tv Bloomberg Markets Asia Bloomberg October 9, 2017 9:00pm-10:00pm EDT
in hong kong and over in singapore, it is 9:00 monday night on the eastern seaboard of the united states. sophie: and i am sophie. this is "bloomberg markets: asia ." ♪ rishaad: kobe steel under serious pressure after admitting they falsified products. mixed: the benchmark is in korea and japan. the kospi enjoyed a rally.
taxes and nuclear topping the agenda as candidates stake out their campaign ground. sayse: the baidu president donald trump is bad for the world. we hear exclusively from chung. let us show you the reaction to what happened last week to the move on the reserve rate in china. happenedou what has because we have smaller banks with different reserve ratios to the larger ones. it could boost the confidence of investors in china. not to say china is turning to easing policy but there is a vast improvement. one of the strongest central banks can execute some easing
when required. you can see this as the reserve cut is taking place. interest rates, 4.3%, way above 1.75% interestts rate there. inflation at about the same, about 2%. releasedhe pboc september new lending today. that is what we are looking for. paul allen has the first word news. has: baidu's president warned that president trump approach to free trade may be bad for the world. he said protectionist policies would limit flow into this u.s. the chinese search engine is opening an office in seattle. happens, america benefits from openness and talent flow.
any form of protectionism will be bad for the u.s. and the world. rishaad: you can see more of that exclusive interview with him later in the show around 9:30 p.m. in hong kong. paul: japan's political leaders are staking out key policy differences. shinzo abe and the party of hope leader koike are basing their campaigns on taxes and nuclear power. north korea will also weigh in on the discussions. as well as the aging population. the extraordinary easing and fiscal packages brought only a marginal improvement to the japanese economy and the results are not commensurate with the changes we have made. while i think rapid policy changes are not the state that are not desirable, we must think
carefully about the exit strategy. turkish markets tumbled for a third day as divisions between ankara and washington even. theseo sides have caused set services after the arrest of the turkish man at the u.s. consulate in istanbul. the lira fell again with a seventh straight day. global news 24 hours a day powered by our 2700 journalists and analysts in more than 120 countries. i am paul allen in this is bloomberg. looking positive at the moment across the board. the nikkei is up. -- let us findt out more and go to juliette saly. juliette: things looking a little better than they were on the open in terms of what we were seeing in south korea and japan. south korea has been having a great session. samsung reaching a record high.
that is lifting the south korean kospi index by one point 7%. malaysia and singapore coming online. taiwan is closed for a holiday. taipei is a. elsewhere, we are seeing other markets starting to turn around a little bit. the nikkei up by 0.4%. you are seeing most of the currencies are strong against the u.s. dollar. a little bit of weakness coming through on the commodity players. we have heard from kuroda saying that we are seeing a little bit of momentum coming through in the japanese economy. monetary base to expand 2%. the financial system in japan is fairly stable. you are seeing some pretty good moves coming through in export stocks. and a quick look at kobe steel. no movement yet.
that is one we will be watching. our focusbe steel and there. thank you, juliette saly from singapore. focusing on china as well. outflow pressure continues to ease. our chinese correspondent, tom, joins us for more on this. tom: another ticket in the box for policy makers they lead up to the big political event that kicks off on october 18. a sign that the outflows have eased. what we saw was eight straight months of increases, around 17 billion for september. comfortably up to the $3 trillion level. .e have a chart 2296. it goes back to it 2011.
