tv Bloomberg Markets Asia Bloomberg November 22, 2016 9:00pm-10:01pm EST
the big aussie banks. climbing back to profit, we are joined by its chief executive. positivity going on today. asiante: we are seeing equities higher for a third lyingutive session, good in the materials. we have seen some metals like copper keys from solid gains during yesterday's session. japan close for a public holiday. the shanghai composite still up a third of 1%. composite is near overbought territory. a good session in hong kong. the gains and materials players 5.9%, alsoa, up eight -- up by .9%. a little bit of movement and
southeast asian markets. .uite a lot of corporate news trans asia airways falling 10% on reports that creditor banks will oppose the dissolution of the bank. you are seeing quite a lot of good buying in that stock. m surging the most in the year after one it contract with the national broadband network. having a look at the offshore renminbi, weaker. we did see the pboc weaken the fix today after strengthening and it yesterday. fix.boc cutting the yuan
strength ing solid the malaysian ringgit. , strength from the dollar there. quite a lot going on in the currency space. rishaad: thank you for that. word newsyou to first headlines. here is tom mackenzie in beijing. >> donald trump has abandoned his alleged to prosecute hillary clinton as hero finds his agenda. during the campaign, he looked her in the eyes and said that if president, "she would be in jail or co--- in jail." he said such a move would be divisive. oil regaining ground after opec deferred agreements on output levels for iran and iraq. talks in vienna failed to resolve questions.
russia, iran determined to boost production after years of sanctions. next wednesday. resorts staff members arrested in china face at least two months in detention for potential court appearances. beijing is cracking down on casinos. shanghai law firm says it is not clear if the matter will go to trial, but the maximum punishment is theoretically three years in jail. crown shares plunged on the detentions. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. rishaad: right, air asia x shares up. malaysia's long-haul budget character -- character --
carrier improving from the malaysian ringgit. the question is whether this momentum can be sustained. in the short-term, it looks sustainable. after eight quarters of losses, the company is optimistic and says it will get back to annual profit. 2.5the quarter, profit at million dollars, revenue up 24%. said, the malaysian ringgit made malaysia an attractive holloway destination -- attractive holiday destination. it is thee sense that beginning of better days when you look at the company ceo. he said a superset of results, more to come, more sensible business decisions being made, huge upside, looking ahead, air asia x looking from work
spansion. it says it sees opportunity in china. it had frequencies to japan, cut flights to australia, all part of a network restructuring. shares are down now. they have been lagging their peers. you're talking about the extent of the recovery, is it one. >> a turnaround. air asia x outperforming the global airlines valuation peers. returning 111% more than its peers, but no agreement among analysts, still divided, three buys, five holds, three recommending a cell. it is a tough space. the question is whether air asia can sustain the growth beyond
the next few quarters. aboutd: right, talking the man x, let's get to running the airline. what do you attribute this turnaround to? >> hi. how are you? a lot of restructuring, cost-cutting, trimming the roots , but moving forward, a lot of focus into two markets, china and australia. we have seen double-digit growth in terms of yields and passengers, so that something we have been focusing on for the last year. rishaad: you are talking about momentum ahead. do you see that? can you carry this through 22017 in your view? >> i really think so. this year, we are one of the only airlines that have grown
40% capacity, and we have seen loads up five points. 25% to 30%. yields next year will be more muted growth. what i'm planning for next year is to focus on the key routes, making it more mature, do more target markets, pushing more outbound travel from those markets, especially china must rate, and north asia. i am confident next year that we will have that momentum moving forward. rishaad: surely you are constrained by momentum if you're not taking on new aircraft. your capacity will be the same or thereabouts. >> not really. it is down to utilization. a year ago, we were cutting capacity. this year, we added 40%, but there is still more room for capacity, our utilization for aircraft is not where i think it should be, so we have a lot of
daytime flying, so there will be capacity coming in with 2-3 new routes we are adding next year. rishaad: which ones? >> the only ones i have told you, hawaii, and we are in the final leg of faa approval. i think we will get it just before christmas, and were looking for a summer start next year. one or two more in china, and a few more in asia. we are evaluating to see what makes sense, but were looking for a market, not just point-to-point. we are looking for connections from a short-haul where we can drive that market. rishaad: short-haul, everybody modelthe load costs works, it's about utilization and turnaround of aircraft. people have asked whether long-haul can work. is, if you go longer
and longer, the utilization of the aircraft becomes less, and you need to have more turnarounds take place, don't you? so how do you do that? you are correct. this sweet spot for us for long halls is 6-8 hours. our average lights are about 6.5 hours. you see in our around network, australia doing well, average about six hours. asia, korea and japan as well. honolulu as well, not a direct flight, so it is a stopoff. that will stimulate more japanese traffic that we believe will be strong for hawaii, because that is the number one destination for them. you have passenger rights from osaka? >> we do.
