tv Bloomberg Daybreak Asia Bloomberg September 16, 2021 7:00pm-9:00pm EDT
paul: hello and welcome to "daybreak asia." i am paul allen in sydney. sophie: i am sophie kamaruddin in hong kong. shery: good evening. i am shery ahn. our top stories this hour. in addition stocks look set for a steady start after a volatile down wall street. traders are weighing risks from china to the global recovery. evergrande looks to calm angry
investors. the debt ridden developer may offer discounts in its repayment plan. the imf's christin -- japan's leadership race widens. the former communications minister is seeking to become the country's first female prime minister. paul: the big story in australia at the moment is that the alliance with the u.k., the u.s., and australia to give australian your submarines, obviously, that has upset the fans, who had a $90 billion deal in place with australia to provide new conventionally powered submarines. one says france has been stabbed in the back. another former prime minister saying that those subs could have been retrofitted anyways so some questions over that. further muddying things, china wants to join the cp tpp so it will be interesting to see how
that application proceeds, considering china's disputes with a couple of australian -- existing ministers, australia and canada. shery: quite a turnaround, at a time when the u.s. withdrew from the tpp, and now, you have china want to join -- wanting to join its his successor, cp tpp. the imf feeling the pressure of being called out by her previous employer, the world bank, for upping china's ranking, in this report from october 2017 at a time when china was asked acted to latest key role in the bank's capital increase campaign. this is something we are watching closely. we will be talking about it and see what the repercussions could be. paul: we have also kept an eye on 10 evergrande. that company continuing to circle the drain. it has not enough unfinished property in the pipeline to cover three quarters of
manhattan. millions of homebuyers are in limbo investors have questions. we will watch to see what regulators do to arrest the slide because of course, the risk of contagion that the urgent -- at the present. junkie on -- junk bond yields spiking. shery: we are hearing the shenzhen world has reached a partial debt repayment deal with evergrande. this over the repayment of part of its debts with properties. this coming from shenzhen world as we speak but this has had repercussions around the commodities space. you see the tighter scrutiny when it comes to the properties sector. you are seeing commodities prices being led lower by metals because they are a key and integral part when it comes to construction and we have seen china steel output falling to the 17 month low, not helping iron ore, which is seeing a seven-day rout. nickel eating base metals lower.
let's turn to sophie because she is in hong kong, tracting the -- tracking the commodity impact. sophie: the iron ore drag on markets is showing up when it comes to stock performance. we have the materials index in asia off went 6% with iron ore futures in singapore tumbling towards the $100 market-making -- $100 mark. the sub index of nearly 2% among those. we are seeing lng players gaining ground. gas rising to an august 2019 higher. it is stocking up for this winter. this until the energy supply crunch has hit demand and consumption in europe as well. helping lift energy stocks in the region, taking a look at that brent trading your june 2013 highs with a rally on course to break a bearish trend line that has been in place since 2008 when brent prices were trading around $147.
markets staying tight into year-end if opec-plus sticks to its current plan. commerce bank seeing that gain at 70 next year, paul. paul: let's get to vonnie quinn for a check at the first word headlines. vonnie: thank you. china has hit back at the u.s. and the u.k. over its plan to help australia build nuclear submarines. a spokesman said the move will stoke an arms race and hurt international nonproliferation efforts. beijing questioned australia's commitments of the foregoing nuclear weapons and accused the u.s. and the u.k. of double standards when it comes to nuclear exports. beijing applied to join and asia-pacific trade pact once pushed by the u.s. as a way to isolate china and solidify american dominance in the region. china submitted a formal application to join they cp tpp on thursday. the u.s. abandoned the original
deal under president trump. beijing meets the agreement of all 11 member nations, including australia, with which it is currently in dispute. the former japanese communication minister will run to become the country's first female prime minister. the 61-year-old will contest a vote for the leadership of the ruling liberal democratic party september 29. the winner of that race is virtually assured of becoming the country's next premier. she is the second woman to contest the ruling party vote. jerome powell has ordered a closer scrutiny of the rolls around investments by the central bank policymakers. it follows revelations of trading in investments by two regional fed presidents. their actions were widely criticized for potential conflict of interest. they said their trade was in compliance with the rules. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries.
i am vonnie quinn. this is bloomberg. shery. shery: retail sales defying expectations in august and posting solid gains across most categories as a resilient u.s. consumer caps on shopping. kathleen hays -- kept on shopping. kathleen hays is here. kathleen: economists will say never bet against the american consumer. the american consumer was showing weakness in august. let's take a look at this chart, turning weakness into surprising strength. this was for a big drop. the consensus view of -0.7 came plus 0.7 so that right there was the good news. and in fact, if you look at another chart where we take out auto sales which were week, gasoline sales which fell mainly because gasoline prices were lower during part of august, you see that the number was 2.0%, a decent number, and remember,
auto sales are not weak mainly because people don't want to buy them. at least that's what we are hearing. it's because prices have surged, new car prices are up. used cars are in short supply. that is the demand signal. 10 of 13 retail sales categories rose in this report and its true that july was revised sharply lower, so the number, this lower base. to put the two numbers together, it is kind of flat. the year-over-year number has stabilized at 15% down from the loftier levels we saw when we were shooting up from the bottom of the pandemic. the quarter might be weakened a bit for the -- that is certainly a question for the federal reserve as they meet next week. paul: president biden is also struggling to get democrats on board with his economic agenda. what is he saying about this? kathleen: it is clearly a very
important issue because republicans may be attacking his 3.5 trillion dollar infrastructure spending bill but it is the discord among democrats, particularly progressives versus moderates, that seems to be holding things up now. today, when he spoke, he focused on the plight of struggling middle-class families, trying to get democrats on board through that channel. pres. biden: for a long time, this economy has worked great for those at the very top. ordinary hard-working americans, the people who built this country, have been basically cut out of the deal. i said this from the time i announced i was going to run. i believe this is a moment with potentially great change. this is our moment to deal working people back into the economy. kathleen: modern democrats, there's a couple of issues. lowering drug prices. they have to negotiate with big pharma. they tend to be big supporters, big donators to people in congress, also raising taxes on the wealthiest.
