tv Bloomberg Markets Asia Bloomberg January 18, 2022 9:00pm-11:00pm EST
economy and ease credit stress. in a key middle east pipeline blocked, picking up crucial supply from a tight market. rishaad: a surgeon treasury yields very much in play. tech stocks taken a hit, there has been a move toward value arguably but the benchmarks headed in a southerly direction. seeing declines for regional stocks as well, the hong kong hang seng up about .10%. the asx in the negative column. haslinda: a sea of red across the board pretty much, it is a yield story. in particular, look at 10 year
already up by almost 40 basis points. what is interesting is that we are seeing the front end rising faster than the backend. look at where markets are right now, we are under stress as far as asia is concerned, the nasdaq down 2.5%. tech in play in particular when it comes to the hang seng tech index, alibaba the one to watch. the u.s. now reportedly probing alibaba's cloud operation, adding more stress to that space. we are looking at the treasury yields right now. rishaad: and this launch taking place of the spacex rocket, that's is seen at the moment.
to provide free internet access to people around the world. that's the scene at the moment. what are you watching out for? haslinda: this launch was expected earlier but was postponed. it was delayed monday because of bad weather at the launch site. spacex is already launched about 2000 broadband internet satellite since 2019. it is to provide fast, reliable, internet service anywhere in the world as well as underserved regions. we are halfway through. if you look at 2021, it's been
redesigned to include laser communications to better communicate without using ground links. we are awaiting that lift off in just seconds now. this is cape canaveral in florida. take a look. >> and lift off. [applause] >> falcon 9 has successfully lifted off from kennedy space center, carrying a stack of
satellites to our bit. moments ago we throttled the engine down. maximum aerodynamic pressure. >> falcon is supersonic. max q. haslinda: it is a success, the second mission this year. internet satellites being launch with this mission. back to our top stories in china, the central bank pledging more monetary policy tools to spare the economy and ease the credit crunch.
the pboc easing its key policy, their expectations that perhaps the ltr which will be released tomorrow will see some easing as well. a reduction could reflect a broad easing in the space. we heard from the pboc governors saying they're willing to open up the market toolbox even wider. rishaad: talking about looking at the requirement ratio, the bank set to have a certain amount of cash in the balance sheet as well. the room for further cuts has narrowed as the average ratio is about 8.5%, compared with other developing economies in the past.
we've got the long primary that may be lowered thursday as well. there we go. haslinda: keeping a kenai on that divergence in policy. jonathan, in the end it is about yields when it comes to markets and the divergence in policy between the u.s. as well as china. >> that's right, and i think it is real yield that we need to be focused on. the trait of the year is into shorter duration bank stocks. one of our highest conviction traits of the center is playing out. we think it's got a lot further to run.
that policy coming out of the u.s.. we can talk about china in more detail, whether the policy is going the other way. haslinda: we talk about the surge in yields. 10-year gilts at one point 87. put it in perspective, it is not that high still. >> obviously that is way below trade of inflation. when i refer to real yields, i'm referring to how you can back that out in the tips market. the textbook normal macro environment, you should expect positive real yields, but we haven't had them really since covid hit, which is like two years of negative real yields. the u.s. market in particular, it blew up in extraordinarily overvalued valuation,
particularly the nasdaq. it is fascinating because the stock is playing -- laying out in the u.s. similar to what happened in asia and china a year ago, and we saw with that did too long growth stocks in china starting last year. haslinda: -- rishaad: is it to directions of monetary policy? ? in china and the u.s. globally we talk about tightening monetary policy. how does that affect way that you look at your portfolios? >> one thing to watch very carefully is the currency and the renminbi. we do expect the u.s. dollar to be broadly strong. in china's case to have this enormous trade surplus. generally when you get that normal rate narrowing as u.s.
rates go up, that tends to put downward pressure on the currency. it's one reason we are not as bullish as some of our competitors. the hang seng has basically targeted 25,000. it's had a reasonable start to the year with financial stocks doing the heavy lifting. but we don't want to get carried away given the fact that the currency has come into play here a bit. rishaad: absolutely. everybody seems to be bullish in the medium-term on the dollar. it's often the case that people get it wrong. what is your take in all of this? >> a year ago, our effects team made a great call and everybody expected the dollar to fall heavily after last year. this year they are much more nuanced in what we are saying.
the reason you don't have such strong external trade positions, you are already seeing currencies make some pretty significant declines. here in asia, we are more constructive than we were in previous cycles. we think the currency will be broadly stable against the u.s. dollar and that does unlock potential for those markets to enjoy a fairly normal, cyclical upswing. in china's case, it is not a normal cycle. rishaad: please hold that thought because we do have a landing taking place, spacex is coming into land.
there were eight previous missions, the spacex landing taking place. the first stage was jettisoned in the landing is taking place in moments. receiving $15 billion in private investments last year. that's a whopping $4.3 billion in the fourth quarter. a record-setting year in a booming industry. space mining is in the frame here possibly as well. investments continued to hit new highs. no doubt is partially down to launch is like this which are guarding more and more interest. top deals last quarter, $337
million raised by elon musk and his spacex company and others as well. something like 250 $2.9 billion in cumulative global equity investments in 1694 companies according to the space capital report. haslinda: a successful landing and so much interest, because it is about linking the rest of the world and providing good internet access. let's get the first word news with vonnie quinn in new york. >> the biden administration's program to send free of a test to u.s. households has informally launched. i had a beneficial launch on wednesday.