we have the approvals. everything is done. for faaust waiting approval. once we get that, we can open for cell, so we are quite optimistic on that. market has -- the been waiting for that for a year and a half. it takes a while in terms of due diligence, but i am confident. we are nearly there. rishaad: let's talk about one of with this benign oil price environment. it? you taken advantage of what price are you hedged at when it comes to aviation fuel? >> for this year, we took advantage as a group. we hedge as a group. we hedged 100% at $57. next year, we are trending up. 70% at $59aged at per barrel. we are trying to find more
positions. position maye oil drop further, so were trying to find more room to see if we can hedge more. i am quite confident in terms of hedging this year. we have been good and in the money as well, which is good. rishaad: the weaker malaysian ringgit makes oil more expensive. it can also help in terms of passenger acquisition. right.are in terms of, that is something we don't have -- hedge. our sales as well are not really malaysian ringgit. we have a lot of australian point of sales currency coming in, 20%. we have u.s. dollars coming in as well. if you match it, the impact is fairly minimal, so i am confident moving forward that you want see much of an impact in terms of currency. there is more paper movement in
terms of the revaluations of the currency. that is about it. about the other airline as a feeder airline. will they work with you on this? >> they work very closely with us. in the past, we were not there, but in the last few years, we spent a lot of time taking sure the team works together. we have a regional team that oversees the whole region. the key thing is to make sure we are competitive in the market. there are a lot of full-service airlines who do drop their prices, so for us, it's to make sure we are on top of things and the make sure we stay competitive. the key focus as well as to make sure we are connected to the short-haul. through, about to of our capacity connect long-haul, so that has been good
growth for us as well. rishaad: looking ahead, long-term growth plans, you will be growing the business. you say you will not be ordering more aircraft. you will be ordering more at some point. surely it is better to do it now rather than later. what sort of planes would you order? >> we really have a delivery schedule. in 2018, we are one of the first take ups for the upgraded version of our current aircraft, so that is 14% more fuel-efficient. the only reason i decided to not take aircraft next year is because we were just coming out of restructuring and i didn't not want to dump too much capacity in the market. in 2018, those aircraft come in the second half, and i believe that will be a game changer for us, and that will be for growth
as well as fleet replacements. some of our older aircraft will hit 8-10 years, but our average ages 5.1 years. we have 69 aircraft coming in for the next 10 years as well. rishaad: great talking to you. chief executive of air asia x. as selfie app seeing a picture-perfect listing it for this guides -- if it decides to go public, or will it? i look at how donald trump is targeting the central bank. this is bloomberg. ♪
league for banks. average short interest climbed 2.16% from 1.1% in october. rising fixed income yields have made higher dividend stocks less attractive. a man building a trump tower in manila has 10 named a special envoy to the u.s. the building is now under construction. it paid $5 million to use the name. he says he see's no conflict between the two roles. china's selfie app planning a share sale that would value the company at $5 billion. sources telling bloomberg there is a split over that valuation. it less people appear more attractive in photos. it generates 95% of its revenue
