tv Bloomberg Daybreak Australia Bloomberg December 4, 2019 6:00pm-7:00pm EST
haidi: very good morning. i'm haidi stroud-watts and sydney. we are under an hour away from market opens in japan and south korea. inhie: i'm sophie kamaruddin hong kong. welcome to "daybreak asia p or, -- "daybreak asia." haidi: the u.s. and china are set to be moving closer to a trade deal, despite heightened tensions over hong kong. newn is set to announce
legislation, equivalent to 4% of gdp. set to pricesis mammoth ipo at the top of the range and should raise more than $25 billion. we get you started with breaking news out of south korea. we have the current account surplus coming in at 7.8 billion dollars. this would be the surplus widening from the previous month of september. also the previous month was revised higher to $7.7 billion. andgoods trade surplus narrowing a little bit us the number coming in at $7.8 billion, also down from the previous month of $8.8 billion. despite the fact we have a current account surplus widening this time around, we have not seen the south korean economy under pressure. novemberports for both and october contracting more
than 14%, but we also had imports plunging, double-digit digit declines for imports in .he past two months haidi: we've got breaking news when it comes to this part of the world as well. we were expecting announcements from the argument terms of how much the big tanks will have to hold in terms of capital buffers . they are raising bain capital -- they areanned raising bank capital levels as planned and they are giving lenders to seven years to increase their capital buffers. the rbs is saying reforms will be net beneficial to new zealand. fromotal capital derived 10 point 5% currently to 16% for tier one capital, and that differs for smaller banks. to 18% foral to rise
big banks, 16% for smaller lenders. rbs saying the reforms will make the banking system safer. this is an asset boost to high-quality capital so they can withstand the kind of massive, unexpected shock that comes once every 200 years. this is pretty bad news when it comes to the australian lenders that are our ability -- that are already struggling. see commonwealth bancshares gain ground this morning after a two-day decline, given that lenders have been meet a longer timeline to capital requirements. we are seeing ozzie shares gain of casht the start trade this morning, recovering from the worst tuesday slump since august.
commonwealth bancshares popping at the start of cash trade. shares halted for trading. commonwealth bank gaining ground. we are also waiting on ozzie retail sales and the trade balance expect it to narrow, keeping an eye on that. let's check in on the broader outlook for market shares. we have ozzie bonds slipping ahead of the australian data for treasuries, steepened overnight. checking in on the offshore yuan is well, study after halting a two-day klein, strengthening past its hundred-day moving averages the dollar fell for a fourth straight session and nikkei futures closed 1% higher this as we wait for japan to potentially reveal details around its fiscal spending plan. with markets seesawing around trade lines, asian stocks set to close after an low. shery: coming up, an exclusive interview. 's in studio with me. you have elizabeth warren coming
up. joe: so much to talk about with the candidate. questions about her wealth tax continue to be of a lot of interest, but beyond that, trade. a huge topic, especially i would say for our viewers. it has just not gotten a ton of attention, i would say, in the democratic primary, in the democratic race, so very interested in getting her thoughts on that as well. meanwhile, a lot of interesting discussion about philosophical differences between warren and some of the other front runner candidates, so there really should be plenty to talk about. shery: we will be looking forward to that conversation. let's not get to first word news with ritika gupta. ritika: nato leaders have wrapped up their 70th anniversary summit with a statement on unity but a few bumpy moments on the way. president trump canceled his own
final press conference, calling canadian leader justin trudeau two-faced after a video appear to show him joking with other leaders at trump's expense. meanwhile, french president emmanuel macron stuck to his message of saying nato should strategic priorities rather than how much each country spends. iraq is dropping its a surprise call for producers to deepen output restrictions, now saying it would be better to extend current limits for another year. japanese prime minister shinzo abe is expected to announce a massive stimulus package later on thursday to boost growth in an economy dealing with a slump in exports, a string of natural disasters, and the fallout from