if you are a business friendly senator or congressman, this is an issue as well. the numbers are very important in one regard. joe biden has to get all 50 democratic senators on board. he can only lose three democrats in the house and that is why he is pushing his own party so hard. paul: kathleen hays there. china evergrande plans to let consumers and staff data on discounted properties to repay them for billions in overdue investment products. let's get more from bloomberg's representative. they are calling this a fire sale. will this help evergrande get on with difficulties? >> at this point, everything helps. the main solution is really to help these assets to raise cash so they can repay their liabilities. if they can have strategic investors inject capital to the company to make it a more solid
foundation but at this point, the time seems to be running out for them to find out the solution quickly. shery: and in the meantime, we continue to see the broader market repercussions. this gtv chart on the bloomberg showing how that property index is really close to the five-year those as we continue to see those property developers, suppliers, commodities, all feeling the impact. >> it is interesting that the broader market implication at sign the real estate sector seems to be relatively more,. a little bit of contagion if you look at the chinese yuan on a trade away basis near the highest since 2016, and commodities broadly seem to be high. shanghai composite index is not far away from that. it awesome just that the market thinks that beijing has both the
willingness and the capacity to -- crisis from evergrande to spread to the broad economy in the markets. shery: they don't want to see another lehmans moment. ye xie with his take on what is happening to the imf. the managing director has been called out by her former employer, the world bank, for applying pressure to boost china's position in a ranking of economies while she was ceo of the organization. china's position in the 2018 doing business report was adjusted lower last year following an internal audit. eric martin joins us now. what are the allegations against your gaza -- against her when it comes why she wanted to boost china's ranking? >> it's a time that this report
was being conducted and composed and put together. it coincided with a push by the world bank to win a capital increase from its shareholders. china being one of the biggest shareholders. the accusation in the report, which the managing director fundamentally disagrees with, she said today, is that she was pushing and pressuring staff to improve china's ranking in the report at the same time that she needed china's support and the bank needed china's support for this capital increase to be able to lend more to do more project lending globally. so that is the relationship that the people from wilmer hale, the law firm who conducted this report at the behest of the world bank executive board, that was the point that they have focused on and where they have
drawn attention with the report published this morning in washington. paul: the world bank pointing to some serious ethical issues over this but what is the likely blowback going to be for her? eric: it seems that it really depends. this is something that the u.s., the largest shareholder in the imf, says they take very seriously. a bateman by a spokeswoman for the treasury today as well as later comments from the national security council. and today is a jewish holiday all across the world, but particularly observed in washington in that congress, does not get a lot of work done today on yom kippur. tomorrow is a friday. a lot of people in congress have shown a lot of concern about china and we have seen that expressed by marco rubio, the ranking member of the senate foreign relations committee in
general about china. lots of pressure and scrutiny of whether the biden administration's export controls for china have been strict enough. one can easily imagine when you talk to people who follow the space, you can imagine republicans in congress bringing pressure on the administration. because this involves china and because of the focus on the u.s.-china relationship. paul: eric martin. still to come, two women are currently running to be japan's first female prime minister. we will discuss the state of women in government with naomi koshi later. we will be hearing from the riverfront investment strategist to says stocks are the only game in town. the answer to growth versus value question is yes. this is bloomberg. ♪
paul: global equities are on-call for a second weekly drop, subdued by the impact of the delta strain. the implications have elevated inflation and upheaval in china. let's bring in our next guest who says stocks are still the only game in town. joining us from virginia, we have the director of investments and chief investment strategist to riverfront investment group, chris konstantinos. you say stocks are the only game in town but i just outlined a number of factors which suggest may be the top is earned. we have the fed consistently talking about taper. is this a time to take some profits? chris: first of all, thanks for having me today. no, we don't think it is time to take profits. we recognize that september and october are somewhat notorious months for the stock market so it pays to be vigilant.