from selling mobile phones. a question not about the timing of rate hikes, but about donald's plans for the central bank. sources telling us that donald trump will move quickly to reshape the fed. how will he do that and what will he do? if heis a lucky president desires to put his mark on the fed and change it to his liking, because there are two vacancies on the board of governors. jeff rosenberg from blackrock says this is what will be preoccupying and having a lot of the attention once we get past the december rate hike. >> the longer term issues however are a bigger story, trump, the election, changes to the federal reserve, many board seats and governors that will be coming up for renomination orton
do seats to be filled, and that will change the tenor of the fed. of thee are 19 members committee. right now, only 17 because of two vacancies. governors of the board in washington are different. let's look why fed governors matter so much. appointed by the president and get to vote at every policy meeting. both the fed chair and the fed vice chair are appointed governors, and then they take that next step into that why trumpyou can see has the ability to put his mark on the fed quickly. back in-frank overhaul the financial crisis created a chairman of bank supervision supervising the big banks. president obama was never able to fill that seat because he was afraid of not getting his pick due to a republican-led congress. governor dan tarullo has been
the de facto chair, a big proponent of dodd-frank. thunder trump is not a proponent of dodd-frank, so people are wondering if donald trump comes in and makes that feist chair appointment, he may be pushed aside and feel like leaving at that point, but we shall see. is what kindpoint of governors would donald trump select? what kind of governors would donald trump select? >> he has been critical of monetary policy. why'd you keep rates so low for so long? let's take a look at a chart that illustrates donald trump's point about being critical of the low interest rate strategy. the turquoise line is the fed's going, the fed funds rate back to the 1970's, steady downturn. the white line a steady drop in bond yields. the fed has overseen a gradual
disinflation there he course. that turquoise line was flat at zero from 2008-2015, that is the time that donald trump and his advisers are thinking may have set up the potential to do that to help. a couple of more things, janet yellen's term is up. june 2018, when they finish their seven-year term as the fed it feist chair, chances are they would like to leave to. rishaad: nice one capping. this one, showing how the probability of a 2016 fed hike is now 100%. malaysia's central bank making a rate call, faced with asia's worst performing currency since the u.s. election. we have a preview on the way. this is bloomberg. ♪
rishaad: malaysia central-bank onguard with the ringgit continuing to be hammered in the wake of donald trump selection victory. they meet later to make a rate decision. very little wiggle room, don't they? at onestage was set t, but it another cu looks like mohammed abraham will follow in the steps of indonesia. all economist are expecting a hold at 3%. rishaad: unless they want to weaken their currency further. >> that is something they are keen on maintaining. last week, they put out caution when it came to offshore trading of the ringgit, so they are
attempting to rein in speculation. the path is narrow ring for deeper rate cuts because expectations that inflation will pick up in 2017. right, that rates are the path of least resistance. especially if there is a fed as 100%'s of respondents are suggesting. >> they would be looking to what the fed may do, but seeing as how it comes ahead of that december meeting, they will have to consider that, but malaysia has not been immune to capital outflows giving that reserves have come under pressure. we can see that happening here. malaysia has not seen an uptick in its foreign -- horded: this is a mentality.