the sales tax hike. the measures are likely to total 230 billion dollars, making it the equivalent of 4.5 percent gdp at face value. the hong kong government has announced further stimulus measures more -- worth more than 500 million u.s. dollars, aiming to support business is suffering from the fallout of six months of unrest. nine new measures include subsidies for utility bills as well as waivers on corporate property tax rates. the total of hong kong's stimulus initiative since june now amounts to more than 3 billion u.s. dollars. global news 24 hours a day on air and on quicktake by bloomberg by bloomberg powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. haidi: the u.s. and china are set to be moving closer to a trade deal despite heightened rhetoric, also besides are nearing an agreement on the amount of tariffs that would be rolled back as part of an interim deal. earlier, president trump said talks are going well. >> we've made progress, but he will make a lot of progress, and fairness in trade,
not only with the eu, but with many countries. we are talking to china, as you know. those discussions are going very well. we will see what happens. get over to senior trade editor sarah mcgregor. by the sort of volatility we are used to over the past year or so, it has been a whiplash week when it comes to trade deal expectations. sarah: absolutely. things were sort of looking so good or seemed to look so good last week that markets were up to record highs, and then of course, we saw some back and forth earlier in the week and comments coming from trump himself and also sources saying talks are progressing. sources tell us negotiators are bying to try to get a deal december 18, which is when the last batch of tariffs are set to take effect, so i think, you know, that has given some optimism, may a dose of reality
to the situation where there is a lot of talk, and it's hard to know exactly from what trump says if things are going well or not, but sources tell us negotiators really are aiming for a december 15 deal, if not potentially earlier. shery: what are still the standing issues at the moment? sarah: we have not got a lot of details publicly at least about what is going on in these talks, what are they negotiating as part of a first phase agreement. what we are hearing as they are trying to wrap up things they could broadly agree on, things like soybeans for agricultural purposes and agricultural products and what value china will buy for u.s. farmers, ip theft, how they will try to check the boxes to look like they have made headway on that. i think it's often in these trade deals with these issues need to be wrapped up that things can get sticky. we will have to see where it goes.
no sentencing until that deal is signed. joining us now, raymond lee. how do you trade in this environment? >> it's very difficult. i think the way we view it is if you have a conviction, just make sure you have development risk management techniques and pace. movementsarket overnight, investors are pricing that some deal gets done. that is probably our best case as well. also, there is still some risk to that. we saw the passing of two human rights legislation in the u.s. and china has said they will retaliate with the passing of legislation. risks andsome marketing, so you have to be focused on risk management. shery: we had that extraordinary move in yields. eight out of the last 10 years,
the u.s. dollar has registered gains, albeit over the past year, it has been the best of a bad lunch, if you will. what is your expectation with the greenback going into next year, depending on what happens in trade? >> i think the u.s. dollar will continue to have a tail wind going into the end of this year and next year. as we look at the outperformance, even though global growth has been somewhat on the sluggish side, on a relative basis, u.s. growth is still much stronger than in japan or europe. from a value perspective, the u.s. dollar has rallied. firstsly, the fed was the to hike rates in 2015 and 2016, but even now, the differentials inmates between a u.s. two-year bond and german two-year bond is over 200 basis points. will say isng i corporate tax cuts in the u.s. allow culprits to bring back a trillion dollars of offshore
profits back into the u.s. without any tax applications, so that is going to give a big and technical towering. >> we have seen the rba holding steady, the be ok holding steady despite the fact that inflation has been pretty muted for both countries. are we seeing the end of monetary easing for these asian central banks, and will that help support some other currencies? least nothink so, at for these two jurisdictions. i think in both those countries, the central banks have cut rates and number of times this year, and the central banks are probably waiting to see the impacts of those cuts and how it gets transmitted into the economy, so i think they are more kind of wait and see. if i focus on australia, we just printed gdp numbers yesterday. it was one hold percentage figure lower than we were last year. the economy here is still a little bit weak, unemployment too high, inflation too low. i'm assuming they will be cutting rates again at least once in the next four to six months, maybe twice later on in
