tv Bloomberg Markets Asia Bloomberg February 28, 2022 9:00pm-11:00pm EST
china beats ex petitioned despite contracting demand and supply shocks. rishaad: newsbreak and concerning hong kong and a possible lockdown taking place. the administration here is weighing public transport halt during a lockdown. also weighing whether to hold public transport or allow residents to leave their homes if they test negative with rapid screening kits. nothing will be planned for the next few days. that perhaps is limiting the gains -- we are seeing losses at the moment. looking at whether they could be rolling lockdown's or whether they would be citywide. this is just emerging right now. stocks at the moment to the upside. what we have is ukrainian overlay, geopolitical tensions, and oil moving slightly up.
this after reversing gains it has made. this time last week we saw oil 7% lower in price than it is today. that's a look briefly at what is going on. looking at what else is broadly happening here. haslinda: well, obviously markets have been whipsawed today. some risk appetite returning. could be a case of buying the dip. there are still risks out there, further escalation in ukraine for one. keep a watch on the fed. don't forget about the fed. taking a look at where we are in terms of the movers. equities pretty much across asia in positive territory. in the fx market, weakness and some currencies. the yen down about .2%. but the currency we are keeping a watch on of course is the yuan, trading at a full year high. prompting the pboc to come in and fix it.
631.19 is the level we are watching. keep a watch on what the federal bank of russia is doing. if it does sell yuan denominated assets we could see some weakness in the currency. and we are seeing brent crude higher .7%. still elevated at $98.68. gold as risk appetite increases, gold seeing some selling. in the bond market, we're seeing some bond yields currently falling, suggesting perhaps that investors are still looking for some havens. today, the mood is pretty positive. rishaad: all right. let's have a look at important data out of china. manufacturing side of things better than expected. there we go,
better-than-expected numbers coming through. this is helping to brighten the outlook for regional equities. 50 points stronger than the 49 point expected. we have expansion. the composite also rose. the readings came on top of a pause we have been seeing in the ukraine-driven selling which has sent the nikkei to 25 to the upside. the shanghai composite up by about .33%. breaking news out of australia. haslinda: we want to bring you live pictures from camera, where prime minister scott morrison is speaking. he is committing $15 million to support arming ukraine. he has given $25 million for humanitarian support of ukraine. the global committee coming together to support ukraine. we will bring you the latest as the headlines come through. in the latest hit to the russian economy the u.s. has now banned
transactions with the russian bank effectively freezing huge piles of its foreign reserves. it also targeted the russian ministry of finance. some russian banks have been banned from the global swift network, cutting off payment channels. the u.s., eu, and u.k. are adding restrictions to a range of russian companies. plus, vladimir putin and his close allies are being hit with specific measures. for more on this, we have kathleen hays, plus our emerging market strategist simon flint joins us for a look at the market impact. what impact are we seeing this have on russia? kathleen: we are seeing a financial crisis now in russia. clearly created by these growing financial sanctions. the fact it hit the ruble so very hard. so, russia, putin, and his team noit -- not waiting.
today in the early hours of the russian trading day, they doubled it. they are not messing around. that is as the ruble hit a record low. bank of russia saying they are doing this as conditions, financial conditions have drastically changed. that is putting it mildly. so the u.s. itself is not waiting. the eu and u.s. said they were getting ready to put some kind of sanctions, do something against the central bank of russia. the u.s. did. banned all u.s. transactions by individuals, by businesses having anything to do with russia's central bank. remember, russia has a total of about 630 billion foreign reserves in central banks around the world. if they cannot get their hands on those, then how can they -- that is the problem. the treasury department made it very clear, they are doing it for a specific reason. as janet yellen said, they want
to limit russia's ability to -- they want to immobilize any bank of russia assets held in the u.s. so this is clearly these -- clearly stepping dissensions up again. many are skeptical on how effective they will be in terms of stopping vladimir putin, they are certainly exacting pain. that is something the russian government is feeling pressure from. rishaad: the beijing administration is treading very carefully on this. a tight well for them. tell us -- a tightwalk for them. what are we hearing from the pboc if anything on this? kathleen: so far we are not hearing much. we know that everyone is looking because china is one of the biggest holders of russian's foreign exchange reserves. russian has about 13 billion reserves in yuan assets.
so it could make a move, it could do something to help russia in this regard. the pboc also has currency swap lines with russia's central bank. remember how the u.s. used currency swap lines with many g10 nations during the great financial crisis? china could do this. the big issue for china is they are in a tough spot too, because traditionally they try to respect sovereignty boundary lines. and what russia just decides to, without provocation, attack ukraine, basically at war with it, now threatening to kill the president outright, you can understand how that puts china in an awkward position. do they want to support that? can they find a way to help russia with its foreign exchange, its reserves and supporting the ruble? that is the question. haslinda: kathleen, we have breaking news here. go ahead, rish.
rishaad: it was exactly what you are going to say. naoki tamura nominated to the board of the bank of japan. this comes against this backdrop for the landscape for the japanese federal bank is changing a little bit. there's even been talk recently of normalization of government policy. kathleen: when you see bond yields rising around the world, when you see inflation, at least it is not getting lower. the global pressures are there. it will be interesting to get more on these people's background. what do they think about monetary policy? governor kuroda only has about another year left in his term. so does becoming a much more pertinent question. who they are choosing now and what they are trying to signal. people in the past have said we will get this big backing away from this extraordinary stimulus that was a hallmark of abe and
koroda when that changes made. it is a year now but then it will be six months and then three months and that will you be up -- and then it will be upon us. haslinda: the ruble front and center. how much worse can the ruble selloff get? simon: about 5% to 10% from the current price of about 105 against the dollar. we've already reached the max deval lows we saw during the crimea crisis during 2014. adding a little bit on there, given what kathleen noted about the lack of usability of reserves. in 2014, 2015, they ran down reserves by more than $100 billion u.s. they almost certainly do not have that much liquid reserves available to defend the currency at this time. but of course this conflict is much more severe.
