tv Bloomberg Markets Asia Bloomberg August 17, 2017 9:00pm-10:00pm EDT
it is losing its grip on the pc market. we end the week -- we started the week with geopolitical sermons over north korea. that has dissipated to a sense and now we have the vix spiking. the s&p seeing it second-worst decline of the year. that was on continued political dysfunction out of washington. the trump administration in a state of policy paralysis as the to speak continues about charlottesville events and through his twitter page. playingrisk aversion into the u.s. session. i want to go to a click chart because this is a data point macro line we are looking at this hour. we are getting china property numbers, and what we have seen
is this calm down for major cities. beijing and shanghai seeing quite a sharp slowdown when it comes to stocks in these major cities. moving quickly to quell what was seen as a property bubble. there were concerns of housing affordability and speculative line. we have seen the slowdown in prices. bit moreing a little moderate because these measures have not been as severe. a key point when it comes to china's economic health because we do know that the property sector there affects more than 40 other sectors, everything from cement to furniture being affected by these numbers. in about 25 minutes, we should have those numbers. been talking about the surge in volatility over data in the u.s., concerns about policy as well as that terror attack in spain. we are seeing a downside in the asian session now. >> as you said earlier, asian
stocks are playing follow the leader. the drop in the s&p 500, one .5%, the second-biggest drop in 2017. -- 1.5%, the second-biggest drop in 2017. take a look at futures. markets might be able to take these catalysts in stride. take a big picture view, asian equities might see a selloff.7, a broad the drag is on tokyo. although the nikkei 225 saw losses earlier over 1.5%. the topics jumping in tokyo. --opx -- topix jumping in tokyo. malaysia andcks in taiwan, both dropping ahead of second-quarter gdp.
safe havens mostly holding gains . treasuries retreat somewhat. the 10 year yield picking up about .2%. a rally in metals is taking a breather of sorts. 2017 seems to be the new battle line for crude and brent, giving toabout .2%, still not able hold gains above the $51 a barrel mark. take a look at some movers in asia. one big winner so far is in .eoul it was raised to a buy. tokyo electronics gaining. a potential catalyst hear from applied materials beating estimates in the u.s. we are seeing chipmakers move on that and stocks rising .8%.
alibaba delivered a solid earnings report over revenue and profits beating estimates. haidi: very solid indeed, and we are still seeing some gain across the tech sector. sophie, thank you for that. let's get you caught up with your first word news. >> at least 13 people were killed and more than 100 injured pedestrians on barcelona's most famous street. two suspects were arrested after what authorities are calling a incident.in's than -- the perpetrator is still at large. germany, france, and the u.k. they stand with the people of barcelona. >> our neighbors in madrid, nice, brussels, berlin, or london have experienced the same horror that the people of barcelona have suffered, and i want my first words to convey to them the affection, solidarity,
and affinity of beholder whole of spain, and the whole of the world. whole of spain and the whole of the world. haidi: military action against remains an option according to secretary of state rex tillerson. he said a potential strike has been endorsed by president trump. earlier, steve bannon said it was a nonstarter. millions of people would die in seoul. president trump has jumped back into the charlottesville controversy, decrying the "foolish" removal of confederate monuments. in a series of tweets, he said it is sad to see american culture being ripped apart and accused one gop senator of lying. paul ryan and majority leader mitch mcconnell have distanced themselves from him. unexpected loss last quarter
after losing its grip on the global pc market. it's cell phone unit continues to bleed cash, leading to a net loss for june. it has fallen for six quarters. that's compared to analyst expectations of a $33 million profit. lenovo rolled out new products. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i am haslinda amin. this is bloomberg. haidi: thanks for that. returning to our top story, hours after a van killed at least 13 people in barcelona, spanish police have perpetrated a counterterror raid in cambrils , a town 120 kilometers away. four people are dead, one injured. david, what is the latest that we know? is there anything the government
can do to prevent this type of attack that we have seen with increasing frequency time and time again? say one ofuld really the difficulties the government faces and the situation is the there isn't a lot -- that there isn't a lot they can do. short of giving in to the demands of isis and the like, and not taking part in the fight against these terrorists. what they can do though is to try to mitigate the risk of , and that is by doing what i would consider to be fairly simple things like erecting barriers around key forest sites. i have just come back from spain, and one of the things i noticed when i was there is that there are very few barriers around a lot of the main tourism streets. managed tothis van
get access to a thoroughfare that goes through the middle of barcelona, and it is jampacked with taurus -- tourists. we have seen them in nice, in paris, all over europe. one would think the authorities would be doing what they can to, as i said, mitigate the chances that anyone can actually get a van in these areas. then again, there are so many places in europe that are exposed to traffic and the potential things that terrorists can actually access. -- seems that terrorists can actually access. and they have a tragic history when it comes to terror events. what is the outlook now? in 2004, we saw 200 people killed by terrorist attacks in madrid. our memories are fairly short in terms of tourism ins ain't. spain being -- in spain.