it shows what is happening with the fx reserves. a reverse correlation between the fx reserves and the dollar strength. the white line. and the fx reserve is the violet bars we see there. there was a peak in 2014. and then they come off quite sharply in 2016. this year, grinding higher. a couple of the factors include the capital controls, not just for individuals but corporate is as well. there has also been a tick up in the inflows. improving market outlook on the renminbi. this tell us does about the fluctuations when it comes to the currency? was quite anr interesting month for the renminbi. there was strength in the first few weeks of september and then
weakness as the pboc stepped in to take the steam out of the rally. first of all, in terms of the fx reserve, there may have been some big corporate with a cash pile and they may be converting that into renminbi. and then, you have other factors going forward like the real estate sector and the curve there. says itg intelligence could weigh in on other assets. another factor is post party congress. if we get a clear eyed stance to could prove to be supportive for the you on -- yuan going forward and another one is the fed. sophie: how closely are policy makers watching things tighten? tom: pretty closely. onterms of the fed's focus
winding back its balance sheet and potentially lifting the rates further. the pressure is likely to be on the renminbi as the dollar strengthens in light of that. that isthe expert -- the expectation from bloomberg intelligence. you are likely to see a continued focus on the stabilization of the fx reserve. they want to ensure these are stable. this is a crucial will for policymakers to use, to support the renminbi if it comes under pressure. you have all of these different is, whether it is the fed, the real estate market, or the increased inflows pushing in the other direction. the chinese investment bank said today that there was a significant tick up in inflows is the fed, the real estate market, or the increasedin september. interesting given that it is traditionally a month when people try to get their money offshore to pay for things like
university fees. increased stabilization for the fx reserves is the expectation. you, tom.hank trade data coming out of the philippines. exports improved but a worsening condition for the impress. sophie: we see the trade balance coming in at negative $2.41 billion. versus the estimate. compared tong 10.5% the fall that was expected. and exports rising 9.4%. some skewed forecasts. rishaad: it is quite something as the trade balance is negative. ahead, for chinese foreign reserves -- will the boom continue into next year? that is next. .ophie: support wanes
-- on global equities. going into the earnings season, what are you anticipating? analysts are revising their third quarter profits. andrew: your question sums it up perfectly. through?cash flow come you are right that analysts have been downgrading their expectations. they often do that at the start of the earnings season. this week, with the u.s. banks. at expectations are only about 4% or so. i would be surprised if companies could not beat that. tax cutsihood of u.s. are coming through in the impact that could have on u.s. earnings this year and next year as well. considerable debate about the size of the tax cuts. will it be more personal or corporate? it could provide an important
boost for u.s. equities. sophie: u.s. equities have been getting a boost. i want to share this chart with our viewers. what this illustrates is that we do have asian stocks serving up a world beating rally this year but they are still considerably cheaper than u.s. equities. they are trading at the lowest price relative to the s&p 500 in the last 15 years. movement intore asian stocks rather than u.s. equities? andrew: i think we have been seeing capital outflows out of america and into european and asian assets. i think that has stopped temporarily. thefactor that is saving dollar against the euro. as those capital flows become more to way. it comes back to the change of
view about the possibility of u.s. tax cuts. when that is priced in, i would expect people to look for more value. -- assumingountries of course that the global economy continues to expand at about 3% or 3.5% into next year which i think is likely. rishaad: andrew, that will be contingent perhaps partly on what the dollar does next. what camp are you in? i would bert-term, expecting a dollar rally. i think we have seen a somewhat extended move. when the euro is getting close to 120. with the political news coming out of europe, it reminded people of some of the complexities of the political debate taking place in that part of the world. the federal reserve looks
relatively hawkish. governor replacing yellen, that possibility. i would expect the dollar to appreciate more but as i say, once that news about the monetary and fiscal policies is priced in, i think we could see a reversal in 2018 as people look for better asset values outside of america. rishaad: where are you finding them? em is a place. are you looking inside china? there has been a decent rally by the shanghai market. what is your thinking? level is much more regional-based rather than specific country based but certainly, asia as a whole looks quite interesting for the reasons that you are just said. is fairlye government ably stage managing a nice expansion in the chinese economy
