. the reaction has been confused and head scratching here in tokyo, given the size of the deal and the target in this case is bigger in terms of market caps and the potential acquirer. the market is still mulling this over and thinking about the repercussions. where itave to see goes. april 25 is the deadline for the deal so mark your calendars. haidi: what happens from there? that is the deadline for takeda to confirm a bid or whether they will walk away. the biggest question for takeda is going to pay for it and what strategy
10:29 --ehaidi: it is it is 10:29 in hong kong. market sparing a little better with the renewed selloff pressure in the u.s. overnight with tech stocks. pretty mixed as we get into the last day of trading around the region. the yen retracing some of its overnight losses, trading at the 106.57 greenback. it is providing some left to regional currencies. ae korean won is rising to
two-week high. we will have to see if a date will be set for the moon kim summit. japanese officials comment on u.s. trade action. china is saying that the u.s. tariffs set a very bad precedent. 225re seeing the nikkei easing gains and chinese large caps losing 1.2%. shares are seeing declines for a second day. i want to check in on the eight h-share gauge. dropet for the worst today since july of 20 -- worst two day drop in july of 2016. sliding 2.2% ahead of results due out this thursday. it is expected to round out a solid earnings season for china
's top oil and gas players. after theyom, rising turned bullish on the stocks after evaluations, saying they will be defensive in a volatile market. rishaad: looking at facebook and that story with the rest of the first word headlines with paul allen. paul: the fallout from facebook's data scandal is spreading. it is redefining -- redesigning privacy settings. say things are being reviewed to make sure they make the correct trade-off in regards to user data. topbook is no longer the punching bag. amazon is the new target. capng $53 billion in market on wednesday.
it came after axios said president trump is obsessed with regulating the company. in 2009, he accused the company of squeezing low prices from the u.s. postal service. tesla plunged heavily for a second day after questions about a crash in california raised new doubts about the carmaker. tesla hasn't said whether the car's autopilot system was engaged at the time. falling on all but five days. is joining a group that includes china, indonesia, and russia. msci is expected to announce its decision on potential classification as an emerging market in june.
global news, 24 hours a day, powered by more than 2700 journalists and analysts. this is bloomberg. maybe a little bit of positivity coming from the korean peninsula with kim jong-un sending a powerful onsage that they are back side. what is in the message? >> the messaging is incredible when you consider that these two -- since xi came to power, there have been no meetings. kim jong-un had even expected to see the envoy that china sent over. the fact that we see him arriving in beijing with this huge entourage really guys send a message to the united states. that message is, when you take
of account of the moves north korea when negotiating, you have to take account of china as well. this puts china firmly back in the position -- the center of the negotiating position. here was kim organizing a meeting with donald trump. trump apparently accepted that meeting and didn't even inform the chinese. the chinese, from what was heard, or furious about that. that puts china back in the middle of any negotiation, and a solution. any solution will have far-reaching consequences for the entire northeast asian region. haidi: what does this mean for the trump-kim summit that we are looking ahead to? >> that summit could now be sidelined in favor of
multilateral negotiations. remember that china, before, was at the center of six party talks. china certainly was to be at the center of whatever happens. people often talked about what the failure of a trump-kim summit would mean. meanwould worry that would that the united states would suddenly think that a preemptive strike on north korea would be acceptable, and that is certainly the line that john bolton, the new national security adviser, has been pushing. if they can't find what they are looking for, the agreement to immediately give up their nuclear weapons, which seems unlikely, that the united states will have to think twice about a preemptive strike. any preemptive strike will clearly be bringing china into what would be a regional conflict. haidi: thishere concerns about
appointment of the super hawk bolton just as we get into these very high level and sensitive negotiations? the thing about john bolton is that he has been involved in north korean negotiations before. in 2002, he was advising george bush. at one point, there was a breakdown in talks on the 1994 --mework, which has actually which had actually put a freeze on north korea nuclear activities. john bolton and some other hawks who were advising george w. bush at the time didn't like it. when they got news about north korea trying to purchase some uranium enrichment technology, john bolton said that was the ammo he was going to use to break that agreement. korean --, north
