tv Bloomberg Markets Asia Bloomberg September 20, 2021 10:00pm-11:00pm EDT
telcos. david: we need to clarify the headline. yvonne: we are seeing a little bit of clarity when it comes to macau, some of the hong kong developers are coming in to do damage control. rishaad: talks that the billionaires in hong kong could be targeted next. david: essentially disputing the report which is perhaps why we are seeing a bit of a rebound. let's have a look at the markets , central bank decisions, rba minutes. the fed, could be a calendar rollover.
as you pointed out, the decay, all flow for the day. the story across the currency markets, dollar strength with the dollar index at about a one month high. sovereign bond markets, 1.3%. we are steady across commodity markets after the 1.5% drop we saw yesterday. the rise of iron ore is steady today. big drop in copper. some of the contracts are right at about the cut off line. rishaad: we also have these property stocks, the hang seng, how the index has fallen to its trendline. you have to look at some of these companies out there, perhaps across these three red lines set by chinese regulators. liability, liquidity, leverage.
we see companies which have liabilities claim higher than 70% of their assets, net debt exceeding -- short-term borrowing larger than cash reserves. all of this is lending to the negativity as well as the hang seng beaten down, reported that it is in bear market territory. have a look at how that has reverted to its mean. if you draw a line we are back to levels, the trend. we have casino stocks and focused, more clarity there as well. would love to see the chart again and see the trendline emerging. david: that is just below 24,000, currently where at --
closer to the trendline going back to several points in which we touched the bottom line. maybe look at that as a line of support. we are still in bear market terrain, and by no means are we out of the woods just yet. yvonne: we are seeing volatility. relatively speaking, it has been a touch lower when it comes to remedy these day. we are seeing three days of drops, we are hovering around the 200 day moving average. given the fact that china is closed, hong kong can be shut tomorrow, we are not going to see a lot of clarity unless we hear some kind of announcement from the pboc and how they are going to contain this fallout. rishaad: thanks. -- angst. we have the global domino style selloff.
let's bring in our chief north asian. what are we expecting today? reporter: absolutely, that is when the offshore bonds is due, and also in on sorbonne. i am looking at reports to get some meat on the bone. we talked about some of these overleveraged smaller property firms, i will talk about that in a second. s&p out with a note saying ever grand is likely to default, and not get any direct support. we believe beijing would only be compelled to step in if there is a far-reaching contagion causing multiple major development to fail. evergrande failing alone likely would not catch that action. it may yet to be proved overoptimistic. some smaller firms, several are
hong kong listed. central china real estate was down more than 6% yesterday. these are companies listed by s&p, also fantasia. listed in hong kong. rise son which is a china listed, it trading today. yesterday civic fell 87%. it has an offshore bonds do on october 18. 240 something million dollars. conversely, city is out with a note saying the evergreen crisis is not the li bin moment, however it could have contagion seized to some of the smaller banks. yvonne: local media in china have not exactly highlighted what is going on. you are not getting a whole guidance. unless we hear something, most analysts are saying we are not going to see the end of this right now. reporter: that's right.
there is policy guidance from the central government on the issues, but there are also lots of rumors about the future of policy in hong kong. look at the big four developments. henderson land. those big companies lost $6.7 billion yesterday on this concerned that perhaps beijing style curves to the property market, which have been quite vast, will come to hong kong. again, it is speculation. we could get some information, perhaps on october 6. the policy address. [laughter] carrie lam will be given her policy address, land reforms,
reports beijing is concerned by monopolistic behavior by tycoons. this has been a long problem of hong kong government being able to appease beijing, taming down the world's most expensive residential property market. we will see if there is any policy. david: our chief not the asian correspondent. as it pertains to bonds, we still seeing some declines. as of today and the question of the day, how long this can last, maybe it's done? or is this just the eye of the storm customer -- storm? guest: we are probably in the eye of the storm. we haven't even heard from beijing yet as to what if any steps they may put in place to help smooth the situation regarding evergrande.