the u.s. market at least has been annual lysing at 35% growth rate over the past 10 months and that is not likely to continue either but when you take a step back and look at it, when i say stocks are the only game in town, what i mean by that is that return for taking risk is still superior to the return you get for not taking risk. if you compare bond yields to dividend yields, earnings yields in the united states or globally . unlike other bubblelike periods like the late 1990's when bond yields are much higher than dividend or earnings yields, we have a different situation today. that is what i mean when i say that stocks are the only game in town for investors. does that mean that there are not parts of the market that are
overvalued? of course not. there is definitely pockets of bubblelike behavior. in aggregate, for global macro folks like us, trying to see the forest for the trees, in aggregate, stocks go off a reasonable value here. paul: in terms of what you like, i know you like financials and infrastructure as well but i noticed tech was not on that list. is that one of those areas where you do see a bit of overvaluation? chris: depends on what part of tech you are talking about. there are parts of tech we are quite bullish on. the unsexy parts of tech, software and services companies that don't trade at huge multiples, don't have huge embedded future growth rates, priced into the evaluation, they just continue to churn out huge amounts of free cash flow, increasingly are sending cascio to growing dividends. there's parts of tech including
some of the mega cap names that we think are quite attractive. it's just that when you start to look at some of the more frothy parts of technology, those are the areas we have a little bit less appetite for because they are priced for perfection in our opinion. shery: what parts of that tech center or frothy? even when you're talking about mega-tech companies, the earnings potential is still very strong despite the evaluations getting stretched. their balance sheets are pretty strong and they are really benefiting from the secular growth in the area. chris: no doubt about it. by our estimates, probably somewhere between three years and five years of future earnings growth that would have eventually happened in the tech sector, got pulled forward because of the pandemic and the increased need and desire for things like cloud computing, remote working, etc., etc., but nonetheless, basically anything trading in a triple digit
valuation on earnings, that's too frothy, that's too spicy for our opinion. a lot from a key cash flow perspective, they are not big key generators yet. lower growth but higher key cash flow. shery: what do you think of china tech? what about the broader emerging markets space? this gtv chart shows the emerging markets really underperforming the s&p 500 in the past two decades -- in the past decade or so. at the time, you had such large china waiting in e.m. stocks that --where do you go from here? chris: right. so thanks for bringing that up. this is the controversy. what do you do with e.m. and particularly with china? a couple thoughts on this. we are underweight in our
balanced portfolios, emerging markets. we prefer the u.s. and within international, developed markets like europe. china is an interesting conundrum because as you said, the index itself has become much more tech heavy in recent years and, you know, technology is a higher-margin, more profitable, more efficient business model in general when you compare them to the china soe banks or industrials. but with that now has become increased scrutiny from the chinese government. and the tough thing for a stock market analysts, you know, it is hard enough to predict earnings. we all have models and methodologies for trying to do that but applying the multiple, the valuation you apply to those earnings is the trickiest thing and when you have overreaching government regulation in the sector, we have seen that in spades with the for-profit education sector in china, and now, we are starting to increasingly see that in tech as
well. it throws so much uncertainty into the mix, particularly for foreign investors because if you look at the china issue market, you brought it up earlier on the program. the market is not doing poorly really at all. the offshore chinese stocks, which is where most foreign investors are getting chinese exposure has been dislocated so it's hard for investors to parse just how much of a valuation discount to assign to a sector like china tech that is now clearly in the early stages of increased scrutiny and regulation. shery: naomi koshi --chris konstantinos will be keeping a close eye on those tech names. he is joining us from riverfront stages of increased scrutiny and regulation. shery: naomi koshiinvestment grs insights into the market. do not miss a big guests coming up later. we will be hearing from sri lanka's central bank governor as the country grapples with a foreign-exchange crisis. and you can get a roundup of the stories you need to go in today's edition of "daybreak."
paul: a quick check of the latest business flash headlines. china evergrande plans to let consumers and staff did on discount of --bid on discount of companies. it is holding an online property event by september 30, offering real estate in repaying retail investors in cash. the top evergrande investor has cut her stakes further. the wife of billionaire joseph lau sold $11 million worth of shares last week. the commercial bank has sold a risky financial debt in the offshore bond market.
the 81 notes were said to be sold at 3.2%, down from initial guidance of 3.6%. sources said it would top 9 billion by thursday in hong kong. such notes have seen robust man in europe. more to come in a moment. and there you have it— -woah. wireless on the most reliable network nationwide. wow! -big deal! ...we get unlimited for just $30 bucks. sweet, but mine has 5g included. relax people, my wireless is crushing it. that's because you all have xfinity mobile with your internet. it's wireless so good, it keeps one upping itself. switch to xfinity mobile and save hundreds on your wireless bill. plus, save up to $400 when you purchase a new samsung phone or upgrade your existing phone. learn more at your local xfinity store today.
vonnie: this is "daybreak asia." i am vonnie quinn with the first word headlines. -- has been called out by the world bank for applying pressure when she was ceo of the organization to boost china's position. she left the world bank in 2019 and is currently the imf managing director. china's position doing business report should have been lower according to an internal review. she says she disagrees with the findings. china has reached a milestone
and its covid-19 vaccination campaign, putting in the lead among the world's biggest economies. the national health commission says more than one billion people or more than 70% of the population has been fully vaccinated as of september 15. china cancer more than one third of the 5 billion shots that have been administered globally. canberra is pushing forward with action against chinese tariffs on australian wine. it requested the wto set up a dispute panel as the next set to deal with the issue. beijing slapped tariffs of up to 200% on all winemakers after bilateral ties worsened last year. china was the top buyer of australian wine before the duties, accounting for 40% of its exports. india is renewing its efforts to clean up one of the world's biggest piles of bad loans.