north korea fired off the program and we now have capabilities in north korea. it doesn't look as though that works. what we do hear from john bolton is that he has this deep-seated mistrust of north korea. a junkie he told on television the other day was, how do you know if a north korea is lying? the answer was, if they are moving their lives. that is john bolton, not me. haidi: that kind encapsulates it all in that one joke. this is a fast-moving story. we expecting dates to be set down at any moment for these now multiple bilateral talks between north korea and its neighbors and the u.s.. krugmanl laureate paul says he wouldn't be raising rates right now. the distinguished professor of
economics at city university in new york talked about the danger of the fed tightening too soon. wagesnormally you raise -- not because you are a nice guy, but you do it because that is what you have to do. usually, tight labor markets lead to wage increases. right now, we have what looks like a tight labor market and wage increases are still very modest. economic data isn't that great. there may be more wage increases, the labor market might not be as tight as it looks. a personal theory, but i have no this, is thatfor people remember the great recession. companies are really reluctant to lock in higher labor costs because, for all they know, the bad times could come back. and we havey knows
no idea how much lower unemployment can go. >> what should the fed do when conditions for inflation and higher wages seem to be in place and the only thing that is missing is that one little detail? paul: i would say wait until you see the whites of inflation's eyes. still, inflation is slightly below their target, and their target is too low. iftheir argument would be, inflation were to gather steam, we would be behind and we would have to induce a recession if we wait too long. they might have to slam the brakes and it could be a little bit uncomfortable. but the danger of tightening too soon as much greater. if they tighten do soon and
inflation drops below target, then we are set up in a situation where the fed won't have enough ammunition to fight the next big shock when it comes. letting inflation go over 2% for a while is ok. rishaad: nobel laureate paul krugman. coming up, the trade in saber rattling continues. this is bloomberg. ♪
insecure part of the debt market but it seems to be dry not. down 74%. china's tech giants have been ramping up consumer lending to meet demand. insurance seems to be planning an ipo of its one connect unit. banks for ahas potential listing in hong kong perhaps by september. the former chairman of anbang insurance has gone on trial accused of $10 million fraud. he is said to have doctored financial statements and use the money on himself. authorities in shanghai alleged wrongdoing dating back all the way to 2007.
getting some more lines from the ministry of commerce briefing taking place in beijing. china saying they will not take place in any unilateral negotiations, saying they have opened negotiations and they have their own principles. they said that u.s. tariffs are typical protectionism and set a bad precedent. a tradeis warning about war. they say that could derail the global economy. a nonexecutive chairman of the mining company irc, which operates in russia's far east and the northeast of china. we've seen poor reactions to the possibility of a trade war. is this something that is top of
mind for you? >> i think you have seen an impact to currencies, but you --en't seen an impact to steel production, two huge deals this week. one, very large underground operation, and another operation, both league producing millions of tons of coal. very healthy prices. , think, from the mining space people are still acting in a manner which is positive for the commodity prices. haidi: is this give you pause for what investment decisions you make at the moment? jay: we just reported a great year. that revenue is up five times and we've made a record profit, from a loss last year to profit this year.
increasing our production. we've also got a bridge operation next year which lowers our costs about 50% on transport. takingnot looking at investment decisions beyond that in the immediate future. it is an exciting time for irc. rishaad: there's a shifting appetite for iron ore in china at the moment. also, there's a bit of price pressure on iron or itself. how do you adapt to all that? jay: we are fortunate in being at the bottom of the cost curve on a delivered basis. at the moment, we're just andding out iron ore grinding out a healthy profit. what is more interesting from an investment point of view --
another had that i wear. i am the chief investment officer for the alliance. here in australia, we are doing 12 million times. vanre a smaller operator hundreds of millions of operations for smg and rio and bhp. we have to focus on improving grade. 58%ave taken great up from to just below 61%. what you see in the iron ore market is that the 62% standard grade has moved up and down, but your discount your receiving for the lower grade material has worsened a lot. there are large producers of iron ore that are really suffering because of that. we have spent a lot of time and resources on increasing the grade here, and that has been a worthwhile investment.