clearly because of the series of conferences taking place this autumn into next spring or so. on the back of that, i think we can see some noticeable improvement in global trade. capital spending is beginning to pick up. parts of asia look more attractive from an emerging market point of view versus latin america. europe can be debatable depend on what is happening with the euro currency. china is stage managing the economy's there. what do you make of the pboc's push for deleveraging? andrew: i think it is a slow process. we are all aware of the many strengths of the chinese economy and some of its moves up the value added chain. debt, also aware of the
bad debt, nonperforming loans. i think we have seen this year, a fine-tuning process. i would be surprised if that does not continue into 2018 and 2019 and onwards. i don't inc. this administration wants to make major changes on that front. it will always be a problem but i have always thought about the chinese debt issue as manageable. i think it will be continue to be manageable. it does not mean that it will go away. but it is manageable. threats, youing of are looking at the emerging markets with a fairly optimistic view. what about the turkish assets -- what does this tell us about the move towards high-yielding debt? still fairly positive despite the risks that come from it. i think in terms of emerging-market debt, one has to
say that it is because so many other parts of the fixed income market are very expensive or under some pressure. for example, the upward pressures on inflation that are beginning to be seen in the u.s. , encouraging the fed to be more hawkish. the credit market is becoming too expensive. is high-yield bond market becoming too expensive. the emerging-market debt is one of the few remaining places that investors can look at. we are still quite keen on emerging-market debt that i think turkey sums up nicely the problems of politics and fundamentals coming together. deficit anda 5% then the recent news of america and turkey and the diplomatic spat reminding investors of some of the political fragility of some of the emerging-market countries out there. my emerging-market debt colleagues -- as a whole, it is
one of the few areas that still sees some yield in the low interest world. you go to the region from time to time. you are there in tokyo. what are you doing there? how is tokyo doing and what is the atmosphere like and what are you looking at their? -- and what are you looking at there? and what about valuations? the japanese economy is doing quite well. it has had 57 months of success of growth. it is seeing a bit of an upturn in capital spending. the domestic side is underpinned by things coming down. economy is making some decent profits and the
government is improving the dividend yield. the japanese equity market is one that we like and one that we are overweight in. we are here for my company's annual conference. i am going to be seeing more in the next couple of days. it will be interesting to get their views on the politics. the japanese election is a phenomenon that we have seen in many countries around the world. clearly money could flow or could flow out of japan under various political scenarios. and we have to address those quite carefully. overall, japan is a country that we like in terms of its equity market. become more of a headwind or a tailwind, we will find out later which way that is going. rishaad: it is always a pleasure, never a chore.
♪ starting out the trading day in china and hong kong. the market is pretty flat, the hang seng. futures are also flat. watching property stocks there as well. flat figures from home sales. revenues are disappointing. we had the economic information from geely saying that new home sales have tumbled in beijing and shanghai compared to a year
ago. we are watching an automaker and the property stocks. geely: we are watching after it posted record sales in september. up 3% for 2017 for that company. the chinese bank has upgraded 30.5 hong kong dollars. the bank says the new models are growing. the question is can they hit their sales target for 2017. rishaad: it looks like they will be able to do that. there was a huge uplift. sophie: record sales. jump in sales in september. sales are healthy. you what we us tell have on the way. a sign of the times. will be hearing from the
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>> 9:29 right here in hong kong. just about -- just under a minute to go. what do we have out there? and a slightn pullback taking place on the dreams, wall street deliberating as to what to do view taxwhat way to renfroe, which is -- tax reform, presented byg donald trump. gotal stocks rally, we've stocks across the globe near record highs. treasuries moving to the upside, as more investors believe there will be a december hike. and it is the earning season. some of the big banks in the
jpmorgan and wells fargo out with their figures. and south korea back online today after their holidays here. we have the index. playing catch-up after that week-long holiday that we had for south korea. have gains in tokyo with automakers leading the rise there. they are now raising their ugly given what's happened with kobe steel. be some pessimism. >> this is going to call for this year. toshiba before that. olympus. there have been so many of these through.t come i was asking whether they are drawing some of these companies out and taking them to whatever happened anyway. okay. that's what we have at the