we are talking here, the top one is singapore. left sidelook at the of the chart, this tracks the last time the u.s. made a decision on their rates, cutting back then. since then, we have seen ossie asean economies grow. rishaad: this is malaysia. >> the white line on the chart. there is little room when it comes to buffer. singapore, 70%. that is what we have at the moment. thank you so much for that. let's have a look at the trading day. a quick look at the market action. this is the hong kong market. .4%, the rise, composite, shanghai, .1% up. we would also be talking about the japanese market going on its
>> it is 1029 in hong kong and beijing. 's ceo sees muted capacity growth after rising passenger numbers. rose 35%, lifting net income to 2.5 million dollars, compared with a $65 million loss a year ago. they plan to hedge 70% of the carriers fueled next year. he said he is looking at a summer start to a new hawaii route. opecegaining ground after
deferred agreements on output levels for iran to an iraq. talks invite enough -- talks in the in a failed to resolve the issues. iran is determined to boost productions, and iraq was to keep pumping to pay for its war with militants and the north. opec meets next wednesday. facebook is so keen to reenter china, that it has created a tool to censor information in the country. the report comes from the new york times, and while it may please beijing, a return is not certain. china booked -- blocked facebook and 2009. -- in 2009. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. rishaad: this is indeed "bloomberg markets: asia". getting straight to the market action. juliette: japan on the holiday
today. we are seeing solid moves from the rest of asia. materials players lifting the asx 200, up by 1%. also hong kong. .5%, energyg up players doing a lot of good work. sinopec up by 2.4%. shanghai composite up .2%. technicals are showing that the shanghai composite, which is in bull market territory, is overbought. up by .5%. markets have been hit the hardest since the election of donald trump. malaysia under pressure with the ringgit down almost 5%. coming through in terms of the bond space, the likelihood that
the fed is going to increase rates at its december meeting. so government debt reverting to some losses. yields higher and australia, 2.7%. the australian 10 year note leading a reversal and bonds. just having a look at the 10 year note, unchanged in the u.s. at 2.31%. a quick look at currencies, the ringgit down .4%. the offshore renminbi showing weakness after the pboc cut the again after strengthening it yesterday for the first time in 13 sessions. president-elect donald trump making headlines after a another much-anticipated meeting.
donald trump had a meeting with the new york times, first on, then off, then on again. 6:00 a.m. tuesday, he took to that heand tweeted canceled the meeting when the terms of the meeting were changed at the last moment, not nice. it turns out that was not exactly correct. the new york times reported that the rnc committee chair falsely told trump that the terms had changed in the hopes that trump would cancel the meeting because he would not be able to handle the questions. the meeting did go ahead with the times. it is reported to have been cordial and went through a range of issues from climate change, hillary clinton, and donald trump's conflict of interest as head of his global business empire. he claims the law is on his side.
mr. trump has been tied to a philippine real estate magnet, who has been appointed the country's envoy to the u.s. he is also building trump towers in manila. he is quoted as saying that donald trump himself is an icon of real estate. he has been my reference for a lot of projects. he exudes luxury and quality. mr. trump is just licensing his name to the building, but has a quote on the website that says i have always loved the philippines. i think it is just a special place. i know that this project will be second to none. that is just one example. is trump has met with indian this partners to congratulate him directly on his win. they are building a trump are branded towers in india. we know mr. trump let his own
doctors sit in on a meeting with shinzo abe. she is supposed to help run the family business once mr. trump becomes president. reporters said to give him some time, but even during that meeting, he was asked if he would sell his company to get rid of perceived conflicts of interest. he said "that is a really hard thing to do." rishaad: asian countries are looking towards new trade pacts after the president-elect confirms that he intends to withdraw the nine it states from the tpp. with a trawled the united states from the tpp -- with a draw >> the talks have been going on for three years in the shadow of the tpp. tpp was a trade deal that was
going to bring in from the united states side all the regulations to raise standards for labor, environment, intellectual property. what they want to try to do is amaga made existing free trade agreements that have been worked out with other countries. and india, which is one of the reasons why they might have some difficulty getting it through. having a meeting next week and india has some problems with liberalizing their services. that it's a bit of an issue for all the other countries involved in it. rishaad: what are the economic benefits it is likely to bring to this part of the world? they would not be as much as expected from the introduction
there are benefits. basically it is to bring together all of these countries with harmonized tariffs and so global supply chains can operate more seamlessly. that is what the big finish it -- big benefit is. it takes in 30% of global gdp. rishaad: if india is part of it. how does china when out in this? >> it helps china and what it is already doing. into the regional economy. it has already become the biggest trading partner for just about every country in asia. it has the silk road strategy, b, china moving ahead with its integration.