households that place orders through the site or via phone will each receive four tests. initial requests are expected to delivered in 7-12 days. china's capital is seeing signs of further coronavirus spread with new delta and omicron infections found less than three weeks before the winter olympics. authorities think the first omicron patient passed the virus to at least two other contacts. officials have stepped up mask testing in contact tracing across the city and halted olympic ticket sales to the general public. u.k. prime minister boris johnson will face angry lawmakers during the weekly q&a session this week. they are calling for his resignation for lying about following lockdown rules. johnson says he was not warned that the parties were against the law. >> i can't believe we would have
gone ahead with an event that people were saying was against the rules or against what you are asking people to do. i would remember that. >> global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. rishaad: still to come, going against the consensus for an increase in hong kong prices. haslinda: and we will dive into goldman sachs results which reveal how expensive it can be to retain talent. keep it here with us. this is bloomberg. ♪
haslinda: it is a risk off day here in asia, after all sectors on the s&p closed the day in the negative. the nasdaq dropped 2.5%, investors selling high growth as well as high valuations stocks. jonathan is with us, you say singapore is a defensive play. we don't talk much about it and it's time to look at singapore stocks. jonathan: yes, we were bullish on it last year, turned it over to strong overweight for this year. the s&p 500 goes to 4400, but it also had a lot more than that.
it's got a very strong value component and very strong banks in the index. it has a rocksolid external position with substantial current accounts. i would characterize it as a creative approach to managing covid, which is going to see it well over the medium to long-term. it's nice to see that singapore is one of the markets that is up in that state. rishaad: you're pretty bullish on japan, people seem to think it's going to come back to some extent. stocks there, you see companies with a lot of cash on their balance sheets. is it going to be share buybacks rather than share appreciation of the top line? jonathan: it's a buyback theme
that has worked well for investors in recent years. the market has value characteristics, and japanese banks for example have very secure dividend yields an extremely low forward pe. for japan, it's going to be challenging, with a selloff in nasdaq that is underway. obviously some parts of the market will not do so well. haslinda: before we let you go, the risk to your baseline and the target. jonathan: i think it is skewed to the downside. into the global economy at least near term has been weakened by omicron. so we have to watch that because accommodation of the slowing growth and firming rate expectations is clearly starting to distance markets.
compensation, our philosophy remains to pay for performance. we are committed to rewarding top talent in a competitive labor environment. rishaad: top executives discussing rising wages at the bank and inflation. more on goldman-s fourth-quarter results with our guest in sydney. it was about how much talent is costing now. let's not forget the 37% that comes from trading. that bit of the business has seen a falloff in the fourth quarter as well. it wasn't just all about the cost of workers >> banker pay and benefits were up 33% for the year to $17.7 billion. as you say, that's actually in line with the revenues they are
delivering. but goldman has had to pay out to retain top talent and that is coming down on that bottom line. but as you say, that's not the only thing investors were concerned about. what investors were most worried about was the falloff in equities trading, as you say. trading contributes 37% to the bottom line and there are signs coming through that that frenzied activity that was spurred on by the pandemic that drove these businesses to records over the past year is now slowing down. so the big question is, how long is this sustainable? haslinda: that's right, so any sense about in terms of revenue but also compensation, given that it continues to be with the slew of fintech's coming on board? >> that's right, they've got
stiff competition from fintech as well as the other banks. we've already -- already written that investors could be up by 50% this year and there is more pay on top of that to come for partners, special rewards for partners making millions of dollars each. so the outlook there is obviously rising but david solomon did say that he thinks the m&a environment he views to be pretty strong. we've already seen a couple of mega deals this year, activision being one of them. the big question remains over trading. haslinda: goldman shares down the most since 2020. thank you so much for that. here's the latest business flash. cruise operators have fought for provisional liquidation and many unable to pay debts as they fall due. in a filing, the company confirmed that cash balances are
expected to run out at our around the end of january. hong kong shares will remain suspended. activision blizzard listed for $6.9 billion. $95 a share. is part of microsoft's push to add a growing platform of games. rishaad: let's look at what is going on market wise. we're looking toward the lunch break there in tokyo. currently the situation is the nikkei to 25 coming down, 1.8% at the moment. against a backdrop of continued yen weakness. we also have an play various
restrictions on movement in the capital of tokyo and that's also playing out with negative sentiments that seem pervasive there in japan. we and there you have it. woah. wireless on the most reliable network nationwide. wow. big deal. we get unlimited for just 30 bucks. sweet, but mine has 5g included. relax people. my wireless is crushing it. that's because you all have xfinity mobile with your internet. it's wireless so good, it keeps one-upping itself. take the savings challenge at xfinitymobile.com/mysavings or visit an xfinity store to learn how our switch squad makes it easy to switch and save hundreds. every day in business brings something new. so get the flexibility of the new mobile service designed for your small business. introducing comcast business mobile. you get the most reliable network with nationwide 5g included. and you can get unlimited data for just $30 per line per month
haslinda: welcome back. hong kong has ordered the culling of thousands of small animals as health officials suspect imported hamsters may have spread covid-19 to humans. we have the very latest. -- it seems to be intensifying? >> actually, this quarantine is after hong kong found -- related to a pet shop. they suspected nearly a dozen hamsters infected with covid may have spread the virus to humans.