$147$147 billion of assets haven identified. parts with a new bad bank which will be called the national asset reconstruction company. an indonesian court ruled that the president neglected the rights of jakarta citizens to clean air. in a rare victory for environmental activists, reports said he must take strong action to ensure healthy air. plus it rejected allegations that human rights have been violated. indonesia rights have been
violated. indonesia ranks ninth among the world's most polluted countries according to an air quality report. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. paul. air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. paul. paul: china is now targeting crypto mining activities in labs and air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. paul. paul: china is now targeting crypto mining activities in labs and colleges in its latest moves against the crypto sector. let's get more from joanna ossinger. what is thewhat is the situatioh crypto mining in china? joanna: china haswhat is the sih crypto mining in china? joanna: china has cracked down on crypto miners in recent months and many miners have actually left the country
samsung says a report that the company is reviewing measures to separate the battery unit is not true. over in japan, another report from them this time, saying that the bank is seeking shareholder approval to reduce measures against a surprise takeover bid. need pond see planning to sell ¥500 billion -- ¥300 million in convertible bonds to raise capex and r&d. we are watching them at the open and the tokyo marathons scheduled for october 17 will be canceled this year due to the covid spread according to nhk's already being postponed. paul: the former japanese minister says she plans to run to succeed yoshihide suga. she seeks to become the country's first female premier. let's get more on this from our politics reporter in tokyo,
isabel reynolds. tell us about noda and what are her chances of getting the top job? isabel: seiko noda is someone who has spoken for many years about wanting to run for prime minister. the problem she always faced is she has not been able to get the necessary 20 backers within the conservative ldp to register as a candidate so for the first time, she has managed this. she has not given a lot of details about her platform yet but she has always emphasized that she's very much interested in issues about women, about children, about families, the elderly, and in particular, disabled people. she herself has a disabled son and she writes a lot about him on her blog. she comes in stark contrast to the other female candidate we have this time which is another former internal affairs minister who is very much on the
conservative wing of the ldp and emphasized things like how japan's traditions must be maintained. shery: half the candidates right now are female. how unusual is that in japan? isabel: this is actually quite an extraordinary and interesting development for japan. only one woman prior to this year had ever even run in the race to become the leader and that is the person who is governor of tokyo. obviously, she failed to become prime minister. what she went on to do shows that even entering the race can be a good career move from a politician even if you do not win the first time, your name is better known and you are seen as a prospect for the next time around so i think both women in this case can look to the next race in a few years time and perhaps have a better chance. shery: isabel reynolds there. even after the campaign, when it comes to japanese companies,
females hold just 6% -- she was elected the youngest female mayor in japan's history. herself, her company's training women for board positions and matching them with companies on board. naomi, great to have you with us. tell us your reaction to the candidates right now in japan's leadership race being women. how encouraging is it and how much further do we have to go? >> we have only 10% of representatives. now, i think it's different. shery: how much of the difference has come from
womanomics for what the previous leadership has done. have they done enough? naomi: i want to make sure boards for the public sector and private sector -- i was mayor in 2012. there were only 2% of female mayors in japan. and where i stepped down last year, there was still 3% of female mayors, so a mere 1% increase in eight years. so in the political arena, the change was so slow. on the other hand, for example, the board of directors -- there were only 1.6% of female board
members. last year, there was 6%. it is changing faster. paul: naomi, when you were mayor, did you have any difficulties relating to being a woman mayor, which was very unusual at the time, as you point out? has anything changed since then? naomi: yes, there were some difficulties because in japan, it is the same. we have a lifetime system so most of my subordinates are older men, so first, they -- the former mayor -- men. they did not like women.
so sometimes, we have a fight, and sometimes, we discuss that. but we have more discussion. we also know each other. but it takes time. paul: in terms of taking time, is any big improvement in gender diversity in japan just going to need generational change? is it just going to be a matter of time? naomi: yeah, i think in the private sector, i think it is changing faster. the reason is pressure following. now is a foreign investor asking the company to have more female board members. so under the abe administration,
he introduced corporate governance. encouraged foreign investment to make foreign investors profitable. so now, we have the corporate governance, which requires japanese listed companies to have diversified boards including women and foreigners. so the number of female directors increased. shery: what more can be done? naomi: yeah, also -- japanese primary federation -- representation of board members by 2030. so we need 10,000 more female directors. just when i'm doing now.
we train women and introduce female candidates to japanese companies. shery: you talk about the progress being made in the private sector. what else can be done in the public sector? because we need more political participation from women as well. i'd also just a personal curiosity. how does the younger japanese generation of women feel about broader social participation? naomi: yes, so political will is changing slowly. but this time, two candidates for prime minister -- it's a big change. and the younger generation, when i was mayor, i -- junior high
school. in elementary school. there are 50-50 student presidents, women and men, and junior high school students. 20% of female student presidents. two younger generations here, very few representation at school. but still, change is coming. people sometimes say -- i hope younger generations -- young women take in more -- paul: can you tell us about the gender pay gap in japan? how wide is it compared to other countries and what is being done about it? naomi: there is a huge pay gap.
one reason is most of men are corporate employees. on the other hand, women are part-time workers, so there is a huge gap. also, the vaccine is not -- covid-19 -- 350,000 male workers lost jobs. on the other hand, 740,000 female workers lost jobs, twice as many women lost jobs. so this is because the difference of their position. so we have to influence the whole working environment. shery: part-time jobs versus full-time jobs and perhaps also what sectors they work in. naomi koshi, thank you very much for joining us today. onboard cofounder and ceo
with insights into the japanese gender gap. when it comes to gender gaps, one key difference, one key issue that perhaps widens the gap is childbirth. motherhood, rearing kids. you can see that many women leave the workforce and many of them do not come back after they give birth. and we are now seeing in china, for example, trying to encourage more women to have children, given the costs of raising children, given how difficult it is for women to work after childbirth. the government really wants to encourage young couples to have children. the province providing 777 dollars in a lump sum payment when there third child -- their third child is born. paul: it really is an affliction of improving well, isn't it, a falling birth rate?
the province is not the first chinese province in china to attempt to do this, offering cash incentives. we have another city in sichuan province offering money as well, substantially less, only 77 dollars per baby compared to the $770 being offered in gansu province. this policy now becoming more commonplace in china. sure to tune in to bloomberg radio to hear more from the day's big newsmakers and get in-depth analysis from the daybreak team. that is broadcasting live from our studio in hong kong. you can listen via the app, radio plus, or bloombergradio.com. we have plenty more ahead. stay with us. ♪
shery: here's a quick check of the latest business flash headlines. credit suisse has reorganized its investment banking team in the asia-pacific in an effort to build its presence in the region. joe gallagher, who headed the m&a team in the region for 13 years will be replaced by 23 year credit suisse veteran christian. the bank has made a net 200 hires including china and the first half of this year. a taiwanese battery swapping start up, gogoro, says it will
go public to cut a deal with a promising company. a type sets their enterprise value at $2.35 billion. the combined entity will list on the nasdaq with the start up expecting to receive roughly $550 million in proceeds. >> spacs are designed for companies like ours with solid revenue, emerging fast growth. it takes a little bit of understanding to capture in the traditional ipo row. you get maybe 20 minutes to tell your story but, you know, after all, this is the decade of electric mobility. we have to start off on the right foot. paul: we do have markets opening here in sydney and tokyo and seoul at the top of the hour. for a look at what to watch, sophie kamaruddin is in hong kong. sophie: and tokyo, we are watching sports and money related stock split nhk media reporting that next month's
tokyo marathon is being canceled because of the state of emergency which saw the government trim its economic forecast in japan for the first time in four months and switching out the board in korea, while the allure of tech ipo's may be dimmed amid the revelatory -- regulatory angst, a share sale is drumming up interest. the price target at 90,000 won, above the 60,000 offer price at the top of the marketed range. the world's largest shipbuilder plans to use two thirds of its proceeds to develop green fuel and automation technology. they are aiming to have smart shipyards by 2030. shery. shery: coming up in the next hour, supply chain shocks are continuing to put pressure on deliveries and prices. a musical group chairman and ceo tells us how that is affecting his business with manufacturing hubs in china and vietnam. we will hear from societe generale's representative, who says they could be vulnerable to a fed shift.