doing well, 3% growth this year, in part because tourism and related industries have been taking off. the outlook as we could potentially see a check on tourism. -- ind not consider spain, there will be continued demand for tourism, although in barcelona, you might see a drop off, not so much because people are afraid of another attack, but the joy of walking through the seat of -- streets of this beautiful city are going to be abated knowing we have just had this terrible attack. haidi: we have seen this kind of in entertainment areas across paris, london, berlin, and now barcelona. david in hong kong with the latest on that terror attack in spain.
business development from japan to singapore. they will become the chief asia-pacific business figure. goldman --ire from he retired from goldman in 2012 to run a private equity firm. delta airlines is involved in three incidents in today's at jfk airport. delta 737 hit the tale of an american airline plane. the second incident involved to planes on wednesday and an hour later, another delta jet hit a flatbed truck. the faa is investigating. released its july report. a bank of america merrill lynch outey of funds points
possible policy mistakes and possible conflict over north korea. joining us now -- great to have you with us. this idea of a policy mistake, does it suggest, given the political turbulence in the u.s. at the moment and the uncertainty over brexit, our --are -- are banks likely to take a more steady as she goes stance? legs i think the simple answer is yes when it comes to rate hikes. i think when it comes to the balance sheet, they feel more motivated in terms of trying to want to unwind their balance sheets eventually. financialhere is on conditions. you continue to see that in the discussions that they have, that the concern is one of financial conditions and returning policy
to more normal circumstances, widerularly a concern, concern, about asset price distortion in markets as well. haidi: we have seen that rhetoric kind of get played up increasingly in the fed. also, we have seen the latest , this concern over inflation. this is really a structure issue coming from changes in wageology and automation, gains as well. i want to draw up a quick chart. forecasting when it comes to core inflation. one year forward is in white. you can see how the actual turnout has diversion going in the opposite direction. talking about the structure change in a way that central banks, globally, not just the fed, are considering a concept
of inflation? look, i think is kari made the right call earlier this year when he asked laned that there is too much focus on -- explained that there is too much focus on inflationary risk. threat forc risk and the past 30 years has not been inflation, it has been financial stability. 1987, obviously, we had the equity crash in the united states. 1997, the asian financial crisis. the globaltart of crisis. the amplitude of these crises has been getting bigger. shouldwhere the focus be, not necessarily on inflation. inflation has not been a perceived threat or a realized threat for the past 30 years. instead, it's financials. janetk that's part of why yellen will be speaking on august 25 at jackson hole about financial stability, which does lend more of a hawkish tilt in terms of where we may be going
in terms of balance sheet normalization. i think we are wrong to be over and --asizing overemphasizing and getting upset over the risk of inflation, when it's financial stability that has been at the heart of our problems. haidi: how much does it change what the fed would do or how confident it feels going through an unwinding of the balance sheet when you see the perceived policy dysfunction taking place, the distraction from actual tax reform, infrastructure spending that's not coming through from washington? >> yeah, i think that's been again recognized as -- in the ,ed's remarks as well recently overnight, to the extent that he mentioned the debt ceiling will have to be taken into account. i think clearly the us why we are intricate territory for the next month or two. tricky's why we are in territory for the next month or