one of the things that andy shay was talking about was china is donald trump coming into the white house, and for them, they can see this is negative news. this has been underlined in an editorial in the people's daily, saying that if there are frictions between the trump white house in china over trade, it's going to be a disaster. rishaad: andy shay was saying the trump presidency and the prospect of it is an unambiguous negative. we also talk about geopolitical issues, the south china sea,
and what this means they. does this tpp withdraw mean they pivoted out of the region? >> one of the things and he was saying that even though you might see donald trump with the drawn from the economic platform of the rebalance towards asia,
one thing to watch is his attitudes towards china expansion in the south china sea. i think donald trump would see that in almost a personal way. talked about how china's island the building in the south china sea was an affront to the american president, and there is implied criticism that the american president did not do enough to stop china from taking actions and the south china sea, so this will be an area to watch ,
particularly when you see donald trump pledging to build up the u.s. navy. rishaad: thank you very much indeed. next, why short interest in australian banks is rising and why it is a trade some call the widow maker. ♪
rishaad: a quick check of the latest business flash headlines. asia shares falling by their daily limit in taipei after the airlines says they want to shut it down. pays asia says it cannot notes due next week, however banks are rejecting that closure plan and will fight it. taiwan cooperative bank calling other banks to discuss counterproposals. first three quarters of this year, the company lost almost $70 million, and the future does not look any better. the board has made the painful decision to dissolve the airline. lufthansa will cancel 900 flights on wednesday after a legal challenge to block a isots strike failed. that 40% of its daily schedule and will disrupt travel for 100,000
people. frankfurt, beijing, los angeles are affected. lufthansa lost an appeal on the ruling. packagesny that flies for amazon and dhl once a judge to for striking pilots back to work. pilots alleging staff shortages. the action comes as online shopping searches. to rise 11%pected to $91 billion. the plane that slid off the lasty at laguardia month touchdown halfway along the runway. the trip.oated along not reportcrew did any problems. the pilot reported no difficulties.
let's have a look at short interest spiking again in australia's biggest banks. it is a trade historically so unsuccessful that it has been nicknamed the widow maker. what is driving this increase in shortselling? bonds have not been performing so well since the election of donald trump and his proposed and for structure spend. have been rising on bonds, making the australian thanks stocks less attractive. and dividendssive have been under pressure from more government regulation. also and are straight are required to hold more capital. there are a couple of factors as well that might way. the housing market in australia, by potential risks posed that, and the potential risk of a hard landing by china. were are the reasons that
seeing the shorts on a strain banks rising. the shorting has been known to fail in the past. a --uestion is why is such why is it such a hard trade to get right? ranking stocks are him and sleep popular with all strain investors and super funds. the dividends are very good, even though the stocks are expensive, the yields are 5% to 7%, and there is a tax break, so they are quite attractive for ordinary investors. often times when we see a dip in the price as a result of shorting, the domestic investors are eager to pick up the slack and by these tips and hold them for the long term, so a tricky trade to get right. rishaad: thank you very much indeed for that.
$500 million. the japanese automaker looks to spin off less important businesses. the amount will be deducted from the value. cal sonic surging. wang jianlin is still in talks with takeover targets for a listing for its property division. one droppedue after out. tougher scrutiny and a regulatory backlog have delayed the release thing effort. disney embarks on a 1.4 billion dollar expansion, adding two attractions and the dining area based on the "frozen" movie. the six-year project starts in 2018 and comes after the park
posted a loss last year. disney is hoping visitors will spend more and stay overnight. packard may introduce cost cuts after announcing a disappointing profit forecast. packard and its spinoff came out with numbers after the bell tuesday, a mixed report from these companies, the stocks swinging between gains and losses, but mostly unchanged. hewlett packard saying profit may fall in the current quarter, and the pc market as a whole has still not return to growth. they say the stronger u.s. dollar is creating pressure on the company. fell from 8%,e and the ceo says more instability and macro uncertainty's life ahead. someear today chart, up 34%. the stock has done well. hewlett packard enterprise heat , aprofit, but sales fell 9%
disappointing for crest -- forecast for first-quarter profit, a setback for meg whitman who hope to drive growth as part of this spinoff. it will be interesting to see how the stocks perform in the wednesday session. there has been a tech bounceback, particularly since the election. this could be a trend going forward. ok, let's have a look selfiemaker of a chinese app hoping to click with investors for a $750 million ipo in hong kong. a $5 billion valuation, although investors are are divided over whether that is realistic. what are we hearing about the ipo process? >> divided is the word.