there is still a lot of uncertainty. if you take the bond market, the offshore bond market, you have several dollar bonds trading around $.30 on the dollar or less. that is an assumption people see the recovery rate somewhere in that region, which will be in line of what we have seen in other major markets. it could be less, it could be a lower recovery value for the moment. as bloomberg has reported, there are some ones sniffing around because they see potential breakup value that can be worth even more than $.30 on the dollar. there is already some interest for people to see a restructuring or something similar, at least that is a positive sign that people see there is an in game in place, but the trouble is how long is the endgame? is it one about something like the global financial crisis, the european debt crisis?
at the moment no one really knows. the situation has been complicated this week by the facts china has been on holiday, there is in less -- has been less news than usual. it is an open question, and it is for people to try and make up their own minds. but we should be getting a little more clarity in the next few days once the chinese markets reopen what we get a sense of what is going on, particularly with the bond payments due, let's see if they make a statement. they may not make the statements or they may something giving us some direction of what they will do with other assets in the future. there is still a lot to be decided. yvonne: how should we look at the -- the market stress we are seeing, is that likely going to pick up and i outlook? relatively speaking, it seems like it's only a touch higher
compared to what you're seeing in this region. -- in this contagion. guest: it's been remarkably quiet. the news in dollar-yuan has never generally the last couple of weeks. we did see yesterday a huge pickup in option volumes to do with dollar-yuan. there was quite a lot of interest in dollar call options, well above the current spot rate. clearly some people are getting jervis and are taking hedging activity just in case the yuan starts to weaken. there is no particular sign of it yet, but the spot market is relatively calm, but clearly people are getting anxious about it and are starting to do something about it by buying some option protection. it's a sure sign that people are
taking out some insurance just in case the yuan gets embroiled in the situation. rishaad: thanks. let's move to the first word news. the securities and exchange commission are expanding morning to investors buying stocks of u.s. this to chinese companies. the way firms recognizing china as shell commissioners is a top confirm. the sec says investors should review company's annual report. china has appealed against the wto ruling that rejected its games against the u.s. over trump era solar panel tariffs. earlier this month, the wto said beijing failed to establish washington's import tax were inconsistent with the wto rules on the measures. china's move will effectively act as a veto with nobody able
to immediately hear the appeal. the u.s. will soon open air travel to most foreigners as long as they are fully vaccinated against of area -- covid. i'm vaccinated american travelers will also need to test within on day of the partners, the policies are expected to this -- start in early november. pfizer and beyond tech are saying that there covid shot is safe with children and produces strong antibody responses. the findings could pave the way to begin vaccinating rate schoolchildren within months. the new school year is coinciding with the surgeon elderly cases. rishaad: still ahead, a norwegian telecom giant has had a rough time in asia.