that is why they are calling for pet shops selling hamsters to close, fair purchased hamsters to be returned, and they are requesting people to go to quarantine camps. this is another example of their covid zero strategy, where there are flareups and they will go all the way to put down any potential virus. haslinda: hong kong under pressure, so is beijing facing pressure. firstly from delta, now omicron. what is the situation, what is the latest? >> look at china, where zero covid policy is also applied, you can see with every variant emerging, the challenge on that strategy is becoming higher. within china's borders, they still have omicron spreading. that is already lasting for
months and led to several lockdowns. it is also waiting on the economy. it is really a question how long china can continue with this zero covid strategy while maintaining its economic edge. haslinda: thank you, jinshan hong. hong kong facing travel restrictions. now the biggest challenge for american businesses in the city overtaking other issues like u.s.-china relations. we spoke to tara joseph. >> there seems to be no light at the end of the tunnel. it is just adding to the stress and strain of doing business in hong kong. on the other of things, executives are telling us in the survey that there is a lot of business to be done in hong kong. so it is a delicate dance. haslinda: real estate consultancy firm collier
forecast 2022 to be a year of measured but steady recovery across many of hong kong's property sectors. let's get more with the head of valuation and advisory service. good to have you with us. how's the covid situation playing out in the property sector in hong kong? we hear about exits because of the zero covid policy. >> omicron is impacting market sentiment. we believe it is more short-term, and people expect it to be recovering gradually. in terms of population, ex-pats are moving out. not because of political reasons, but because of the policy. families are -- kids are studying overseas, and people cannot travel. that makes leaving hong kong quite difficult.
but we still have an influx of a population. universities reopening, so there are international students coming in. so it will balance out. overall, because of the low interest rate condition and holding power is not quite strong, we believe the residential market will still go up 2% or 3%, that is our forecast. haslinda: but regulations are changing. that might impact interest and sentiment in the market. >> that's right. but whether the government will increase interest rates -- but will the government increase interest rates all of a sudden? no, we believe if it goes up, it will be slow. the impact will be quite marginal. for us, the interest rate here -- if you borrow by mortgage, it is less than 12%. way easy to cover by rental income. i think that still supports the residential market quite well. haslinda: i've been wondering,
we've had the property clampdown by china, a credit issue with the likes of evergrande, how might this play out? i'm wondering how it will play out in terms of residential and commercial properties. >> i think the commercial market, in terms of supply and demand, they are still soft. but popular things like ifc, icc, good performance in terms of occupancy. but it is shrinking at the moment. so there's a lot of consolidation for reducing their footprint. the office market will be a big challenge. people moving from -- using this opportunity moving from leasing their property to buying their property, we will see some part of the market pick up gradually. in china, we have a number of chinese developers suffering at
the moment, or trying to sell property, land to local developers. but it is a good opportunity for local developers to buy it. it shows a strong demand from the end user, the residential buyer looking for a quick product. even china evergrande gave us some in the market, local developers picked up those stocks and able to sell to the end-users. haslinda: for property investors, where are the best opportunities, bearing in mind china's organization policy will continue? >> i think the best location, or the best sector, will be the industrial market. we've seen almost half of last year, transactions based on the property. those transactions are highly driven by institutional buyers
in the hong kong market. the industrial market has a good -- you can use industrial, convert to data center, you can even convert to temporary housing. there's a lot of angles to play. and that brings a lot of attraction to investors. we ask pete -- we expect at least 70% in terms of the indoor sector. haslinda: you are expecting property prices, residential property prices in hong kong to continue to rise, despite what is happening right now?
how there are good measures in place, but not hong kong. do you see the government putting further pressure to bring prices down? what measures might they adopt? >> in terms of policy changes, we have a policy address coming up. we don't see further compression from the government. we have the election coming up, as well. very late stage to change big policies at this moment. we expect the government to supply more, that way natural competition will come in. for example, -- was sold to the developer, now coming up to the market, to the citizens. their competition is quite serious. it brings down a little bit of the pricing level. i think that will be continuous -- from the government's perspective, they want to control the supply. providing more supply, that way it brings down the price to the citizens. but i don't think there will be further implementation for direct policy. haslinda: luxury versus mass-market, how will it look in 2022? >> ironically, luxury will
outperform against the mass-market. because the luxury market was holding by a lot of the rich people, and they're holding power is very strong. even the first-hand market from the developers, luxury houses over a few hundred million dollar hong kong, they don't rush to sell. because they all go by -- basis. developers are continuing to hold off, especially redrawing their vacancy tax proposals. so no rush for developers to sell faster. and also the individuals, the wealthy people are not really under the pressure of the financials. that is another reason the luxury market will outperform. at this moment in 2020, we have adjustment in the luxury market. and people waiting for borders to open.
once the border opens, buyers will come back and the target will be luxury market. . people want to take the opportunity to buy at this moment and wait until the demand comes into the hong kong market. haslinda: recovery with luxury outperforming. hannah jeong, thank you. here is vonnie quin with a first -- the first word news. vonnie: the pboc has pledged to use more tools to spur the economy and ease credit stress. signs of the property slump or send. the central bank will roll out additional policies to save live growth, frontload actions, at make moves. it said room for a rrr rate cut is narrowing. they expect the pboc to cut the loan time rate. the defective benchmark lending rate on thursday. macau's casino law contains unexpected provisions. it includes limiting junket arrangements used to attract vip bettors. operators will need to notify the government before making big
financial decisions. the chief executives can revoke single licenses on national security runs. beijing 2 -- macau is a luxury and tourism hub. the greater tokyo region and other parts of japan set to come under a because i emergency from friday. measures said to be in place for three weeks as the government tries reining in a surge of covid cases. the prime minister says a final decision will be made wednesday. local media reports tokyo plans to raise the virus warning level with more than 5000 cases reported tuesday. u.s. antitrust enforcers have announced an effort to toughen merger rules. they say a new framework is needed to combat a surge in amedeo activity, threatening to further worsen across the industry. the justice department, antitrust division, and federal trade commission said merger guidelines need to be overhauled to protect competition. >> too many industries have
become too consolidated over time. we need to understand why and think carefully about why our merger analysis tool can do better to prevent this problem from getting even worse. vonnie: global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quin, this is bloomberg. haslinda: breaking news out of germany. its new daily covid cases topping 100,000 for the very first time. germany reporting cases topping 100,000 for the first time. it has 112,323 to be exact. rishaad: we've got to take a break. on the other, we hear from one of india's richest women. the founder and chief executive of -- one of the few indian women to start and lead a
listing of her business last year. monica kapoor speaking to her at the bloomberg year ahead summit. focused on building a sustainable business model. >> indian capital markets were looking to invest in tech led companies. because there is a clear difference or growth part for companies leveraging technology to grow their businesses. and the growth experiencing is far higher than the traditional. i think investors in india wanted to participate. the first of them came to the capital markets. some of it was about earlier in india. and that will change. but again, there is also profitability before listing in india.