moment. hong kong shanghai, markets, they have just opened. julius, what's happening? hang sengshanghai and the index opened fairly flat. but have a look at south korea. that is what you want to be watching. up by 1.8%, thanks to the surge that we have seen in samsung trading volumes of samsung also rising quite strongly today. remember, this is the first time that south korean stocks have had a chance to react to what global equity markets in six sessions. south korea coming back online the first time since the 29th of september. malaysia looking a little bit first half hour of trade, as is singapore's market. but elsewhere, you're seeing pretty good turnaround. we've had that commentary from bank of japan governor kuroda today. the nikkei up around a third of 1%. the yen has been holding with a 112.e of most other asian currencies doing quite well against the
greenback. in terms of bonds, not much happening. we did have the u.s. treasury close monday, so there wasn't a lot of direction in -- bond movement there. we are seeing it fairly flat in returns in asian bonds as well. but it is looking good in terms benchmark index. we are seeing this big move in samsung electronics, one of the performance. samsung sti also looking good. of these korean stocks lifting the index. electronics did have a downgrade. we will also have seen some up downgrades coming through. of course, the other major stock we are awaiting to see whether or not it trades is kobe steel. still very much in the focus. sales to each buy order on that stock, this after
falsified data in terms of aluminum and copper parts. toyota, one of its clients, saying this breach of compliance is a grave issue. we will be watching that as it online.ck over the past 12 months, that 55%. is up by about stocks leading the gain. there has been a switch out of both energy players as we see wti fall below that. >> right. earlier whichws suggested the yen is putting a smile on some of those people in charge in tokyo. let's get that and the rest of the news. >> japan's current account is by growingpported exports. by a billion was helped
goods trade of 2.8 billion, well ahead of forecast. japan has recorded a surplus since june 2014, reflecting the its overseas investments. the most in four weeks as china's foreign reserves rose eight-month. also advanced as the world's by $17 stockpile climbed billion. is the of increases longest since mid-2014 when $4 trillionked at before declining. hasnesia's central bank inflation will remain its main focus. its deputy governor says beetary policy will remained -- will remain aimed the eighth cut since the dwibeginning of last year. leavingre companies are
catalonia as separatist leaders independence. property company colonial and shifting theirre legal headquarters from barcelona to madrid. pharmaceutical company, the only which hadrm left seven companies from the region at the beginning of last week. hours a day,24 powered by more than 2700 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. >> expanding presence in the united states by opening a new base in seattle as part of the drive to further develop a.i. technology. exclusively to bloomberg, the president explained why he thinks a.i. is game changer for the world. mosti. is the single time.ant force of our
and it also creates a new company, like striving. transformedy it's traditional industries. baidu,s critical for critical for the entire industry. >> give us an update on your self-driving car efforts. when will we see it on the road mass numbers? >> you will see cars probably as early as next year. i will say in five years, you will see some of the cars on the as commercial vehicles. we began to put into it.new technology definition,, high the mapping, and the machine learning. technology. so this will accelerate the whole industry. if you look at a lot of they are building a
products. repetitive with polo, you actually can build upon this and innovate on their own strength. >> what about your electric car push? that, the progress on especially as the chinese government is moving to limit gasoline cars? >> right. that will be another transformation. the cars, in the mobile industry, the next five years, energy, electricity driven, the ride sharing and also a.i. will play a bigger role. so we are fully behind that. we are not making cars per se. but if you look at all the learning capabilities and all the technology and perception, mapping, those will help cars more than the hybrid or the gasoline cars. >> your streaming service is to go public in 2018, at
evaluation.n what are your expectations? >> the membership subscription increased tremendously, from ads membership.m the people pay for content. our corea part of invest consent and buy consent. >> google, facebook and twitter news,der fire for fake spreading misinformation. baidu's responsibility here and plan to combat that kind of thing? is a globale news challenge. and there's no exception in china. and every year, we receive $3 billionround that we need to verify that might turn out to be fake news.
so it is a challenge. combination of our technology and also content, minimize the, to fake news. >> i understand you have, like, of cybercops, actual people that are looking at information. is that correct? >> now, first, we use technology. a lot of things we talk about in a.i. are able to help us do the screening. but after you do the screening, you have to make sure the sources are authentic. we work with, as i mentioned, the different like technology and the cyber authorities to contents arese authentic, real, and then high quality. an obligation to make sure the user gets good contents. but it's continued to be a challenge for us, for other companies in china, and for companies in the u.s.