2020. i think korea is the same. it is a country that is very open, so it is exposed to the volatility around trade deals, it is exposed to the tech sector. expect that to be ok will probably have to cut rates at least one more time next year as well to manage the growth situation. your: you also say in notes you expect the r.b.i. in india to cut rates. i wonder how supportive that will be of equity markets when the chart on the bloomberg shows it is getting pretty expensive, trading 19 times trailing a 19 times forward in the u.s. quickly rba having a meeting today. i do think they will cut rates at least once or twice in the next six months or so, so if it's an hour or early next year, they will have to cut rates. they just printed gdp numbers that were quite low at 4.5%, so growth is struggling. you mentioned about the equity
markets. a lot of emerging equity markets can tread a high p/t, but what we are really focused on is the fundamentals. for relations to be sustained for a long period of time, you want fundamentals to pick up, and the governments are trying to help growth. haidi: always a pleasure, good to see you. coming up next, democratic presidential candidate elizabeth warren joins us to talk about her tough stance on wall street, the wealth tax, and the trade war with china. this is bloomberg. ♪
joe weisenthal joins us with the special guest. joe: thank you very much. i am pleased to be joined by senator elizabeth warren, running for president. you are on bloomberg tv. boss ises are -- our running against you. senator warren: i've heard that. joe: so have we. from what i've heard, he is spending perhaps more than all of the other candidates combined on tv ads, i think with the exception of the other billionaire in the race, tom steyer. how much is this, for you, evidence of the need for a wealth tax? senator warren: i'm capitalist. i believe in capitalism, but ,arkets without rules are theft and part of those rules are that everybody is supposed to pay a fair share on taxes so we can reinvest in opportunity for all of our kids, and that is what a
two-cent wealth tax is for me. your purse -- your first 50 million is free and clear, but your 50,000,001st dollar, you got to pitch in two cents. when you hit $1 billion, it goes to three cents. joe: there are probably many bloomberg viewers who suspect otherwise, and there is a parade of billion hours who say if elizabeth warren is elected president, the stock market will plunge putting 5%. i don't put a lot of weight on those productions. that said, i'm curious -- under a warrant administration, with the performance of the stock market be something you cared about? senator warren: what i care about is an economy that works not just for billionaires and millionaires, but an economy that works for everyone. look what is happening in america -- stock market goes up, gdp goes up, unemployment is
low, but what is happening to working families across this country? it has been a generation, and there's been very little growth in income, but at the same time, families are squeezed for housing, for health care, childcare, the cost of sending their kid to school. those are all through the roof. so families take on more and more debt. they are squeezed harder and harder. by the way, that's part of why i want to see a wealth tax. it's what we can do with that wealth tax, how we can invest in an entire generation of young americans. joe: a technical question about the wealth tax that often comes up is that several billionaires or people with over $50 billion have a big part of their money tied up in liquid private stock. i always see people in silicon valley talking about this with the wealth tax, and again, it applies to one of your rivals, our owner here. how do you levy a wealth tax of 2% or 6% against someone whose wealth is tied up in a private
share? senator warren: you can levy it. you can give them time on how the collection works over a period of time, but it does not mean you can just say i don't have to pay anything because it would be a problem for me to have to sell off some of my stock. it is a problem may for everybody else, but keep this in mind -- the 99% in america -- they pay 7.2% of their total wealth and taxes -- in taxes. the top .1%, people that will be affected by the wealth tax -- they are paying 3.2% of their total wealth in taxes, so my pay twoasking them to cents more means they are still not carrying a fair share. this is, for me, about not just numbers but values. that to sense that people are using to continue on these huge fortunes, to continue to grow those fortunes, and what are those fortunes growing out?
i don't know -- 6%, 8%, 10% -- just means they may not grow as fast. you put that investment in america, in a whole generation, that's universal childcare for every kid, universal pre-k for every three-year-old and four-year-old, it's raise the wages of every childcare worker in america, it's 800 billion dollars into our public schools, a federal commitment, it's about making technical school, two-year college, four-year college tuition free. it's $50 billion for historically black colleges and universities, and it's canceling student loan debt for 43 million americans. that is an investment in an entire generation. joe: let me ask you a question about your to care for all plan. when you unveiled how you are going to pay for it, the media how did you on the question quite a bit, including new tax on corporations and additional tax on billionaire wealth.