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shery: hello and welcome to "bloomberg daybreak: asia." i am shery ahn. sophie: i am sophie kamaruddin in hong kong. paul: and i am paul allen looking at major market opens. asian stocks look set for a steady start after a volatile day on wall street. traders are weighing risk from china to the global recovery. ever grand looks to calm angry
investors. the developer they offer discounted properties in its repayment plan. the imf faces scrutiny, the world bank is called out for trying to boost china's ranking. we have market opens in tokyo and seoul. sophie: we are seeing divergence at the start of trade, little change to the nikkei225, adding .2 of 1%. we have seen fluctuations as candidates outlined a roadmap to lift the economy out of the pandemic. the government offers a lowering of its economic outlook amid the projected emergency which has weighed on consumption. checking on the open, a trading debut making a splash, 110,000 won above the offer price on that trading debut. kospi seeing downside pressure. the korean won is on the back foot, keeping an eye on what is
happening for markets ahead of the long weekend. korean guests in focus right now, trading in august 2020 eyes . switching out the chart, we have seen nasdaq futures take a hit in u.s., europe, and asia but prices elevated going into the winter season, price staying above five dollars per session. the aussie dollar set for a second weekly drop with iron ore headed to the $100 mark amid concerns around chinese steel demand as we are seeing risk in the chinese property sector. will markets in focus, saying above the $75 per barrel mark but it could be making a break of that bearish downturn we have seen since 2008. we have the end of the week performance, pulling up the
chart on the terminal, indian stocks have shown the resilience here, you have the sense, topping 59,000 as an rbi official spoke of easy policy support. it is hong kong at the bottom of the pack amid concerns around property, casino stocks, so that risk still looming large there. shery: despite the outperformance of india, we have seen asian stocks lagging behind. look at this chart, asian markets have been underperforming as traders weigh the risk of china to the global recovery. let's bring in our next guest joining us from hong kong, and of asia's equity strategy. what can we expect from asia given the underperformance we continue to see? is there more hope given the
valuation levels right now? or are we going to continue to be impacted by other factors like uncertainty in china? >> you really have two elements to understand the underperformance of asia. you have china underperforming the global markets and a specific china issue with china underperforming asia, and i think this is really the two broad issues we have on asia. one is have we seen the end of the reflation trade. by this i mean we have signs of 2022 earnings, and certainly south korea will not be as big to profits as it was last year, so this is one concern making us
cautious and asia, and the second one is china, with an major policy shift we have seen, the ever grande crisis, so we have these two issues where how we position in asia, we find among the larger market, looking at the variation, it is probably on china we will see the most upside. shery: you are expecting china to see more upside given evaluation levels from here? >> you have today the valuation and asia, which are up to a very disparate level with india on the one hand and china on the other hand. msi china has become the lowest
valued equity market in asia, and that is interesting because they had a premium default this summer, so it has become a discount. we started to see the premium rising again, so now you have a number of serious risks in china , especially the one around ever grande. we believe the markets remain investable. we are not seen a general -- from the private sector, and this is one market on which you could see the greater upside and probably the greater downside as well, so this is very much worth
the volatility is going to be the highest. paul: we did see today besides the difficulties around ever grande also tencent dropping out of the top 10 most wealthy companies in the world by market cap. the line around this regulatory risk does seem to be down. why do you see that changing? >> you have one part of the market which is the heart of the storm, the internet tightening, which as some -- on which you have some headwind for the next couple of quarters, whether it is on the regulatory risk, governance, and even cyclical headwind impacting those things,
so that is why we see actually the upside to be more on the on short rather than the offshore part of the market. i think it is early for bottom fishing in the infinite space. paul: are there any other markets in emerging asia look more appealing than china right now? >> what we are seeing in the rest of asia, you had the pandemic and the response to the pandemic, and also i want in korea in 2020, there going to contribute -- they are going to contribute to earnings, and this
is probably where we take the more cautious view. again, i am taking the one year view, you have india, and india as against all expectation been performing extremely well. you have this domestic money being active, and finally the second wave, which is not hit the economy, so this is explaining the sentiment that not looking at where we stand in terms of the valuation, important in terms of the history, markets, we cannot get more than eight niche view on those markets. paul: i went to quickly get your thoughts on japan as well
because planets seem to be alighting there in terms of p/e ratios. what opportunities are you looking at japan? >> you can see what is going to come from the external, the u.s. the equity market has underperformed. among the reason, you have the pandemic, you could see some implement here, you can expect a fiscal package to support ahead of the general election. these are some elements which could help to support the market . it is a big story for me on japan, especially when we look at it from a global asset
allocation point of view is what would happen if you see the u.s. treasury yield rising, getting back to where it was at the beginning of the year, 1.7%, and at the same time being resilient. if you see this combination, the japanese market would be the one where you want to be in asia. what we have seen is a very strong relationship with the u.s. and with the bond market, and this has continued. paul: frank benzimra thanks so much for joining us. let's get to vonnie quinn. vonnie: china has it back at the u.s. and u.k. over its plan to of australia build nuclear submarines.