>> japan's political leaders are staking out key policy differences, less than two weeks the snap election. prime minister shinzo abe and party leader yur wrur are set to face their campaigns on taxes power.lear >> we've got our chief correspondent. now, can koike's challenge actually result, you know, in party?ains for her can she really challenge the
prime minister's record? itit's interesting, because will be about the economy. you mentioned about the nuclear issues, and they have differing about the energy mix in japan going forward. so that's going to be a main issue. the tax issues, consumption tax or a tax on earnings.retained but the real issue here is the economy and monetary policy, interestingly, abe economics and this unprecedented easing euro rates was a cornstone of abe economics in the past five years. in this election, they did not is asarily mention this cornstone. but koike is pointing to it as a difference. they don't believe they should change the monetary policy right now, the party of hope, but they do have differing opinions on exit strategy. this is what koike had to say in an interview with bloomberg television. >> the extraordinary easing of broughtackages have only marginal impromptus in
marginal improvements in the japanese economy. while i think rapid policy desirable, since that could destabilize the markets, we must think carefully the exit strategy. >> and, again, she's against this consumption tax that abe proposed for 2019. inflationhit that 2% target by then, thereby justifying it. bets are off, you know, until they get signs that the inflation is going to be picking up at all. toit's still puzzling as what koike's role is going to be and why won't she put her name for parliament. >> she's not an mp. put heruntil today to name forward to run for the lower house. an mp in order to put her name forward. repeatedly that she is not going to put her name
forward. the main reason is they have of winning.chance this is the place of the future. >> so she's being realistic perhaps here? yes? thanks so much, steve. sees gooduest, he afternoon koike's policy as welcome. >> it's nicole. thesere you making of all political shenanigans there and what about the debate so far? actually think it's very good news for investors. there's no question that over the last 12, 15 months, abe economics has gotten stale. been no new ideas coming from abe's prime minister office. and now we've got political metabolism. there's a debate. koike economics, whatever you want to call it. up.know, the debate is back that's always good news, because it keeps the dream alive.
>> keeps the dream alive and she's seemingly more pro-business. she's about deregulation. but we haven't really seen more the bones when it comes to to potential mandate for the party of hope. seeing heree you that could be optimistic when it comes to her economic thrust? >> look, first of all, i mean, just look at her background. woman.a self-made she is surrounded by entrepreneurs. she doesn't have a lot of time vested interests, you know, big business leaders in japan. aboutally is all self-made entrepreneurship and that's going to be reflected in the party isthat promoting. the other thing is, very important, she is going to stay on as the governor of tokyo, as the governor of the most important economic region in japan. that, she's going to hold the powers that be very much accountable. there's been talk about special economic zones, empowering the
regions. with agovernor of tokyo, voice in parliament, that's the supplyrbo-charge revolution in japan. koike of the reasons that has -- she doesn't see a party majority,nning the arresting that away from the ldp. the scenarios that could happen, how do you see the party of hope influencing what forward, and how would they do that? >> you're absolutely right. stepping stone, you know. remember prime minister abe election to catch koike offguard. he knew that she was building a a national party takes time. you need candidates. election, thaty sort of, you know, forces koike to scramble. up withre going to end 18 or 120, something like that, inment of seats there. it's a stepping stone.