yvonne: this week's central bank parade continues as the bank of indonesia gets ready to announce a policy decision. the doj starts a meeting, ahead of the federal reserve decision. we have been talking about the contagion in the last 24 hours, is there any chance that this prices may actually cause the fed to delay saying it is ready
to taper? reporter: it's not surprising. the meltdown does not appear to be over yet, stock markets are selling off around the world. however, when bloomberg television spoke to a former top fed official, he was head of the bank of new york, he said when china started tightening policy they start pulling back. he does not think a stock market selloff alone will cause the fed to move. >> i think the federal reserve understands china is an employer and the global economy. if china had a hard landing that would have serious consequences area i think at this point, it's premature to reach that conclusion. the chinese have tried to tighten things up before, and when it starts to affect the rate of growth and in -- employment, they ease off. kathleen: bill dudley sees a
risk of the federal reserve waiting too long to start addressing rising and nation with policy steps. >> they are not going to react to small-market moves on that basis. i think at this point, it's premature to reach that conclusion. kathleen: he talked about rising inflation, the fed is trying to guard against that. bottom line, here is what they are going to look at and but we have to listen or. what do they say about transitory inflation? they raise their inflation forecast when they put out there new summary of economic ejections. taper timeline. are they going to start soon? we don't know. they are expected to open the door even if they don't give an exact date. how much is the delta variant
expect -- affecting the economy? these are the key things we are listening for them to talk about. rishaad: tell me also, we had some talks of speculation, the reserve bank of new zealand, looking at a 50 basis point hike. that has been quashed by an official? kathleen: it was the head of the rbn who made it clear they were ready to take a rate hike step at the last meeting, but because of the lockdown of some of the biggest cities, they did not. but today, he pointed out and made a broad statement that when things are uncertain and risks are balanced, central banks tend to leave their policies unchanged and move in 25 basis point increments. let's be clear. it does not mean they will not
hike rates at all on october 6, it just puts the bigger hike on the back burner especially when the largest city is locked down. inflation pressures are rising. they are expected to do a smaller move, still a significant one. david: that is the question. 25 or 50? it's looking more like 25. in terms of the chart, my 1241 is the rbn. while you look at that, the executive director at macro sales at j.p. morgan australia. in terms of what the market is pricing in, does that make sense? guest: absolutely. our forecast is looking for a rate hike at meetings from here.
it has been interesting to watch the market movement today. he laid out when risks are balanced, it does make more sense to sit unchanged or only move in smaller increments. i would say that we always know they have a tendency to surprise. even if the market is taking the hike out, the fully priced 25 basis point is still there. certainly, i would say that woman get to the october meeting, i think the 15 will be on the table. -- the 50 will be on the table. and may not be that the risks are balanced. moving to level three, and i think new zealand has managed to somehow keep a lid on the delta outbreak. for the markets it will be quite interesting as we approach the meeting. for now, the market is less
hawkish. yvonne: how are you viewing the contagion from evergrande? it seems like haven currencies are catching a bit. aussie yen reaches the support level as well. is there further to go? guest: i do think so. evergrande will have to wait longer to get some concrete information to figure out what the steps may be. i think they are taking longer than we have seen in previous crises which may have emanated in china, and i think there is a different shift coming from the regulators and government in terms of common prosperity. the markets are trying to figure out what this means and what does action look like under the new framework. we have seen it -- all of the sectors. it's going to be something to continue to watch. in the end they will say things
to an extent, but markets will be putting up some jittery moments until that happens and i do think aussie yen and trade to the 78 level. to the fed, i think the dollar overall will have a stronger footing as we expect a hawkish outcome from the fed. rishaad: we are going to hang on to every word. on top of that, for the dollar itself, how is that impacted? is the path of least resistance essentially to the upside? we have a headline breaking concerning the canadian election. we have justin trudeau winning a third term as canadian prime minister, according to ctv. remaining possibly as prime minister. to that question, then? guest: we think the dollar is still under positioned and i
think we are expecting real money investors will start to move back into dollar polish positioning over the next few months. there was a real washout for the short dollar positions, but we do think the market is starting to turn more positive, particularly dollar asia is trading better from here. for the aussie, clearly it is under pressure and as iron ore continues to trade we, we do think that can take -- can continue. . investors are thinking maybe it starts looking cheap on a few metrics, i would say it is too early to enter into that trade. aussie yen can move lower from here and risk will reverberate. rishaad: thank you so much for joining us, wish we had more time with you. justin trudeau winning a third term as canada's prime minister. we will be having a look at that, having a look at