politicalthere was capital to pass wealth for all but nothing willingness to increase or pass them as taxes -- would you be willing to do what george w. bush did in terms of the iraq and afghanistan wars, with the recent tax cuts and essentially pass the medicare for all part by adding trillions of dollars to the deficit? senator warren: i think the right way to do medicare for all is asking those at the top to pay. we know that if we do nothing, going forward, that families across the country are going to pay about $11 trillion over the next 10 years out of pocket, and that is in premiums, co-pays, deductibles, uncovered expenses. i figured out how we could get $11 trillion out of the system -- by asking the top 1% pay more, by asking big corporations to pay more -- in some cases, to pay anything since some of them have not -- and also by cracking down on tax cheats. my personal favorite in that
list. for me, that is what this is about. this is about asking those at the top to pay a fair share in progressive taxation. when i rolled out medicare for all, a transition plan, when i rolled out my two-cent wealth tax, i want to show how we pay for it. part of the reason for that is because i think this is ultimately about how we think we ought to be allocating the costs of making this country work and creating opportunities into the future. for me, i think we ought to ask those at the top to pay some more. that would move our country closer to where other countries are in terms of the total amount of tax revenue that we collect. ae: let's shift gears for second. suppose on day one of your administration, tariffs on china would still be in place. what would china have to do to
get them lifted? senator warren: the problem right now is the president has no plan. withwhat is the dealing warren plan? senator warren: part of it is we need an overall strategy on tariffs. trade is about tariffs but not just about tariffs. in the 21st century, traders about regulation as much as it is about anything else. what i want to see is i want to see a coherent plan for anybody who wants access to american markets. i want to ease up so that our farmers are not being squeezed like crazy like they are now, and by then, we have already lost markets. it's going to be really hard for them to regain. a third part that i think is important is we need to be working with our allies. we want to have a trade deal with china that is favorable to the u.s. -- then let's not declare a trade war at the same time on canada, on our other asian allies, on our european allies. let's get everybody to work
together on this and try to get china to follow a reasonable set of rules on trade. joe: but if china is hoping to wait out trump administration or warrant administration, you would not be willing to lift tariffs on day one? senator warren: the point -- we cannot keep doing this as one offs. that is the whole point. we need a coherent strategy, a strategy that works with our allies and a strategy that makes clear where our long-term interests lie in trade. i want to see trade occur, but i want to see trade occur in a way that is helpful to the american workers, helpful to the american consumer. i don't want to see what donald trump is doing. he is destroying markets. he's destroying value around the world. joe: would you tie chinese human rights abuses potentially to a trade deal? senator warren: again, working with our allies, we should be putting a lot of pressure on china, and part of that pressure
should be diplomatic and part of it should be economic. we need to use all the tools in the toolbox. joe: let's talk political philosophy for a moment. some of your competitors -- joe biden, pete buttigieg come to mind -- they are selling a vision of we can heal america, bipartisanship, we can work with republicans, etc. do you think they are naive in 2019 to have that view of politics? senator warren: i have worked with were publicans. i have passed a dozen pieces of legislation i have done on a bipartisan basis since donald trump has become president. he signed into law my hearing aid bill that will reduce the cost of hearing aids. there are places where of course we should work with republicans, but the fundamental question is -- what do you think is broken in america? for me, what is broken in america is we've got a country that is working great for those at the top, an economy that is working great for those at the top, and a democracy that is working great for those at the top. it's just not working for much of anyone else, and that is why
i'm so concerned about michael bloomberg jumping into this race, dropping $37 million in .ne week on advise -- ad buys i don't think elections ought to be for sale and i don't think in the democratic party that we should say the only way you're going to get elected, the only way you will be our nominee is either if you are a billionaire or if you are sucking up to billionaires. the problem we've got if that is the case is buckle your seatbelts because that means the government is just going to work better and better for billionaires. we've got this chance in 2020 opened thisor has much, where we could make the kind of change that makes our economy and our democracy work for everyone. i want to see us take that chance. joe: senator elizabeth warren, which we had more time. thrilled to talk to you. thanks so much for joining us.