a spokesman for the foreign ministry said the move will start an arms race and her international number proliferation efforts. beijing question austria's commitment to forgoing nuclear weapons and acute -- accuse the u.s. and u.k. of double standards when it comes to nuclear exports. -- has been called up by the world bank for applying pressure washing the ceo of the universe -- organization to bussan's position in the ranking economy. she left the world bank in 2019 and is currently the imf managing director. john's position in the 2018 world bank report should have been seven places lower according to an internal review. she says she does not believe the findings. the federal german jerome powell as -- investments following revelations over trading investments by two regional fed presidents. there act -- their questions
were -- the 61-year-old will contest a vote for leadership of the ruling party except for september 29. the winner of that race is virtually assured of becoming the next premier. noda is the fourth candidate and second woman to contest the ruling party vote. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am vonnie quinn. this is bloomberg. shery: still ahead, we look at the supply chain squeeze and how it is affecting consumer product makers like musical group. the ceo joins us for that. the world bank says georgieva applied pressure to boost
shery: ahead of the international monetary fund -- the head of the international monetary fund is being accused of pressuring the world bank to boost try to's position world economies. kathleen hays is here with more on this. what exactly are the accusations against her? >> they allege after a report by an outside law firm that in 2018 she put pressure on the committee that would decide the ranking in the doing business report, the global ranking, and this report says that because of this china's ranking was moved
from 85 to 78. they say the changes to the doing business report appear to be the product of two distinct pressure applied by leadership on the business committee. when you read from the report, it is kind of hard to follow, it seems very subtle. it is about looking at data, changes and reforms china is made, china is nervous about its ranking, and there seems to be a move to look at the data that she encouraged helping them move up. it broke down the data, it boils down to the interpretation of how it was used. they did use an outside law firm to do this. it was not like they had internal people deciding. she was at the imf then -- she is at the world bank -- she was
at the world bank then, she is at the imf now. those business rankings, the world thanked says they will suspend the report at least for now. they are important to emerging markets trying to attract foreign capital, because at the rankings, the better your position looks for lending, for receiving lending, so that is the impetus for this. it does not seem when you look at it that she herself was doing anything to benefit her own pocketbook, not anything like that at all. paul: what does happen now? what is the potential blowback? >> our bloomberg team in washington reporting she is going to keep going to work as usual, we know the treasury department, the u.s. treasury says they are reviewing and analyzing these serious findings. the u.s. is the biggest contributor to the imf and world bank, so this is important. people are saying she is
expected to discuss this report at a staff meeting on friday. let's look at what she says so far, i disagree fundamentally with the findings and interpretations of the investigation and data irregularities as it relates to my role in that doing business report. the world bank is abandoning the doing business report because we are concerned about potential ethical considerations. we shall see what happens next. it is interesting, it may be ironic that this is barely four weeks before the annual imf world bank meeting. we will see if it is a cloud hanging over as they begin. for now, many questions, no definite answers, but i assume she will get her chance to tell her side of the story. paul: kathleen hays there. china as applied to join the conference of an progressive agreement for transpacific
ownership. this is the trade pact pushed by president obama to isolate china, but president trump pulled out of that deal in 2018. our china editor has more. this is interesting considering china's relationship with some of those members are not necessarily one right now. what is it looking to get out of this? >> china has been on a push to join trade deals across the relation -- the region. and as strong relations and another member -- of members just signed another trade deal. china is looking to increase the scope of its free trade agreements to increase its ability to trade without tariffs, but it is looking to
exclude the u.s. from having influence in the economic situation in asia. if china does not join this agreement it will exclude the u.s. because any agreement as to be unanimous. obviously they're are looking to increase their ability to trade but also looking to solidify at what they see as their role as the central economic core of the asia-pacific region. shery: will china be allowed to join? >> it requires unanimous consent from all 11 members. exactly when they're going to get that, as paul mentioned china has problems with australia, candidate -- canada. japan has been very clear that china as to meet the requirements, but they are not very enthusiastic about that. they would much rather first
sign a deal with china, south korea, and japan. japan's position is that they would prefer to do the trilateral effort first and consider tpp later. there are a lot of countries it would not be happy about china joining, but there are also economic questions about whether china can meet the targeted agreement, state subsidies, enterprises, labor conditions, all of these things china would have to meet to meet the conditions of the deal -- make to meet the conditions of the deal. shery: coming up next, the latest on emigrante's fallout -- evergrande's fallout. more details next. this is bloomberg. ♪
shery: global developer china evergrande is set to sell properties as it seeks to -- a severe liquidity crunch and avoid an outright collapse. for the latest on the saw that let's bring in stephen engle. what is the latest? >> isopotential bond default looms or a potential restructuring involving local governments and the creditors, that also potentially looms. we have the political a potato, a flashpoint is these wealth management products sold to individual investors as well as employees, and a lot of that is coming to, and they are unable to pay, so what has happened is evergrande has come up with three different options. one of the most sensitive ones
and probably the most preferred by evergrande is to in lieu of cash basically sell inc. completed flats and apartments and parking lots and retail space and office space at a huge discount. they're hoping these wealth management products holders will take them up on this offer. 20% discount for residential units, 46% for office space, 52% for stores and parking lots according to sources close to negotiations, or you could potentially take cash, 10% for each quarter for the next 2.5 years or so. i love this statistic, evergrande has uncompleted flats accounting for about 3/4 accounting -- accounting for about 3/4 of a minute and floor