koike is staying honest. tokyo has huge influence, holding the government accountable of up economiceding reforms. ofyou liken her to the rise emmanuel macron. the only difference is he became president. >> well, look, you know, you're exactly right. thingou know, the nice about the presidential election in france is that it's very predictable. a set time frame with which this happens. be more, you've got to agile. the real focus, i think, is build a strong solid base in parliament right now, use your power, holding the government governor of as the tokyo, building that tension between tokyo and the national then perhaps in 2019, we'll get a double election and we'll get a new prime minister. >> so should the new parties' fire, what are the
investment implications of this? >> i think the key is issue is macroeconomic side, not much is going to change. this whole focus on the tax increases, it's really very academic and ultimately irrelevant for investors, because remember, the tax hike 2019,only happen in october. so that's really very, very far away. is thatters right now and monetaryolicy policy is going to stay very a--the bubbling up of asset pris further to get a tailwind. >> is this just a tonic for japan's political system, with the current opposition, the official opposition if you will, the onlyisarray, and opposition coming in within shinzo abe's party? >> look, you're making the key point here. this is about reorganization of
marginal parties here and governor koike is doing what great politician does. taking ideas from other parties themasically formulating and giving new energy to those ideas, for example. when you look at the economics, at the end of the day, it really the third era that prime minister abe tried to when he started the original abe economics campaign here. about realignment and about generational change. you will have seen that koike her partner from the democratic -- he did throw out, so to speak. did not allow the old veterans of the democratic party to run again. very important. big generational change. energy change in parliament coming. >> as you say, hopefully keeping the dream alive. stay with us. morewe're going to get with you after the break.
>> we're back with bloomberg markets, continuing our discussion. have, of course, have this kobe steel scandal at the moment. news coming out on that. what does that tell us about japan?te governance in because we've had, of course, them, nissan, takata, toshiba, olympus, just to name a few, where there has been a failure has gone right to the top. are we getting all of this information because of abenomics inspite of abe -- in spite of abenomics? scrutiny onhat the corporate leadership definitely has been tightened. because of a combination. the regulatory oversight. also, investor oversight and
also the japanese media is now empowered. don't be afraid of the big bosses in japan. go after the scandals. so it's actually good news in of the overall transparency, you know, that we're getting in japan. >> so we're seeing here that sense. working, in a the push for corporate governance reform? exactly right. you've got effectively, remember, japan, this sort of insider capitalism with the big groups controlling the flow of information, controlling the way power gets allocated here. changes in the corporate governance code , with the corporate code, basically you're moving to an open system of capitalism where and transparency is starting to come to the fore. that should ultimately be good for the economy, shouldn't it? and talking of the economy,
very good growth numbers. nominal and real. the the only real fly in oibtment seems to be inflation governments talking of 2%. should they abandon that target and actually have given the other -- given the other data, takingo think about their foot off the pedal? >> no. i disagree with this. the key issue is the purchasing power of the people. youve got the fact that, know, wages and incomes are increasing. it's not a reshape recovery but it's a gradual recovery. for the first time in one new middle class is starting to emerge here, while at the same time, there's no bad inflation. important.y so i think whether the bank of japan keeps its 2% target or doesn't, ultimately doesn't matter. the key point is the one that is by governor kuroda all the time. that is that the bank of japan hurry to change policy
here. to decouple from the federal reserve, should the reserve raise interest rates, nothing is going to happen here in japan. >> all right. much.you so at wisdom tree. >> we will indeed be live in tokyo for that election in japan. >> stay tuned for our special coverage. abe's gamble. that starts this friday, october 20. look at weas going on as -- what's going on, as we are about japan and we'll have a look at what's going with the nikkei. at the moment, hang seng pretty much flat. got the index, shanghai giving up some of the gains that the first trading session, after the golden week holiday. china's foreign
>> from our studios in new york city, this is "charlie rose." charlie: we begin this program with news out of washington. after weeks of speculation and against the advice of his national security advisors, president trump is expected to decertify the iran nuclear deal next week. what does that mean for the future? david sanger joins me now from washington. he is the national security correspondent of the "new york times." david, let me just begin with you explaining the difference between decertifying or failing to certify, and withdrawal. >> there is a big