this is --ritika: "daybreak asia." of the u.s. and china are said to be moving closer to a trade deal despite heightened tensions in hong kong and shenzhen. sources tell us the sides are near an agreement on the amount of tariffs that would be rolled back as part of an interim deal, adding that president trump's comments about waiting until the election do not mean talks are stalling, as he was speaking off-the-cuff. north korea has released propaganda pictures of kim sacred writing up a mountain as pyongyang on washington trade new barbs. state media says kim was displeased with president trump
referring to him as a rocket man again this week, saying the countries are still technically at war and the five-decade truce could turn sour at any moment. claimedorities in italy fiat undervalued the u.s. part of its business by more than $5 billion following its acquisition five years ago. the dispute relates to the october 2014 restructuring has fiat purchased the final part of its chrysler unit. potential death presents the group with a potentially hectic tax bill. the decision to step back from anning alphabet has bought refinement boost for the founders of google. their announcement lifted shares and added $1 billion each their net shares. they each own about 6% of google .nd still control alphabet
shery: thank you. sophie, what are you seeing? reactions of the decision to protect the economy with the increase to capital requirements, we see the kiwi dollar climb further, above 65, topping its 200 60-day moving average for the first time since july and firming up against the aussie, which you can see right
here, this as we see the aussie fall by as much as .3% against the kiwi dollar. on the back of the announcement, we have anz bank revising its monetary policy outlook, now only seeing one more rate cut from new zealand in may next year in light of a more positive economic outlook and the softening of the capital requirements proposal for the seven-year transition period instead of five, so aussie banks climbing if they have more time to come up with a 13 billion u.s. dollar increase. we check in on aussie shares which are climbing, all snapping a two-day decline, rising over 1%. anz shares, though, remain steady in trading. let's quickly get a check in on resource stocks in sydney. you have an energy space gaining ground while crude is edging higher, this after the rally we saw overnight. haidi: oil could find more talks -- oil of could find more support ahead of talks. let's bring in jim thornhill. are we expecting any surprises
-- it would be an oxymoron. >> the outcome remains somewhat in doubt. as ever with these meetings, we are sort of trying to read the rooms, listening to whispers in core doors as going on as always with these meetings. a has been quite vocal leading up to the meeting calling for a further cut. iraq is probably the country that has done the least to meet its output targets this year and has been the most recalcitrant, and that probably will not have gone unnoticed in riyadh. as always, it comes down to the saudi's, who are, of course, the biggest player in all this, and they've been keeping their cards close to the chest so far. i think it is fair to say expectations are that the 1.2 billion barrel cut that was announced earlier this year will be extended to probably the middle of next year. that is probably almost priced into the oil price now, so it would be somewhat of a surprise
if the saudi's got everyone to back a further extension of that cut at this point, but you cannot rule anything out at this stage. shery: we have seen compliance is a bit of an issue. this chart on the bloomberg showing that russia has consistently fallen short, and we are talking about exceeding their output quota for most of the year while saudi arabia has done the heavy lifting, but how much of an option does saudi arabia have at this point when just tonight, they have to price their aramco ipo? >> of course that is a huge issue in the background of this meeting. we've heard reports overnight that they are looking to price that ipo at the top end of the 3232 marketing range. that will probably not be a huge surprise given that these will mostly be taken up by local investors, and i guess the suspicion is they will pretty much follow the direction of where the government tells them course,at one, but of offsetting that, they want to get a price that offers some does start the stock
trading. it might go a little below that, but all the signs are pointing to a price around the top end of that, and we should get confirmation of that later today. it is do get priced in riyadh later on, so it will be interesting to watch that as those opec talks continue. thank you.ery: sticking with aramco, huge fees generated from its record-chattering ipo directly impacting the ranking of investment banks. hsbc, really fun, barclays, jp fund. -- relief su: big banks, investment banks saudi aramco for years knowing there might be a deal like this and some banks did a lot better than others and that is impacting what we call the league tables. this is the ranking of the top
five with the volume in the aramco deal. ,hen this deal is set to close that's when we will see the rankings really change, and hsbc apparently will be the biggest beneficiary. it kept its presence in saudi arabia through a stake in a newly organized saudi british bank. we look at hsbc's chart talks. barclays to leapfrog and getting into the top 10. barclays actually falls out of the top 10. has not done that in a long time, and j.p. morgan chase, which we saw was at the very top in terms of its involvement of the deal, now jumps to number two globally in terms of being the number two biggest ipo bank. even so, the little piece alone allowed it to advance to the ninth spot, so that is a pretty