david: welcome back to the show, brief look at some of the big movers. we started things off with evs. the stock is down 9%, it's dragging down some other names. rishaad: let's take a look at japan. making waves, on the way down. nippon holding 7%. it is a situation where we are having a look at steel and indeed metal manufacturing, very much dragging markets down in tokyo. that is down to a catch-up as
where watching these asia and how the contagion effect of ever grand is playing out. japan is really dragging the whole index lower. rishaad: going to turn subjects and have a look at what is happening with telco, tele and art returning to growth in the second quarter driven partly by asia. half of total revenue and seeing a growing subscriber base and
data consumption, operations in thailand, bangladesh and pakistan. it recently suspended mobile in man rishaad: the asian had joins us exclusively. thank you so much for joining us. characterize how this is all playing out in your business and give us a sense of how you are managing political risk in this environment. >> thank you for having me morning. first of all, as you are introducing, asia remains an important region. we have 165 million customers here. it is exciting times. high competitiveness. things are going on. there is a need for investments, for developing digital solutions, and formulating the
development of society. we are running our businesses on sound principles. we expect the markets to develop in the next few quarters. rishaad: give me a sense of how the various entities are performing. which are the best ones and which are not doing so well? germany plans to divest, as you did with myanmar. michelle: -- >> asia as a whole is consisting of high competitiveness and high demands for data and productivity. of course driven by the large population base and the rapid digitalization we see in these societies, not the least during the covid pandemic but the
general trend. we see these markets across all of our business units quickly maturing. consumers are using data on equal terms as europeans and americans and people from japan. it is a thriving business. this may make us focus on making our business and network digital and run the business as efficient as we can. let me also say that this drive for data consumption and digitalization is putting high expectation on investment technology and networks, which the companies currently in a way are shouldering alone while facing intense competition. in general, -- yes. yvonne: i was going to focus more on the myanmar exit because there were some statements you
guys came out on why you decided to exit that market. and you mentioned that your continued presence would require activation of equipment that was subject to european region sanctions and that you had denied the order for the deployment of this spyware technology. would you say that was the sole reason why you exited this market and how have you responded to the order? >> we have faced increased pressure to intercept systems in myanmar and what we have said is that technology is subject to the european union and norwegian sanctions. it would be unacceptable for telenor to activate such systems. we said we will not do so. this means it is impossible for
us to remain in myanmar. we can operate under these circumstances. in that sense, we have found -- for our people working there. customers and value chain. i would like to say on your question, this is not in terms of our strategy. this is a myanmar specific situation because of the totality in myanmar. in a short, we have been for 25 years and we have had to maintain our development in asia. david: you are going to bring our attention to your other wholly owned operation in pakistan. i want to get your thoughts on -- your outlook for that market and those assets. jorgen: in pakistan, we have a
very modern and strong company in a country in market with very fierce competition. we are developing that business with all of the other businesses. what we have said in particular is that we believe the sector in asia would benefit from a higher degree of consolidation. the reason for that is the high demand for data and investments in the sector and the need for an acceptable return, hence investment capacity going forward. did you see what we do in malaysia? that is exactly the case. we are trying to develop in order to be able to be a key player in the digitalization of the malaysian market. david: just to clarify.
so you do remain committed to pakistan? jorgen: we do remain committed. yes, we do. of course. david: your outlook for malaysia, since you touched on that, and just your thoughts on competition there? jorgen: yes, so we believe the deal we have introduced is fit for consumers and go for malaysia as a country. this company will have the scale. it will have the capacity and competence needed to successfully drive digitalization in malaysian society and it will also help technology developments into products and services that are advancing in the digital experience for everybody. it is really important to do this. strengthen the malaysian digital economy and help malaysia
recover post-covid. we have delivery of submissions. we are hoping for regulatory approvals and we have said we expect this to close in the second quarter of 2022. yvonne: has the use of huawei equipment changed in any way since president biden took office for telenor? jorgen: we have a strategy on technology. we are having contracts with all the global players such as nokia and others. that has not changed. it is the same way some years ago and the same way now. we are seeing that we need lenders in 5g and artificial intelligence development, which
is all coming together now. this is what we plan to do for work and partnerships with these lenders and owners in order to deliver the services in nordic countries and also in asia. rishaad: last one for me at least what about the chip shortage around the world? has that impacted your business in any way? have you made any provisions for that? jorgen: it has not. i'm not the one to tell if it will. we all anticipate it will influence our business. we are moving ahead with our technology programs. today, we are running all our data traffic a storm cloud-based systems, running 60% of our systems, and we do not think that chip situation will influence our plans to any significant degree.