and they were extremely well received. i think sustainability of the business, it is very important. but just not between capital. but building a sustainable business model for the long run. and i think we are differentiating between the platform based on what you believe is sustainable. >> you have become india's richest self-made billionaire. to put it in context, putting it in the spotlight, which is absolutely. and the company has been calling for women to take control of them to put the spotlight on their own lives and take charge.
how can women boost their presence among startup founders? >> i think -- i think these things take generations. if i look at it now, they're starting their businesses, i think the numbers are definitely very different. if you want to fast-forward, you already see the differences. just feeling empowered and coming and starting it. at the most of these things in a country like india, it is also equal rights with many years to think about the change. this is my message, we have given women rights reborn. let those who give them a right to dream. this begins in every family, where the family has to respect a woman's rights to dream for herself and a support system for
women to feel empowered to go ahead with ambition and treatment. -- achievements. >> and they have shaken of the beauty industry in india. i remember a time when buying makeup meant buying it on a trip abroad or in a local store, where it was impossible to try on a color or find a suitable match. the beauty industry of india is still quite small and quite young. what is your outlook for this industry and the year ahead? >> for the beauty industry, looking consumption, it is not even $13 compared to $250 plus in the u.s., or if you looked at it from a perspective of -- only 8% of investors online is unorganized. where there is no branding,
there is no quality. and it is really important. if you look at the global business, beauty matters a lot. you look at companies like l'oreal, a lot of market share because of consumer trust. there has been a revolution, so to speak. we've created a platform and demand generationally for high-quality products. to me, that is enabling many brands to come up with their own offering. haslinda: that was the founder and ceo speaking at the year ahead summit. if you are a subscriber, catch up on all of our interviews by using our interactive function. you can also join the conversation by sending instant messages to our team and guests. even the anchors.
massive premiums for available metals. they are stepping into increase monetary and while price moves spark my supply bottlenecks. unlikely to reach a goal of 9 million cars. due to persistence shortages. they are paring back production to 700,000 units in february, around 150,000 units lower than the original goal for the month. europe's car sales slid during december for a fifth month of declines, showing the extensive uphill battle in the chip supply crisis. users can read more with our newsletter. supply lines. and coo's said the air conditioning and heating company taking a more strategic approach to supply chain issues,
including working directly with chip suppliers. they spoke to romaine bostick at the year ahead conference. >> we are trying to take a much more strategic approach. so we have come out of this pandemic in a robust and resilient way. so we are now dual sourcing many critical components. we had 25% of critical components dual source. we have gone to 35% on our way to 75% in the next five years. we are investing more in automation. we've gone from one million manufacturing hours to 3 million at the end of last year. we will double the number in the next five years. we are starting to work with chip manufacturers, which we had not in the past. we would buy chips through distributor. we are not only working directly with them, one of the key focuses is buying chips and procuring them on behalf of our tier one suppliers, whether a
compressor or motor suppliers. they are just as reliant as we are. and we have more critical mass to support our suppliers. one of the biggest focus areas we've had as a company is on-chip procurement. labor continues to be a challenge. only exasperated in the u.s. and globally by covid. so we have to do a lot of different activities to make sure we can keep factories open and support suppliers on the labor side. that continues to be a challenge. a lot of folks are really stepping up and working tremendous hours to support us and customers challenging times. cracks i want to go back to your comments. i'm curious as to how much leverage you have to get towards the front of the line versus these companies with our carmakers in other industries that might seem to have precedent. i'm also curious whether there's
a longer-term strategy with regard to making sure you have that steady supply? longer-term contracts, more onshore production? what is the solution? >> with respect to chips, we have much less leverage than some of the folks you mentioned. automotive suppliers, apple. so we don't have the buying power with the chip oems that some other folks in other industries do. but we have met with the ceos of major chip manufacturers and made it clear we are in this with them for the long-term. we have done unique arrangements we have never done in the past. we have procured capacity with some major chip oems, which we never would have done in the past. haslinda: that was david gilland. let's look at the market. across the board and the equities and bond space continuing in asia.
cracks it is almost 11:00 a.m. in singapore and shanghai. i am haslinda almond. >> i'm rishaad salamat it. let's have a look at the top stories. stocks on the way down, extending the drop. as we get the surge in treasury yields and the prospect of a tighter fed. china's central bank pledging to use a more tools to spur the economy and ease credit stress.