space -- manhattan floor space. it is a sticky situation for those holders. shery: stephen engle with the latest on evergrande, we are turning to singapore because the government and temasek are setting up a $1.5 billion fund to invest in firms and ipos. this move in order to increase the appeal of singapore's stock market. we are hearing that the move is meant to increase at the attractiveness is a location for capital raising, the state investment giant and singapore exchange are involved in the effort, edb will start the fund nearing ipo. a campaign to ramp up domestic
shery: we have breaking new set of singapore, we are getting the latest nonoil domestic numbers, month on month the contraction of 3.6%, missing estimates of a gain of 2% in the second consecutive month of contraction for export numbers month on month. also the year on year number really missing expectations, a gain of only 2.7% when analysts were expecting a gain of more than a percent. that is coming from a jump of 12% in the previous month, so
those august numbers looking weak, not surprising given that we are seeing exports show impact of the delta variant it spreading across the region. when it comes to electronic exports, it is a much bigger jump than analysts expected, a jump of 16.7% year on year. the expectation was only for a percent, also a gain from the previous month, so perhaps showing when it comes to electronic commodity exports they remain resilient. let's turn to vonnie quinn. vonnie: beijing is applied to join in asia-pacific trade pact once was by the united states as a way to isolate china and solidify american dominance in the region. china submitted its formal application on thursday. the u.s. signed the original -- abandoned the original deal under president trump. beijing easy agreement of all 11 member nations, including
australia with which it is currently in dispute. -- is pushing forward with action on chinese tariffs on australian one. it set up a dispute settlement panel to give the issue. in slaps tariffs of up to 200% as ties were celestia. india is renewing its effort to clean up one of the world's biggest files of bad loans with a sovereign guarantee of $4.2 billion. india's finance minister says $147 billion in nonperforming assets have been identified. the new bank would be called the nrncl. and indonesian court has --
in the rear victory for environmental activists the court said they must take strong action to ensure healthy air. it rejected allegations human rights have been violated. indonesia ranks ninth as one of the world's most polluted countries. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am vonnie quinn. this is bloomberg. paul: let's eat out we are tracking on the markets note, sophie kamaruddin is in hong kong. sophie: asian stocks had to step a three week game. asx 200 lower. an tokyo chipping stocks are getting ground, trading at eight june 2008 hi. -- bank falling for an eighth straight day. i went to i light hyundai heavy,
making a solid debut. a little above the ipo price of 50,000 won. a stock was controlled at jefferies, but it did break its earnings forecast with steel. we are seeing fortesue -- fortescue fall to a low. -- set for the first -- worst week on record amid concerns on chinese steel demand. switching of the board, a breather for print, but crude is set for a fourth week of gains. guess richard is extending the drop, still holding above five dollars, morgan stanley boosting
their gas forecast on tightening markets going into the winter season, ahead of which we have seen asian buyers paid top dollar, cautioning guess markets remain very exposed. shery: as the global energy supply crunch fuels a surge in prices, china staring down another winter of power shortages. to discuss is an analyst. one companies or markets are going to be most susceptible to these rising prices in asia? >> probably less than what some people think. european and asian dynamics are different, but bloomberg analysis shows the actual spot trade only amounts to 20% of global energy trade, and the high prices we are seeing in asia right now is for spot delivery of liquefied natural
gas. most l and g get most through long-term contracts apply. this is linked to oil. the spot price in november and december is about $23. in comparison, quilt link contracts are between eight dollars to $12. the price you are seeing on the screen is not necessarily the price that will be lending in incheon, tokyo, or shenzhen. smaller buyers are more reliant on the spot market, and those who have not secured their energy needs through long-term contracts. paul: that is the big picture. what is going to be the real-life implications of all of this? what are ordinary people going to feel when it comes to these
prices? >> we are already seeing it hit industries, ceramic factories, was factories -- glass factories. we are seeing sugar production being affected in the ok, alumina prices are going up. all of these things are being felt in the industry first. the biggest fear is that as the northern hemisphere enters the winter. vanke, there is a growing fear that if the situation does not alleviate itself markets will let you look or gas rationing, and the biggest concern is that if we are headed for a very cold winter if there is a shortage for guess apply for people to keep their homes -- heat their homes. shery: what is the upside risk then? >> all of these things are
weather related. if the winter is not that cold, we might see prices easing. if it is cold, prices are going to get worse and if there are typhoons impacting shipments into asia or hurricanes in the gulf of mexico impacting u.s. energy shipments those are going to be the issues to watch out for. gas prices are highly susceptible to weather variation. paul: our analysts, thank you. so to come a musical ceepo -- ceo will talk about how supply chains are impacting him. this is bloomberg. ♪
paul: the supply chain crunch meant to be temporary it looks like it will last well into next year as the surge in delta variant it up and's factory production in asia and disrupt shipping as well, posing more shocks to the world economy. our next guest runs a hong kong based musical group which makes bluetooth products. they have manufacturing hubs in china and vietnam and say they cannot get enough components continues. joining us now is the musical group chairman. thank so much for joining us. i am wondering if you can give us a sense of how much more
difficult it has got to secure a on shipping containers. >> [indiscernible] the situation is quite difficult for us. we cannot get the container on time, so that is the problem we are encountering now. paul: so this is obviously having a severe impact on your business. what sort of impact are you expecting it to have on profit margins as well? >> [indiscernible] especially with overhead going up. we do not think we can get a profit margin in this year, and it is quite difficult when the shipping cost is up, so we are
[indiscernible]. shery: what about raw material costs? >> raw material costs are special. those have been coming up about 300%, and also others have been going up. it depends on the type of component. the impact could be about 10% to 12% of total cost of the product. shery: when you talk to other people in the industry to they have any visibility on how long this could last? >> we see that there are factories coming up, so we hope