petropavlovsk has a 31% stake in irc. aey are guaranteed, i think, $230 million loan to your company and they want to sell. are you comfortable with them selling? jay: it has been a bit of a because wee for irc have delivered, we have built up some fantastic results that i am proud of and i like to congratulate our team. in that environment, you've seen two of our large shareholders selling their stock. that is why, even though we have yielded great results, the share price has been underwhelming. onse results are only based 50% capacity, and not in light
of the bridge being operational. so we've got a great future. if some of our shareholders are, for other reasons, external to irc's performance, being forced to sell, and that is definitely the case for some of them, then it is unfortunate for us. i think the future is still very exciting. haidi: i think it is fair to point out that one particular had quite a time over the past few years in terms of leverage. petropavlovsk has had a very uncertain time. it has had some very definitive and substantial changes to its register. the board at the moment -- i spoke to the chairman yesterday and he confirmed that they have the support of their shareholders, but one of their shareholders came out with a
very negative statement on the performance yesterday. it is a strange one. we have to operate independently. we are in a very good position with our ability to refinance this loan. it should be completely independent of any decision on petropavlovsk. we just battle on. it has been a tough year to get to where we are now but i think our costs arehat now in the 40's on a longer-term basis, on a delivered basis, so irc has become somewhat of a cash cow. rishaad: putting your gf g hacked on, president trump -- on, president trump wants to revive the u.s. steel opportunity. do you see that as an opportunity? jay: our business model within
the gfg alliances to add value. we will not be selling, where possible, a primary steel product. andill be recycling steel providing value to that product. we are the largest engineering company in britain now. we provide jaguar and aston martin with products. we are in a fortunate position in the u.k. that we are not selling much steel to the u.s.. it is not just steel which has been impacted by section 232. perspective, i think we remain in a fortunate position. we continue to try to add value as much as possible for what we produce. haidi: thanks to have you -- good to have you in sydney.
close to buying a stake in swiss re. it is a deal that would value the insurer at as much as $39 billion. let's break it down with a tech reporter. what does a technology company want with a 150-year-old insurer? reporter: i think that is the question on everyone's mind. in the absence of any clarification from softbank, we are left to speculate. obvious explanation is they are after the insurance cash flows that would allow them to carry on with other operations. reports say they are after a 25% stake. in the meantime, obviously, this kind of scheme has worked before very well for warren buffett and he has many times expressed
admiration for that particular business model. right now, softbank is keeping quiet about their motivations for the deal. haidi: how does this fit in with the vision fund? pavel: that is the second interesting question that has not been answered so far. thed a chance to speak to head of additional innovation at a large insurance company in tokyo. they pointed out that insurance really hasn't changed much since it was invented by lloyds in the 17th century in england. , automotive,o fire now cybersecurity. it is the same mechanisms that do risk distribution and payout of guarantees. , do they know yourhing that they don't, typical buzzwords, ai,
web-enabled services. they do have a portfolio of companies that have potential answers to the challenges faced by the insurance industry. the real question, can he generate these kind of synergies. far, howeverord so stellar when it comes to returns on investment, does not have a lot to say about synergy from portfolio companies. thank you so much for bringing us up to date. you's it for me but, rish, are staying around for more. rishaad: yes, we continue. ♪
>> i am mark crumpton. you're watching bloomberg technology. the white house says president trump and theresa may spoke today and agreed on the importance of dismantling russians by networks in the u.k. and the u.s.. they also agreed to work together in preventing chemical attacks in both nations. a federal judge has ruled the district of columbia and maryland may proceed with a lawsuit against the president according to the washington post, which reports the attorneys general alleged the president's business dealings violated the constitution's ban on receiving improper payments from individual states
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