sony falling the most in nearly two years after microsoft announces plans to by activision's blizzard. >> we are seeing pretty much across the board. dragging losses in wall street. 11 sectors closing down. the nasdaq low by 2.5%. close to correction. the msc asia-pacific down 1%. extending the loss for the day. infotech, tech slumping about 1.3%. tracking the losses on the nasdaq. the likes of the kospi and the nikkei dragged down. the cost becoming lower by .10%. it is all about yields. let's bring in how the bond market is doing. that route continuing in asia. tenure yields surging as high as
2%. of course, people say it will get to two. way faster than anticipated. china 10 year yield. the premium of tenure yields in china providing now inching ever closer to that of the u.s. treasury yield. let's bring in our next guest part of our wealth management asia. make sense of the markets. it is about yields right now. cracks yes. that is what it is all about. a repricing of risk assets. some of it is warranted. we saw strong technology sector. but it is all about the fed catching up and coming out with a hawkish pivot in december.
and other fed speakers reiterating. because they need to move. u.s. inflation will be 4.6%. but we do see it sequentially getting better. from 6.8% where it is now, maybe closer to 2.6 by q4. but the outlines will be inflation and supply chains watching during the year. haslinda: where are they going forward? >> our two year yield target is 1.25%. it hasn't changed in the last couple of months. now it is looking more appropriate. tenure yield is 2%. yields can overshoot or the forecast can change. 1.2 5% on the two-year is pricing in the rate increase forecast, four rate hikes. so we are getting there. we think the two-year forecast
is appropriate, given where we think the fed will be moving in the coming months. 10 year yield target depends on what the longer-term growth is. the debate is moving too quickly are not fast enough. 10 is the barometer. that is moving up, which is good. at the same time, there's a limit to how fast they can move, given the current environment. haslinda: the equity market getting impacted by higher yield. i'm wondering whether earnings season can bring some. if it can provide the support they are looking for? >> it could. with the u.s., we will get a day of numbers. maybe 8% this week, but we are looking closely at margins. growth is picking up. even this year slow was above trend.
that will be key. i think there will be more dispersion in between sectors. sector calls are key. we have been long energy and other cyclical sectors. it is also about quality and pricing power. which companies can raise prices more than costs are going up. and that will create dispersion. it will be interesting to see that in the coming weeks. rishaad: give me a sense of how you perceive the next few months. uncertainty is of the fed, it varies. we could see another mutation of covid-19 and how it is caused. it is bound to cause volatility with these concerns. how do you really prepare yourself? >> with the variant, someways omicron is gone. good news it's it is shorter.
cases down 40%. south african cases down 80%. new york city down 30%. hospitalizations much lower. but it is unknown whether we get a worse variant or more transmissible. but this is playing out right now that it is more transmissible but much higher vaccination rate. but if we step back, we are in a higher hold environment. more of the fed interest rate expectations, wage inflation. we think it will have a bigger impact on the markets focusing on going forward, assuming we don't have a disturbing variant. that is key. the fed doesn't want wage inflation and other inflations getting embedded. when we look at five-year forward inflation expectations, they have not gone up as much.
it is a cyclical rebasing of inflation. then we go closer to trends. and that will impact. but it means more ball, more interest-rate ball creating more sector volatility in equity market. it affects longer duration sectors. and we have focused more on cyclical. rishaad: when it comes to tapering, this is taking place in uncharted waters. 2020 one was probably unprecedented. is the economics textbook really a proper guide? we may have many unintended consequences, given where we have come from. >> history doesn't repeat, it rhymes. in the fed has been rewriting the playbook since 2009.
so you have to look at past historical data with that air of caution. normally, early interest rate cycle equities outperform. by roughly 5%. so we are expecting lower returns. but the pace of the ray rice -- rate rises will be higher. they were from a quarter to 2.5 inches, but slowly. at the same time, global growth is stronger. much stronger than 2018, as well. that is the differences. we think the dispersion is key, but also the diversification. we have also been looking at real assets. looking at hedging properties. gold is a hedging property. but underway government bonds. hopefully there will be a time to buy government bonds during the year. people need income and credit. the one place to get yields.
there could be interesting allocation opportunities, as well. rishaad: hold that thought, a lot more to talk about. going to move to the spread of the pathogen that causes covid-19. over to new york with vonnie quin. >> china's capital seeing signs of ferner -- for the coronavirus spread. new infections found before the winter olympics. beijing's first omicron patient has passed to the virus to at least two total contacts. a person in a different part tester to preliminarily positive for delta. set up mass testing across the city and ticket sales to the general public. the biden administration's program to send free covid tests to u.s. households has informing the -- informally launched. testing kits operating in limited capacity for testing purposes ahead of the official launch wednesday.