david: i would imagine now that there is extra time on your hands in singapore. if you had a wish list, is there any other market in asia you would like to be and if you can have it your way? jorgen: myanmar is still in our operation and we are trying to take care of our people and our customer and keep those networks working. that being said, we are focusing predominantly on our current assets and making them as relevant as possible. in addition, we are not ruling out new engagements, but that is only when the strategies -- when we can play a role which is significant in the digitalization journey.
and we are not ruling out but we are not actively pursuing that. yvonne: you talked about engagement. i was going to ask you, because on top of just this merger, we are seeing a lot of these type of telcos and technology types of m&a of late. are you seeing a lot more interest from different investors when it comes to your space and can you give us any examples? jorgen: i think that there are a few things triggering that. first, if you look at north america, there are three or four players in the whole of the market. there are tens of players in europe and there are equally high number of players in asia. if you look at the return of most telcos, there is a requirement for new investments. we have an internet of things
investment wave ahead of us. so you need a robustness in these companies in order to fulfill the role. digital way of work. you need financial strength and size in order to do that. in addition, you have all these technologies coming into play. therefore, all players have partnerships. we are looking at partnerships. not necessarily structural ones. it is clear with having then -- everything that is happening, you need to work with others. new competencies are needed. you need robust telcos to provide that conductivity in all that is taking place and therefore also, structural discussions are natural. we have said that we think there are some markets in asia that should consolidate. not necessarily only to make the
companies better but to fulfill the role in society's of bringing connectivity and digitalization more in the forefront. there are other markets, too. david: thank you so much for making time. we look forward, needless to say, to speaking with you again. jorgen rostrup out of telenor asia. just an update to what rishaad was pointing out on elections in canada. justin trudeau winning a minority government according to ctv and their projections as it pertains to the index, which was high on the contract. the tsx slightly weaker as it pertains to the u.s. dollar versus the canadian currency. have a look at southeast asian markets doing this across the region, down seven straight days. there is a rate decision on deck. bank indonesia. expectations -- we will sit on
the fence for now. rishaad: first word news. have a look at u.s. house democrats they unveiled legislation. the suspended debt limit through december 2022 as part of a spending bill needed to keep the government open past the end of this month. the risky move aiming to pressure republicans who pledge to vote against an increase in borrowing limits. take a look at the reserve bank of new zealand dampening speculation it could start its tightening cycle with an interest rate hike next month. in a speech published on tuesday, the assistant governors saying that uncertainty means global policymakers tend to keep their base rates unchanged or move in 25 basis point increments. scaling back bets on a 50 point hike in october. take a look at india as it resumes exporting covid vaccines. the shots will be supplied to the world health organization's covax institute or initiative.
india halted shipments in april after the delta virus variant swept through major cities. and you expect to have around 300 million doses in hand in october alone. the biden administration is saying that russian restrictions on natural gas exports means some european countries may not have enough supply to heat homes in the winter. european gas prices surging on news that they opted not to pump more gas to the continent in october. meanwhile, the u.k. government's warning of a long and difficult winter with high energy prices, two power suppliers into bankruptcy. yvonne: new indications the pboc may need te's policy. we will get more analysis. how we reached that inflection point for the pboc to take some action. this is bloomberg. ♪
richard: the big concern among investors is that china is going to let this company be an example to all other heavily invested the firms, particularly other developers pick xi jinping came out with the three red lines policy last year -- other developers. xi jinping came out with the three red lines policy last year. what happens is there's a certain pain threshold in which beijing may be forced to act if turmoil gets to great and they worry about instability -- too great and they worry about instability. they feel that that is a bigger risk than the increasing moral hazard by helping out evergrande. that gives us a sense of where we are with asian stocks and how they have been hit by this compared to others. looking at other companies because of those three lines. liability levels, leverage, liquidity, those things.