chinese investors, and international investors not seeing eye to eye. chinese investors see it as a great opportunity. this company has 450 million active monthly users. thatad: i have to confess i did not know what this company did. what does it do? talk to the girls around you. they probably have more expertise. it is to help you change your looks. rishaad: might as well take a picture of someone else. wearing makeup, you can try on different shades of lipstick, then you can buy that lipstick. that is one of the selling points they can give to investors, just on the verge of monetizing the product. there are advertising and
e-commerce opportunities, but more skeptical investors are saying you are a mobile company th still makes revenue from hardware. it sells mobile phones as well. where will theng growth come from. rishaad: the question has to be how significant would it be if this company came to market and had this idea. million would be the largest ipo and all a decade in hong kong. what the company is testing is there valuation price. like i said, maybe they can fetch that price locally, but if they want to find a large name brand, cornerstone investors, they might have to give a little bit. rishaad: timelines, what should we be looking at news wise? >> they will be talking to investors in hong kong, new
york, singapore, london, getting more clarity as to what investors think their violation should be, and then we will see them pricing the valuation. rishaad: thank you very much for that. and its look at meitu some 750h may raise million dollars and a $5 billion valuation. asian equities extending gains we saw earlier. we have that advance after u.s. benchmarks rose to new records, particularly the dow breaching that 19,000 level. bonds in this part of the world pulling back. feeling, or should i say conviction, that they will be moving by 25 basis points higher in december. that is what we have at the moment. right, let's get to what else is coming up.
indeed, which are looking at as well. >> the focus remaining on oil. $50 aholding close to barrel, despite opec unresolved about how to bring iran and iraq into the fold as to the grand plan to cut output. what the lack of progress means for the official opec meeting indiana. we will be talking trump. is the china-u.s. relationship too big to fail? saysdent xi jinping relations are at a juncture point. what does the regional comprehensive economic partnership mean for the relationship? we will be talking trump and the ramifications for asian economies. india's cash crunch continues to make winners and losers. these a and mastercard look to
calm out on top, global payment company set to see a surgeon transactions and usage after the indian government crack down on high denomination banknotes. we will look at all of that and market action as well. let's give you the flavor of what is going on in the market. starting things off with a look at sydney, the opera house there , and equity market they're being led higher by those overweight mining companies. we do have shares in those coming about as we saw copper maintaining its climb following a surge in most industrial metals in the last session as well. no trading in japan, but the yen holding on to its retreat. emerging market seeing their currencies appreciate against the dollar. government debt reverting to losses because of that at 100%on now standing
that the fed will move by 25 basis points to the upside next month. this is the picture at the moment when it comes to south korean equities, up .6% at the moment. also, this comment saying the bulls have got control, and u.s. equities and many other developed markets will go higher, at least in the short term. that should help the emerging market space as well. a chilly hong kong at the moment. the hang seng up by .25%. asare looking forward "bloomberg markets: asia" continues after the stunningly short break. ♪
♪ announcer: from our studios in new york city, this is "charlie rose." charlie: tom friedman is here. he is a pulitzer prize-winning author. he is a columnist for the new york times. he is known for tackling big ideas and wide-ranging subjects. he has a book out which some are calling his most ambitious yet. imagine that. it is called "thank you for being late." in it he argues today's world is moving faster than ever and will only get faster. i am pleased to have tom friedman at this table.