case orders through the site or phone will each be four test. test to be delivered in seven to 12 days. the greater tokyo region and other parts of japan testing under a quasi-emergency from friday. measures expected in place for three weeks as the government tries reining in a surge of covid cases. the prime minister says a final decision will be made wednesday. media reports tokyo plans to raise the virus warning level with more than 5000 cases on tuesday. the u.k. prime minister will face lawmakers in parliament during a weekly q&a session on wednesday. more of their party members calling for his resignation for attending parties and allegedly broke lockdown rules. he said he was not warned the party were against it at all. >> i can't believe we would have gone ahead with an event where
people were saying was against the rules or -- what we were asking people to do. and nobody warned me it was against the rules. because i would remember that. >> south african researchers say the omicron variant appears to cause less severe analysts. a study of 23 people showed those who previously cut the delta variant could contract omicron, but those infected by the omicron strain did not catch delta. particularly if vaccinated. it is yet to be peer-reviewed. global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quin, this is bloomberg. haslinda: the outlook for india's gold industry is rollouts modernized the sector. rishaad: world bank saying
rishaad: 22 minutes before lunch. some losses being extended. china had a loss of 2%. extending the loss, as well. we do have the pressure seemingly coming off of some of the property developers. if we look at what is going on, probably down to the pboc. more tools spurring the economy. this is signs of a property slump in the country. central bank saying it will roll
out additional policies to stabilize growth. and preemptive moves, economists expecting to allow investors to cut the loan prime rate. the benchmark lending rate. haslinda: still with us, our guest. the pboc saying it will use more tools open up monetary tools in a wider fashion. are you looking at that rate on thursday to be cut or not? >> it make sense after the cut to see how we are cut this week. we also expect additional easing measures. another rate cut possible as well as other cuts. they will have an impact on the housing market. the tool is important. we came into december. and we had the meeting. they set the tone we are moving
away from deleveraging to stabilizing growth. so it will not be the kind of stimulus we saw coming out. but it is putting growth. expectations are lower on china growth. so this puts a floor. creating some distortions in the supply chain. a short-term in consumption. but this is required for the china economy. haslinda: how big a cut is needed to bring back confidence, especially in the credit sector? china cutting by 10 business points, and investors were not happy this week. >> investors haven't been happy for a while. it has been painful. we look at the last four property cycles, based on the current data of prices and peak
sales, we think the property market can bottom in the middle of the year. so we still have some pain to go. markets are discounting mechanisms. you look at asia high-yield or the property sector, you already are pricing 35 or 40% default rates. that has drawn up high expectation. but we will have 20 of default, leverage property developers. they will not be saved by the rate hikes. but it is about stabilizing the economy. the key is the side with some fearing is reappearing. that is the key thing they don't want to see. it will be much more costly. and they are moving more decisively. rishaad: that is the point i wanted to address. about systemic risk. wide-ranging statement from the deputy government belying the truth in some way.
so wide range. makes you think they are seeing systemic problems and perhaps things are a bit worse on the ground than the data showed. >> the data -- there will be a bit of a hit into the new year celebration, given people cannot travel as much. but if you look at china economic supplies, they are beating expectations. credit impulse indicators just turned to positive. that is what you need to see. you are seeing the second derivative of the data getting better. at the same time, they need a floor. look at china credit default swaps, the china currency, it is not the indicating stress on a systemic level. because exports are so strong, current account is good. so we are not seeing -- prior
property downturn, we had a significant weakness in the current state. and we lost $1 trillion in fx reserves in china. so we don't see that stress. but we see an impulse slowdown. rishaad: absolutely. how important was the next chinese earnings seasons? libby a better gauge as to how corporate china is performing? give us a sense of the macro climate. >> it is definitely important. people will be looking at that side, in terms of a margin, and how long the consumption hit will last. in the medium-term, earnings matter. there's a high risk premium on technology because we don't have the details. but there hasn't been anything dramatically new. but some of the risk premium can
start to evaporate. at the same time, some areas in the market that are strong in policy action, small mid-caps in china perform well. we have been hiding out in china mid-caps. there were up 15%. it is not leveraged so much regulatory. and they were in policy positive areas. they actually believe in outperforming in china. but over the year, we think it will get better. haslinda: thank you. part of our -- bnp paribas. follow the story and the day's trading on our markets live blog. that is on the bloomberg. get a market run down in one click. this is bloomberg.
rishaad: we are back. this is a look at what is going on with tech stocks. asia's tech index. some upside movement. some of these leading the advance. jd.com, as well. taking a look at alibaba. the u.s. commerce department investigating whether beijing can gain access to u.s. crime data through their cloud. let's discuss these implications with catherine lim. certainly it is a huge national security issue. >> definitely does raise the concern.
but they should not be new. we have been monitoring the developments between the u.s. and china. if i can take a step back. last year, alibaba launched one of the customers. it hasn't reported, even though it is still unclear who the customer is. but there are talks the implications of the result was increased u.s. scrutiny. so it is not new for watches in the space. that is contributing over the course of the last six to nine months, why alibaba has been increasing to penetration among industries and companies on mainland china rather than in the u.s. haslinda: the u.s. probe adding to pressure on alibaba, already
under intense government scrutiny. i'm wondering if it changes the outlook of the company? >> there is no doubt entering 2022, it is going to be a more turbulent year. they've also indicated the revenue growth, and possibly into 2023 will be slower. and they will be focusing on actually building growth within the business. i would like to highlight that possibly, the lower growth expectation built-in by the market. haslinda: catherine lim, senior consumer and technology analyst with bloomberg intelligence. a quick check of the latest business flash headlines. -- hong kong has filed for -- unable to pay debt. in a filing to the hong kong
stock exchange, it confirmed its cash balances expected to run out at or around the end of january. hong kong shares will remain suspended until prior notice. dsp group positioning itself for a return to large-scale m&a. sources tell us they have expanded the dealmaking team and is interested in pursuing acquisitions. they are evaluating rivals, occluding a partner. no indication it is preparing any bid. the company in the process of accessing oil and gas and has no plans to collapse its listing. citigroup to be in advanced talks with taiwan's financial holdings for a sale of its consumer business in mainland china. sources say they emerged as the likeliest buyer after outbidding rivals. that agreement could be signed