two. we have to see how policy negotiation goes in the u.s. fed'say play into the decision-making process. but again, when it comes to the balance sheet, you see that consensus again in the fed minutes, the consensus around balance sheet unwinding, but there is a very active, live debate about to what degree short-term interest rates should that interest rates have not really materialized. haidi: i just want to check out this quick chart, 116, showing the assent of the euro. do you think the strength in the currency is going to be enough to outweigh a more hawkish sounding mario draghi and prevent him from renewing his concerns about inflation? >> my sense is they will try to sound unified in their outlook on the balance sheet. merrill lynch
believes the ecb will proceed with some sort of papering -- tapering of its balance sheet to 62 million in the first half of 2018, and maybe to zero in the second half of 2018. from that perspective, i do think we are still on track. and janetio draghi yellen will try to be united on issueront and address the of financial conditions and hopefully calibrate themselves as well. i think that's the key thing with euro-dollar. you can see it in the accounts of the ecb, that they are more concerned about the strength of the euro. in fact, it would be helpful if yellen and draghi would calculate their remarks so that the perceived relative unwinding of the balance sheet, the trajectory of that unwinding of the balance sheet, means that there is not too much volatility
euro-dollar too strong or too high that it would projecte with the ecb's three -- projected unwinding of its balance sheet. if the euro were to go to much higher, it would tighten financial conditions. haidi: maybe something unexpected out of jackson hole as well from mario draghi. thank you very much. up, their earnings are the best in years, but is it sustainable? ♪
s&p on of the air on the domestic political concerns as well as the terror attack in spain. markets down by 1.25 compared to futures, just a little less than that. lenovo.be watching had a surpriser quarterly loss, its first loss in about six quarters. it appears to be losing its grip on the global pc market. at the same time, it's investment in its smart phone services are not paying off. we were expecting a net income of $32.9 million. the pc segment is the only profitable one, so serious headwinds for lenovo. also watching chinese insurance. bloomberg asia
pass insurance -- asia's insurance analyst. is this what we were expecting? i think overall, they came in on the high side of estimates. about 46% year on year growth in the first half. they did well in the first half and mainly the second quarter is margin expansion as well as hiring more asians. if you look at the size of the asian workforce right now, it's about 1.3 million, and that is close to the largest in the country. what does massmutual's asia business do in terms of product offerings? quick sorry, can you say that again? does this do for the financial products offering? so, what they are
doing is actually going after the high-end market, namely the urban area and the like. the product offering basically surrounds long-term protection and regular term savings plans. these are typically higher-margin products. the read across the rest of their peers is pretty good as well. looking at things like cpac and new channel life. haidi: thank you for that. ven lam in hong kong for us. we are going to take a look at the china and hong kong open. also, just in a few minutes time, we should be getting china property numbers. a cooling in the property market. major cities continuing to buy.
♪ not: 29 in hong kong -- 9:29 in hong kong. we are waiting for the opening of markets. markets joining in on the overall selloff being extended to the asian session. a downside when it comes to the u.s. wall street session. the second worst decline from the s&p this year. concerns about policy coming from the trump administration and the tragic terrorist attack in spain. yen, a second game
for the yen. safe haven assets holding onto gains. the latest property numbers, taking a look if we are seeing a disdain soft landing -- a sustained soft landing. they want a goldilocks situation. take a look at this chart, gives you a snapshot of the slowdown we have been seeing. they had seen extraordinary of a year.the period 60% year on year. downis come back -- come rather severely after we see measures.g
chart some from this of these smaller cities, they slowdowng less severe when it comes to property prices. marketch and uneven when you talk about chinese property prices. into that more. >> in the last hour we get a of data and we have the first batch. beijing, new home prices falling for a second consecutive month. .04 percent. beijing, july, existing home prices falling 0.8 percent.