what we have seen is unlike in the rest of the world where companies with stronger balance sheets have typically outperformed those with weaker balance sheets, in asia, the opposite is true and that is largely because of xi's crackdown on every kind of profit or private sector industry -- profitable private sector industry you can think of pit we saw the selloff in hong kong developers, very strong companies. we saw casinos the previous week. we had tax previously. any industry that is doing very well, that is very appealing to investors, is also a failing to xi jinping when he is looking at companies giving back to the country through his, prosperity theme. it is traded as a paradox for investors, where normally, you would look at balance sheets and strong companies. they would be appealing. those are the companies following the most. david: richard frost on his
story that the market meltdown might be able to help evergrande. let's have a look at the broader implications in the chinese economy which before the evergrande story started really gaining traction. it was on a slowdownanyway. david to talking us through -- on a slowdown anyway. david talking us through what the pboc might do. >> well, yes. the pboc may need to ease again following the costs in middle july because of weakness of the economy. what we think is that it is -- it would be a rrr cut, more than
an interest rate cut. rishaad: tell me something very quickly. if you look at the $305 billion of liability, that represents nearly 2% of chinese gdp so that gives us a sense of how important it is. on top of that, we do have other knock on effects so this will go awry very quickly. richard: yes, i think -- caused the market panic from yesterday but i think that for china evergrande itself, i think the balance sheet does not make enough to trigger systemic risk. but what people are worrying about -- that is why people get nervous on that. on the other hand, i think for the pboc, so far, there is not a method to trigger the action on
the monetary side because i think the market liquidity is still good and the pboc may have scheduled -- they have considered another rrr cut in the near term. so far, the pboc -- special move because of china evergrande. that is our view. yvonne: all right, david qu, thank you. saying perhaps easing could be on the way for the pboc. let's check the latest business flash headlines. they received a cease and desist order from u.s. regulators, studying unsound practices in technology and risk management. the office of the comptroller flagged noncompliance with security standards and the order requires the union bank to improve risk governance and
assessments, internal controls, and staffing deficiencies. regulators will examine the safety of millions more toccata -- airbags that is -- takata -- millions more takata airbags. additional evaluation is needed. the inflator's can explode in a crash and explode metal shards. we have plenty more ahead. this is bloomberg. ♪ let's get a quick check of the -- this is bloomberg. ♪
rishaad: busy week for central banks with at least 10 more answers due over the next few days. they intend to state their decision on wednesday. officials expected also to hint where they will start tapering asset purchases before a full on announcement in november. >> if the economy evolved broadly as anticipated, it could be appropriate to start reducing the pace of asset purchases this year. >> this year is going faster than we thought. >> the timing and pace of the coming reduction in asset purchases will not be intended to carry a direct signal regarding the time of interest rate lift off. >> we think there will be some increase in interest rates during that period.
>> over the next year, there may be some, you know, interest rate -- >> we rely on the economic recovery. >> the remains fragile. >> risks for the price outlook are tilted toward the downside going ahead. >> i find it difficult to understand why rate rises are being priced in year or early 20 23. david: -- 2023. david: there is risk coming back with the exception of japan. that is one market that is just coming back online and playing a bit of catch. the rest of the region is steady. s&p futures most important are firmly in the green, .4%. the support level, which we closed above and are now still holding above as far as futures are concerned. that is one to watch. the 100 day moving average. the hong kong story is stable,
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>> from the heart of where innovation, money, and power combine in silicon valley and beyond, this is "bloomberg technology" with emily chang. emily: i'm emily chang in san francisco, and this is "bloomberg technology." the death toll by covid-19 in the u.s. has surpassed that of the 1918 influenza pandemic. a milestone many experts say was avoidable after the arrival of vaccines.