big move there. again, this is significant. what these tables do is gauge the ranking of the banks in the emerging-market. only chineses the investment bank involved in the aramco ipo. how high does that rise? su: it actually shoots up to the 20th spot, has not been there in years. you talk about the banks involved in this. you mention it is the only chinese investment bank to get a role in the aramco offering, so it moves up 11 spots higher to the number 20th space on the global ipo league table, and that again is when the aramco deal closes. as i mentioned, it has been three years since the state-backed firm was at that high-level, and again, this is a major shuffle for these banks, and it gives them bragging
rights as well as a lot of money. back to you. shery: thank you. we are hearing u.s. antitrust regulators have widened their scrutiny of amazon and are now going beyond retail operations to also include their massive cloud computing businesses according to people familiar with the matter. investigators at the u.s. federal trade commission have been asking software companies recently about practices around amazon's cloud unit. that would be amazon web services. be outraged by the ftc signals the agency, which is already looking at amazon's conduct in their online retail business, may be taking a broader look at the company to determine if they are violating antitrust laws and harming competition. the ftc and amazon have declined to comment, but bloomberg has learned amazon now faces widening u.s.-antitrust scrutiny in their cloud business. you can see amazon web services revenue growth. it's very that it's a very high margin segment for amazon, but revenue growth has stalled recently.
haidi: this is "daybreak asia." u.s.-china trade war uncertainty, a global real , opening at seized new fund focusing on commercial property assets in japan. great to have you in the studio. about why you are investing in japan, what the fund's focus is and what sort of assets are diversifying into. >> first of all, we like japan because with the global backdrop in terms of uncertainty, low rates, political tension, etc.,
we think japan is a safe haven. the primary reason we launched the fund is we feel japan is stable, safe, will have protectable returns, and global real estate investors are looking for that. this particular strategy is multi-asset, meaning it will have logistic, residential, retail, and office in it, and it's generally on the core side of the risk backed front. it should deliver a good dividend, and that is also very attractive to the japanese market. aery: what sort of impact has negative rate policy in japan had on property in general? >> it's a great example of how a commercial real estate market will operate in a low interest rate environment. we know there's a lot of negative interest rates in the world. japan has already been a low interest rate market. it has been the last 25 years. government been
policy. really what we like about japan is the global interest rate markets. shery: i think the prevailing narrative when it comes to that economy and market is we talk a lot about the aging demographic, the entrenchment of lower inflation rate expectations and low growth, hence policy from the boj on government largely unchanged or ever getting more expensive. what are we missing in terms of the opportunities for growth that clearly you guys to by starting this fund? >> you are absolutely right. that is the backdrop for japan and has been for quite some time , but like i said, in the new world, i think that is what we can expect. economies are generally
struggling, rates continue to be low, and in that type of area, real estate is a huge and officiating. the main reason we like japan is we tend to focus in the two big cities -- tokyo and osaka. those still have positive fundamentals, and i mentioned earlier, the yield difference between what you can get from the gdp and japan and commercial real estate is quite attractive. it's really that ability to deliver consistent income over
the near-term and midterm that makes this particular product attractive and also this market attractive. the last one i would add is japan being the third largest economy in the world and one of the largest commercial real estate markets in asia, it always is liquid. there always are plenty of buyers willing to buy assets, and we think that liquidity is also a great backstop. where are you seeing the most growth and opportunity? is it retail, is it mixed? what are you looking at? >> the primary sectors we really like our logistics. logistics is a darling in the region. not surprising. it is a darling in japan. it has been a strong performer. online penetration in japan is not as high as it is in korea and china. plenty of runway in terms of fundamentals. we really like the space. we really like the multifamily space, very productive, very stable, next-generation housing affordability is an issue for
them, so rental demand stays strong, and there's always net migration into osaka and tokyo as the two main cities. as you know, greater tokyo is a 40-million-person metropolis, so it is a major market. those are the primary ones we like, but we also have office and a little bit of retail. shery: you mention south korea. you have been expanding their. tell us about the market. advanced, 65cally million people. we look at logistics, and we are an early mover in that space. there's not as many developers in that. it's because the land is quite fragmented, the ownership structure.