in the coming weeks. citigroup's assets can be $1.5 billion. rishaad: five minutes away for the market close. taking a look at chinese markets. we saw some gains on the shanghai composite being erased. china breached 2%. has recovered a fraction. but what we have at the moment is semiconductor related stocks. really responsible for the fall we are witnessing currently. looking at markets. we do see the developers moving to the upside. also the tech stocks. really down to the pboc bank for stability. that is why it has been getting relief. we will have to wait and see. that is the position for equities in china heading into lunch. what we have coming up, another
>> 11:29 a.m. in hong kong and singapore, 10:29 p.m. in new york. the pboc pledged to use more tools to spur the economy. signs of the property slump worsening. central bank will roll out additional policies to stabilize growth, frontload action, and make preemptive moves. it says room for another rrr rate cut is narrowing. economist expect the pboc to allow lenders to crack down on the time rate. the full draft in macau's casino
law contains unexpected divisions. it includes limiting junket arrangements used to attract vip batteries. operators will need to notify the government before making big financial decisions. the chief executive -- national security downs. paging speaking to as the measure and tourism hub. u.s. antitrust enforcers announce an average of tougher merger rules. a new framework is needed to combat a surge in activities threatening to further worsen concentration across industries. the heads of the justice department antitrust division and ftc said merger guidelines used to assess deals need to be overhauled to protect competition. >> to many industries have become too consolidated over time. we need to understand why and think carefully about how you merger analysis tool can do better to prevent the problem from getting worse. >> the largest airlines canceling some flights over concerns about interference with
the rollout of 5g mobile phone services. japan airlines will not fly planes to and from the u.s. after a warning from boeing. the signals could obstruct their alternators. 787's will replace the triple seven on some but not all of the routes. global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quin. this is bloomberg. haslinda: thank you so much for that. taking a look at markets as japan comes back from lunch break. the nikkei to 25 down almost 2%. among the biggest laggards in the region. tech playing out, tracking losses on the nasdaq, down about 2.5% at the close. the concern remains yields. surging. expectations the fed will raise rates more than the quarter of a
point in march. take a look at where we are, in terms of hong kong. a bit of a relief. those tech stocks also in positive territory. perhaps about lower valuations, bind the dip. the hang seng property index also up about 2%. let's take a look at oil. the way it is inching upwards. brent crude at 8858. not just about the geopolitical concerns, it is about the pipeline that got impacted by the explosion. oil at the highest levels in about seven or eight years. rishaad: let's talk about sony shares. going into the lunch break, down. take a look at how the share plunge is doing. extending losses after microsoft
announce the $69 billion deal for scandal plagued activision. counsel gaming with playstation and xbox brands. let's look at the asia tech editor. is it an overreaction, given sony has a very strong gains portfolio, as well as hardware sales? >> in terms of the short-term, you can say it is. in the long term, the threat is microsoft signaling it has bottomless pockets for its spending spree to make it game pass a successful subscription service. it changes the game, in terms of the council market. not trying to outsell sony. it is trying to get as many gamers signed up for a subscription service as it can,
which would take away from sony's playstation business. haslinda: how much of a game changer is it for microsoft? how does it gain? why do regulars want to take a look? >> the antitrust issue is significant. assuming goes through, it makes microsoft a world number three games publisher behind tencent and sony itself. regulators will want to take a look and consider it. there is a move towards consolidation. activision itself said didn't see itself as large enough, which is striking considering how big it is. didn't think it was large enough to compete because game production across the rising company to consolidate. it is a big deal and signals's microsoft is a company that has great resources that can focus on this.
a whole bunch of initiatives such as getting into electric vehicles, doing a plant in japan. it has a whole bunch of things it needs to invest resources into. haslinda: thank you. the third quarter expenses were up 5%, partly due to a rise in performance pay. we spoke about talent retention assets. >> it is a big challenge. it is touching every part of the world. and we speculating what is driving this. lifestyle changes on the back of the pandemic, if the world is flush with cash, if it is looking for ever greater talent. while we are above the trough
levels in 2020, 2021 was kind of back to normal, in terms of levels of attrition. we needed to pay up, but we found ways to save money in other areas. expenses were more or less flat. and i would hope we can continue with that trend. find the savings to pay for ever more protein talent. >> how sticky do you think they are? on wall street, it is a one-off story, pay up and walk away. how sticky do you think it is? >> the prophets are sticky. it's been an extraordinary year in some aspects of the market. we saw it from u.s. banks. it has been fantastic. will it carry on? fixed income businesses are doing well, but not as well as during the peak of the pandemic.
profits are up, wages will be up. >> how do you lift revenue? how do you lift the share price? you had a nice rebound. you are nowhere near the pandemic level. with the e.m. exposure you had, the hong kong exposure you had, what is the strategy to jumpstart growth? >> that is a good question. we are releasing earnings in about a month. we will be sharing our story with how we accomplished that. on the one hand, emerging markets, china in particular, is out of favor with investors. particularly, equity investors. that has an impact on our share price and others with a heavy chinese component. we know these are the drivers of economic growth. looking at china above expectations. above 4% gdp growth. you say that is tough. relative to 5% or 6%.
for percent is still pretty good. especially given the challenges. that is through asia as we work through the pandemic. but we lift profits by continuing to grow. growing consistently for several years. and low interest rates, a very high impact on the banking industry. >> your website on hong kong, where you are hugely predominate , says here for good, grade. no banker more qualified to tell us about the potential move from hong kong to singapore. can you predict western banks, the more larger commercial banks will be forced to jettison hong kong for other geographies, including singapore? >> i don't think so. hong kong has been ever more so the entry point to china.
the place capital goes into and out of china. very much a two-way street. there has been message flows over the past couple of years in china. it will probably balance out over time. essential flow of chinese money will also accelerate. things like the wealth connection program, allowing chinese savers to increase savings in currencies. and that is going to hong kong. hong kong is solidified. the strongest it has ever been. haslinda: standard charters speaking with tom keene and jonathan ferro. the outlook for india's gold industry looking for a rollout to modernize the sector. the council will join us next. this is bloomberg.