the situation will ease up in the next year, but not for sure. shery: is there anything that the government or other organizations could do to help? >> we do not see that. we ourselves after take care of the issues by our self. this is a difficult year for all of us. paul: you mentioned that there may be more factory capacity coming online, but what about worshiping capacity? do you expect to see more containers on the ocean in the near future? >> we do not see that because some of the ports close down, or some of the containers, turnaround time takes much longer because those ships have
two acre -- anchor, so the turnaround time takes a lot longer than what we are expecting. [indiscernible] paul: i was going to ask you supply chain issues -- whether it supply chain issues are all related to the pandemic or other factors? >> [indiscernible] the supply chain has been disrupted because of a demand surge in this year. shery: are you seeing that being frontloaded given the holiday season coming up? >> yes, some customers are
trying to -- their inventories earlier this year, but it is difficult for us because we do not get enough components to handle deliveries on time. shery: we understand the situation -- how difficult the situation must be. thanks so much. a taiwanese start up which specializes in better be swapping technology as announced plans to go public and list on the nasdaq do a merger. it's as the enterprise value at $2.35 billion. the ceo spoke to stephen engle. >> we recently announced partnership in both china and india, but with extension always takes global capital, always making sure that as we work with our partners we operate with
absolute transparency so that we can stand shoulder to shoulder with our partners as we commercialize into those markets, and there is no better market to do that than the nasdaq where technology giants where the microsofts and googles of the world of his day. emerging fast growth, it takes a little understanding to capture it. in a traditional i you get 20 minutes to tell your story -- ipo you get 20 minutes to tell your story. >> it is an interesting investment i saw your press release. it is a combination of a merger with ride hailing delivery and another, and they have key investors themselves, everyone from alibaba to google, facebook, visa, and a whole
litany of companies. what are they going to bring and how are you going to leverage that investment from them? i assume southeast asia is going to be your next big push. >> south east asia is the third longest -- largest market. of course the largest is china. -- with our partner, the largest two wheeler electric maker intranet with 23% architecture. together we are going to create this open network that really allows customers to swap and go and go as far and for as long as they want. >> the partnerships you are announcing the last few weeks, the two largest two will makers.
what are your goals for the china market and are you going to bring that infrastructure, and is it scalable in a chart market dominated by those two players? >> we see ourselves growing quick but in a controllable way in china. the team is ready. we will start with -- is a pilot market and quickly go into another right after that and expanding to half a dozen cities next year and franchising our solution into many more cities after that. paul: that is the gogoro ceo speaking with bloomberg. we will be hearing from those for lincoln bank governor -- sri lankan bank governor. plenty more to come.
proceeds to fund eco-friendly vessels. -- the outstanding loans will mature in september 2025. this is casino operators extended declines on thursday after recent crackdowns, and j.p. morgan downgraded the stock. china's industrial commercial bank as sold risky financial debt in the offshore bond market. the notes were said to be sold at 3.2%, down from initial guidance. sources say they topped 9 billion in hong kong. shery: we have to talk about the evergreen story not right -- evergrande story, right? let's bring in our uber markets anchor. how are the markets --
narratives changing over the last few weeks? >> it has shifted. pricing, whether in dollar bonds, that is out stocks are priced, is curious i guess is another way, extreme, let me get on the in their. in a lot of ways, let me use an astrophysics analogy, when you cross the event horizon into a black hole, the mass starts to break down. when you press the book at 15%, what constitutes book? you have yields on two eurobonds 10 times riskier than what you were getting in china's talk market, it shows the narrative has shifted from repayment to recovery. well we are getting signs of stress in parts of the evergrande story and some parts
of the china property space, it is still not showing up broadly when you look at funding rates. this is obviously something we will be tracking closely as we wrap up another week of this evergrande story. paul: david ingles there watching the evergrande story as it continues to unfold. sophie kamaruddin is tracking the brundtland in chinese property stocks. sophie: stress showing out in chinese real estate names as well, to percent of hitting new five year lows about morgan stanley cutting their outlook with martin pressure seen for the real estate space, capital economics saying the property funds will be followed by a listing decline saying intimate is set to enter an era of sustained decline. you have been asking the question --
it needs to sell or property with lower prices. shery: now the only property developers, given china's crackdown from tech to education companies, it is changing the dynamics within china. the founder of a chinese e-commerce platform losing work wealth this year than anyone else in the world, and our viewers can take the function go on bloomberg. we are tracking 500 members of an index, and his laws is much larger than anyone on that list, even larger than the $16 billion loss by the evergrande german. we have been talking about is problems with evergrande there. paul: losing 27 billion, putting
evergrande's problems into stark perspective. adr down 44% year-to-date, and unfortunate in a way, because it was not long after that they posted their first quarterly profits. the regulatory crackdown really starting to bite not just for the companies but the owners of those companies as well. shery: the future of those chinese billionaires really hanging on the direction of that common prosperity drive by president xi jinping, and that is having an impact on credit markets as well. look at futures right now. here in the new york session chinese and art losing ground for a seventh consecutive session. u.s. futures continuing their move downward, .2 of 1%. they fell in the new york session, but also stronger-than-expected retail sales numbers which spurred speculation that the fed could be moving quicker toward
tightening. taiex futures unchanged following a week when we had chinese activity numbers really reflecting virus controls and tight curbs on property with retail sales missing estimates, asset investment, as well as industrial production. yuan holding steady at that 645 level. paul: let's take a look at other markets in the region, nikkei in positive territory. the cost be weaker, but in australia we are off by more than .9 of 1%, and the miners taking a hit, iron ore price continuing its downward spiral. one of the worst performers on the market unsurprisingly. iron ore taking a real beating,
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