one thing that is really interesting about korea, they really embrace cold storage as part of the sort of online sales, so the ability to deliver food to your door very quickly has become a very big business in korea. they are sort of leading into that, so we are the big space that can accommodate that. shery: and you know, you say you like freedom office space. what you mean by that? >> doesn't everybody like we-work? shery: until a little bit ago, yet. >> we like creative office space, we mean smaller buildings located by the train station that maybe have not had any improvements over the last 10 or 15 years, so the ability to come in and take down the drop tile ceiling, putting new materials, kind of refreshing the space has really been appealing to i.t. companies that have run out of being able to get space in the central core, so it is spilling into these smaller areas. we have seen a really nice uptick and also increases in rents way above what we thought.
that is what we mean by creative, kind of repurpose think the space a little bit. shery: shinzo abe is early yesterday expected to announce details of this $230 billion stimulus package for the economy. part of that will be going into infrastructure investment. does that sort of prop up new opportunities for your side? >> i think that is great news for us, great news for anyone investing in japan. that kind of stimulus will obviously try to lift the economy, but as you know, this is a familiar story for japan. they have done a fair amount of this stimulus before. results tend to be positive short-term, and you got much more into the longer-term trend that you outlined, but as i said, we are not that worried about the aging population. there is high productivity over there. there's incredible savings.
if you look at the reserves of the country -- 1.3 trillion dollars -- that makes it one of the highest countries with reserves. there's a lot of backstop in japan. in the current global context, that is a place to us that feels extremely safe to put our investor capital in. so much for you joining us, lasalle pacific asia-pacific management ceo. across assetyo management. we could hear more details about this package sometime today even. what are we expecting? >> that's right. as you say, the speculation is
around 230 billion dollars for the top line number. the key thing, though, and this is what we will be looking at when the package comes in, is what is the freshwater? that's the key thing. how much of this is real new spending. net new spending and not appropriations from the existing, you know, annual budget. japan will often have these supplementary budgets around this time of year that amount to
previouslyepackaging approved spending measures, privaten loans to companies, things that are not real -- what we would call, you know, real spending. the real spending is likely to be about half the size of the overall package. 100 billion dollars, 100 $20 billion. these are the kinds of numbers that are being discussed, and the key thing is -- how quickly will this be deployed? are these going to be infrastructure projects that stretch out over a fair amount of time? are they going to be inducements to spending to help pull out of the contraction this quarter that everybody expects thanks to a hike in the sales tax? these are the key questions we will be looking to answer when the package comes in. shery: why do they even need a package? didn't they already tried to put up some safeguards from that tax hike? what happened? >> they did. there's a couple different dynamics at play here. it's quite interesting. first of all, all of the rhetoric we heard from government officials about don't worry, we are not seeing the of run-up in spending and decline in spending after hike october 1 that we saw last time around -- that turned out to be absolutely false. saw exactly what happened every time before.
big run-up in spending in september, then everybody stopped buying things in october because of the higher sales tax, and so the economy is going to shrink this quarter. the focus on, you know, fiscal discipline at this time when they are still trying to get the economy in gear really is wrongheaded in their view of many international economists and from the investor standpoint as well. they've got to fix that problem. then we had some damage from typhoons that hit japan, and there's some severe damage to parts of the country. finally, and this is particularly interesting, there has been increasing interest in
japan in modern monetary theory. there have been seminars about parliament. people are talking about this, and you can kind of tell that mmt has entered the debate a little bit in japan, and as discussions began about this package, the size really started blowing up quite dramatically over the space of just a few weeks. it has quadrupled. over the long-term is to what extent is there a greater appetite for ongoing spending in japan then in the past? if $25 trillion does the trick, right? if you are away from a screen, you can always find in-depth analysis and big newsmakers on bloomberg radio broadcasting live from our brand-new studio in hong kong. listen via the app on bloomberg radio plus or bloomberg.com. this is bloomberg. ♪ you are watching "daybreak asia." hong kong analyze has mettlistea