rishaad: a look at gold. the world gold council saying the outlook for demand. the second-biggest consuming nation of commodities that things remain strong. precious metals in november. and the peak weddings that followed. let's bring in the regional ceo india at the world gold council. give us a sense of the demand and how it compares to previous years. >> demand during the pandemic was affected partially due to lockdown and all of the functions. what we saw in the last quarter of 2021 was a spurt in demand. partially because festivals and weddings came back. prices soft and. savings were higher. people could not spend on anything else.
travel was contained. all of the money flowed into gold. equity markets performed well. this is a case where people found savings had to flow. goldplated's part well. so we saw a huge spurt in quarter four. rishaad: so we are sure it will come back. we also see the central bank also buying gold. how has that affected the market? >> central-bank buying doesn't generally affect the market. it is also something that doesn't move the local market sentiment. and we have seen many central banks in 2021 and 2020. that does not affect consumer sentiment. overall at the global level, central banks buying gold is positive. as far as india is concerned, it
is driven more by weddings and the fact people could not spend money on other things. particularly travel and other stuff. so the money started flowing into gold. haslinda: it has to do with liquidity, pent-up demand, so we are tracking the third wave of the virus in india closely. an impact on demand? >> fortunately, no. a lot of uncertainty about it. it appears even in the city like mumbai, coming down and we have seen people have started to live with it very responsibly. not so in some other pockets. but we have moved. i don't think the current wave has affected the demand at all.
haslinda: you are also tracking the gold industry and stock trading in particular. what are the expectations, when will it start, what will be the impact? >> there are two policy changes from the last two years. one was the formation of the international bullion exchange. it should start trading very soon. we expect some changes in the taxation part of it. it should be in the first half of some year. there is an exchange within electronic gold receipt with financial security. that has a lot of potential for bullion banking in a very big way. if that should have been toward the later half of the year. haslinda: like most things because of the pandemic, people went online, the digital gold market.
what is the potential and what kind of growth? >> when you talk of digital growth, it is etf holdings. a small fraction of the overall demand. and the overall etf's have never exceeded even 40 tons. but we see quite a bit of etf's currently. and they have grown from etf's. but in the overall demand scenario, etf's still hold a very small portion of demand. it doesn't impact much. rishaad: so -- gold being bought for not just its physical properties, but how much is on a speculative basis? has it been eroded by
cryptocurrencies and the like? >> gold buying in india i would not say has been affected in any matter by crypto. it is not people who probably have invested in crypto would have bought gold otherwise. we have not seen any other kind of cannibalization. gold is driven by certain fundamental factors. 60% of the demand, and you have coins and others people save for many years later. and these factors have not gone away. people do understand when you hold crypto, you are holding a high-risk asset. even investors would say you need to hold more gold to balance that risk. i haven't seen any kind of cannibalization in india through crypto. >> thank you so much for joining
us. we have the open in india. looking at the story in the moment. checking in with the price movements in mumbai. and looking at a couple of companies making headlines. we have one company that beat estimates further earnings. and lmt technology on another beat. that is a couple of companies making waves. but certainly, a day where we see stocks -- regional stocks under some pressure. a lot more on the way. this is bloomberg.
everybody wants a little inflation. the last 20 years, every country has been trying to get to percent inflation and have not been able to do so. a little inflation is good. but excessive inflation. find much more than two. in short for the most part, higher inflation means higher interest rates. higher interest rates means lower asset prices. >> higher interest rates could also throttle the economy. post-pandemic recovery is now in question or at risk? >> i don't think it -- first of all, i probably asserted i'm not an economist. as you know. but i think we are going to continue to have recovery. but i think with higher interest rates, all else being equal, it won't be what it otherwise would have been. low interest rates are incredible stimulant.
so the economy will be less stimulated. >> when we spoke a few months ago, you described assets as being in everything bubble. and you urged the federal reserve to let interest rates normalize. what i want to know is do you want -- does oaktree want jay powell to use this opportunity with inflation staring us in the face to pick the everything bubble, or maybe it did? >> i -- i don't think the fed should try managing asset prices. but it should try to create a new environment conducive to the economy doing its thing. but i also believe other than the extremes of overstimulation and hyperinflation or recession, i mean the fed should be relatively passive.
that is why called for naturally occurring interest rates. interest rate have been artificially low, they were made to get out of the pandemic that served its purpose. the economy has been very strong. the demand related to that strength has continued to contribute to the inflation we have. interest rates have to rise. the economy has to be rushed into it. we are seeing that. more interest rates sooner than had previously led people to believe. all of this will cool off the economy to some extent. rishaad: howard marks. let's check in with the business flash headlines. kicking things off with goldman sachs. shares struck the most in 18
months. learning of a surprise drop while -- source. trading revenues 11% on the sign that the covid pandemic trading boom might be starting to fade. benefits also 33% coming in at $17.7 billion last year. they wrapped up efforts to maintain talent. microsoft buying activision-blizzard for 69 billion dollars. the largest cash take since the start of the pandemic, $95 a share. the move part of microsoft push to add a growing portfolio of games to its xbox game past service. sony, making the playstation, fell by the most in almost two years. some -- 9 million plus this year. pointing to persistent chip shortage in global supply chain disruptions. producing 700,000 vehicles next month, about 150,000.
didn't hit the new annual target and manufacturers 5% more units. haslinda: emerging markets, it is about surging yields. investors pricing in a bigger rate hike come march then further anticipated. more than 25 basis points. all 10 year, in particular. 2% mark. it is staff earned. flipping the page. in terms of the oil market. oil markets also surging. brent crude at 88.56. it has to do with geopolitical concerns. also to do with the pipeline that was hit by that explosion. oil at 80 year high. rishaad: naturally, this is taking its toll on what is going on with the equity markets in this part of the world. and you can see the damage being