cells prices have sales pricesome have been brought down. cities tracked by the government, that is down from june. this is month over month. these are the numbers we want to look at showing the real trend. year-over-year numbers are quite skewed. as we got the previous one, year-over-year home prices, all in china saw price again. 56 of in july rising in june. versus 60 in
shanghai outng and right now. the third tier cities are what we're going to be looking at right now. they have seen the fastest price never cities you have heard of have been rising. we are still awaiting july numbers. aging, july existing home prices, rising 13.1%. shanghai july existing home prices falling 0.4 percent. haidi: that is the take away. given what we know about the property prices. we will be getting more analysis as we get more detail. in the meantime, let's take a look at shanghai and hong kong
markets joining the fray. not a happy friday for the rest of the markets. how are the chinese markets doing? shanghai, we have the index falling. zooming in on what is going on with property players, real estate segment down 0.2 percent. we are seeing the continuing trend of fewer cities in china posting higher home prices. this one sliver of green when it comes to the shanghai composite. that is insurance. taking a look at the broader -- what is going on with the construction segment, we do have construction stocks moving half a percent and building products just slightly higher. marginal gains for that segment in shanghai. 1%g kong shares falling over
, extending the drop we saw on wednesday. chinese shares set for a weekly gain of over 1.5%. gains for ang onto second day advance this week. in singapore we are seeing the longest losing streak for stocks. shares in taipei, those falling ahead of numbers anticipated later this week. let me show you what is moving in hong kong. , that stock seeking after a two-day rise. rising, the stock was leading gains. alibaba pictures, i want to alibaba ishis,
burning more money on media and entertainment. its content craze is being fueled by the gains from its commerce business. some of these riskier, unusual bets are playing off -- are paying off. let's get to the first word news. spain is on high alert after the death of civilians and presumed terrorists. suspects shot dead by police in a town south of barcelona. the operation was linked to the death of 13 people hit by a speeding van in barcelona. the prime minister says spain and the world stand by the people of barcelona. president trump is said to have a bandwidth plans for an
infrastructure --to have abandoned plans for an infrastructure council. order foran executive the panel in july but failed to make formal appointments. it follows the cancellation of two other advisory councils since some business leaders quit. a report cites an official saying the proposed a number of shares exceeded -- global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪ haidi: thank you for that. alibaba closed at a record high
in new york after reporting sales in earnings that topped analysts expectations. that was fueled by the e-commerce business. we have our asian tech reporter who has been covering alibaba in detail. it was a very impressive set up. on all frontsat for alibaba. doubling,, revenue that growth is coming from their core e-commerce. their new initiatives in clouds is doubling. the company says they will continue to invest in all the sectors while they have a strong growth. haidi: did we get any information about the international expansion ambitions? ofe we looking for details the success they can replicate beyond china?
>> in southeast asia specifically, they reported earlier they were investing. billion round of fundraising for tokopedia. without alibaba in the game, it looks like they have that foothold in the region with took a pdf. haidi: thank you so much for that. more on alibaba a little bit later. our correspondent will be joining us from shanghai to unpack those very impressive earnings. the bloomberg breaks down china's property prices. this is bloomberg. ♪
is "bloomberg markets: asia." let's get back to one of our top stories. fresh property numbers out of china for the month of july. our next guest sees a slow down in property sales. the regional head of property research joining us now in hong kong. great to have you. we look at these numbers that it just dropped in terms of that july month. we are seeing the same trend when it comes to the major cities, the slowdown the result of the cool curve. what do you see going into the second half of the year? >> that slowdown will widen. the first and second start of the tightening first.
by june there was an 18% increase in volume which was very much driven. we thought that was the end of the strength of that growth and things are going to cool down going forward. haidi: i want to throw out this quick chart, it is when 83 on the bloomberg, you are talking bloomberg.3 on the do you see these gains in third tier cities being sustained and how does that correlate with some of your calls on these property developers. we've seen a rally for the likes of evergreens -- evergrand. >> weaving the rally in the
third tier cities are not going to be sustainable. much of the volume increases were because of restrictions elsewhere. --most the people in the of the buyer in these cities do not live there. as the mortgage rate goes up, this maximum demand will be decreasing. haidi: what do you think will happen post this congress? it seems like property and everything else, they are aiming for this situation of keeping pasts stable until we get
october with the congress takes place. >> things will be quite stable. tightening measures are not very dramatic at all. they just came step-by-step for tier cities. then they raised to the mortgage rate. it is going to be quite impacted. continuethis term will because the problem with the is it isperty market landing on the -- there is a physical undersupply for the past few months. i think this tightening could go on for a while. continue toces will go up because the supply cannot meet the demand. that is why the tightening is going to go on.
to a ceo spoke earlier and he seems to be bullish when it comes to the emerging middle-class story that has been going on in china for the past decade. >> you are seeing growth in online and good growth off-line in china. we are building great properties that are focused on chinese consumption, middle-class consumption. it is a wonderful that for now and the future -- a wonderful bet for now and the future. haidi: this middle-class story, it seems to be very resilient. alibaba's numbers suggest that the consumption side of the economy is strong. if you look at the numbers, retail sales, shopping malls are
picking up, sales numbers are growing by 20% year on year. out of shanghai, you still have the percentage growth year on year. chengdu. growth in all of the shopping malls, have close to 30% growth. the older cities. the middle income classes are spending. creationok at the job of china, and a lot of cities there are much higher income jobs being created. they areecently that offering half a million u.s. dollar per year for a middle-management job. tail consumption
trend will be here to stay for a few more years. haidi: what about the imbalance story, the overcapacity story that has been well documented when it comes to some of these small, completely unknown cities in china. do you see a bit more balance now? >> that supply has peaked because it got started in 2011 with the chinese government was clamping down on the real estate market. they shifted to the commercial property market. all of the supply came onto the market around 2014-2016 and started to taper off as consumption picked up. withe on a switchboard demand picking up and supply coming down. if you look at the chinese
developers, some of the 2018-2019 completions in terms of shopping malls are 90% leased out. you can see the strength there, . haidi: you were saying you will be --you should be selling country garden and evergrande. can you explain the game? -- the gains? on keh developers focused y cities. they were catering to rural dem and. because of all this home purchase restrictions plus of the price increases, it pushed out demand from the first and second tier cities. it becomes a urban demand.
we have seen a lot of cases where selling price is going 14,000,000 to 12,000, 16,000 because there is a complete change in people who are buying this property in terms of the income. there has been a big shift in values. land prices have caught up and margins are going down. earnings growth going forward will slow down quite quickly and that is why we are quite bearish. haidi: it has gone up so fast this year. she joined us from hong kong to go through those latest chinese
♪ let's get a check of lenovo shares. it is seriously underperforming and what is a down session in hong kong. a net loss reported of $72 million. the company losing cash on its smartphone and server business and it's possible global pc businesses pressured by the likes of dell. more details out of tokyo.
let's start with the smartphones segment problem. why are they doing well in the space? >> they have a lot of competition in smartphones and it made it challenging. bought ibm's pc business about a decade ago. they made it quite profitable. they tried that model of making acquisitions, gaining scale and trying to increase profits, it has not worked as well on smart phones and the server business. smartphones, they face a very competitive market. the smartphone industry is dominated by apple and samsung. even in china, the biggest market in the world, they face a lot of competition. a long list of companies who are strong in that market. pc business has
been such a wonderful success story. profitable that is also coming under a lot of pressure from rivals as well. >> it is not the great market that is used to be. a decade ago when they were making this acquisition, there was a lot of promise. when they bought the motorola brand, they hoped there would be room to grow. instead of those markets have flat lines and the price of component have caused pressure for them. they had component prices that are going up and that has been a challenge on the margin front. they had not been able to make the profits they wanted across the board. pricing pressures are going to continue going forward. it is going to be a challenge for them. haidi: the company has been trying to do things to show up growth. negotiating toen
acquire a business from fujitsu. they still need to complete that deal. it is not clear how much additional scale it is going to get them. they have had buyers over the years, they have been willing to make acquisitions to bring down their cost, the more competitive but both in the pc market, the smartphone market, the server market, you have competition across the board. you have other companies who have seen their model, seeing how it works and are following their lead in terms of that strategy. haidi: a few challenges therefore lenovo. we have seen their stock falling in the hong kong session. let's take a look at the markets trading across the region. a pretty unhappy sight. hong kong, downside of 1%.
announcer: from our studios in new york city, this is "charlie rose." charlie: we continue this evening with the events in charlottesville, virginia and the aftermath and the president's response. last week's violence continues to reverberate throughout the entire country. president trump yesterday defended his initial statement, reiterating that there is "blame on both sides." president trump: what about the alt-left that came charging at the alt-right? do they have any semblance of guilt? let me ask you this -- what about the fact they came charging with clubs in their hands, swinging clubs, do they have any problem?