there should be some further downside to the ruble. rishaad: simon, what are we likely to see with regards to further spillovers into global markets? is this likely? simon: probably, in the sense that there is still a risk of higher energy prices, not least because of the western world taking the view they need to increase the pressure, and the most obvious source of pressure is on those energy exports. that will send oil prices higher, that will be inflationary, u.s. yields would rise, the dollar would rise. and for emerging-market currencies, all the imports in asia, they would suffer. and of course those geographically close countries like poland would do poorly.
rishaad: simon, thank you very much indeed. simon flint there and kathleen hays. all right. the price of oil very much in focus, as we see awarded moves to try and bring it down. here are the first word news headlines. vonnie: the u.s. and its allies discussing a coordinated relief of about 60 million barrels of oil from their emergency stockpiles. this after russia's invasion of ukraine pushed crude prices above $100. sources say deliberations are currently focused on 30 billion doub -- 30 million barrels from the u.s. although a decision has not been made. singapore plans to impose unilateral sanctions on russia, making it the only country in southeast asia to do so. they intend to impose export controls on items that could be used as weapons in ukraine. they will also block certain russian banks and financial transactions related to the country.
jp morgan ceo jamie dimon says there are ways around sanctions involving the swift messaging system. this after the u.s. and allies shut russia out of the network. he explained this connecting the banks could bring unintended consequences, including third parties finding loopholes. jp morgan -- >> sanctions say they cannot do business with you. i can still do business with you. there are lots of work around. they are different tools used for different reasons. vonnie: hong kong is said to be planning a citywide lockdown to make sure -- the drive will start after march 17 with officials planning to test residents three times over nine days. core financial services and the vaccination program will continue to operate. final details are still being
worked out. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. haslinda: thank you so much for that. still ahead, we dive into the commodities chaos brought on by russia's invasion of ukraine. raw materials financing dries up. next, we look at the impact of geopolitical tensions and the outlook for global top five. andy shi joins us in just a moment. keep it here. this is bloomberg. ♪ s bloomberg. ♪
bloomberg markets as we check in on the global smartphone market. brands among the top five global smartphone brands in terms of shipments. all that coming from the market intelligence firm idc. one of the names of course, oppo. aiming to become the world's top three technology enterprise brand within five years. let's get over to andy shi. thank you so much for joining us. first of all, how do you plan to get there? andy: very glad to be here. oppo is a very fast developing chinese brand that started from 2014. global markets starting from southeast asia that gradually to other asian markets and then last year we see very rapid
growth in latin america and europe as well. so that makes us top five in the world. rishaad: yeah, ok. so, which markets do you need to penetrate to get there? and i want to ask you also as we are living in these tough geopolitical times and what is going on in eastern europe right now, you stop to shipping phones to russia? andy: personally i'm looking for the markets south of asia, including tunisia, thailand, and others. globally we have now entered over 40 markets in total. and we have been closely watching the situation happening in ukraine and russia. but currently we do not see a huge impact on us, but we will still be watching for that. globally, we have lots of
manufacturing centers in turkey, algeria, china, india, and asian asia -- and indonesia. it's not hurting our business anywhere yet. haslinda: andy, the situation in ukraine is not hurting you yet, but are you intending to comply with u.s. sanctions on russia by stopping your shipments to russia? andy: uh, we haven't. we haven't had a clear understanding of the situation yet. but currently the business is still stable over there. haslinda: oppo is ranked third in ukraine with 6% of smartphone market share there. what are the prospects then given what is transpiring right now? andy: we have just entered this market. i would say it's starting from
two years ago. they are still at a very early stage. we're looking to expand our business into more markets in eastern and central europe. we see bigger potential over there. that is how we gained our rapid growth from last year, because all the other markets are stable and we have a very big market share already including china, india and south of asia. for new markets, i'm talking about latin america and the european markets, this is how we're more focusing on to grow our business. so definitely, this will be some issues we need to tackle for faster growth in this year or in future years. but overall, our business is quite stable.
rishaad: give us a sense of how, as a smartphone manufacturer, you are doing with the chip shortage and supply chain disruptions overall. andy: actually, oppo is not just a smartphone brent. we ha -- brand. we have a lot of factories all over the world. for us, we're very confident to say that we have one of the best supply chains in the industry. so that makes us still ranking so high in the global markets. so that we can not just focus on the shortage of chips, but more focusing on what we want to deliver to consumers. we're putting over $8 billion u.s. in the past five years to investment into research and
develop. th -- and development. that will help us launch new technologies. like a smart charge, which enables you to charge your phone from 0% to 100% in five minutes. we also launched with qualcomm that enables you to faster use 5g and have a faster and more stable 5g connectivity for home and office use. with all this new technology launching, we think we can p rovide more variety of products rather than just smartphones. haslinda: how about your sales in india? how are they looking, and have they been impacted by worsening
relations between china and india? andy: i think most of the smartphone brands in india currently are chinese brand. so, i do not see a very big impact on that. we have actually all the firms we sell in india are made in india. we have deep funding with local society so it has become an indian brand as well. we have too many factories over there. we can't say whether it's a chinese brand or indian brand. it is truly international now. haslinda: thank you very much for your insights. now, if you are a bloomberg subscriber you can catch up with all of our interviews by using
haslinda: welcome back. here is the latest business flash. jp morgan is freezing funds with exposure to russian equities. jp morgan clients will not be able to buy or redeem shares in the jp morgan emerging europe equity fund or its russian fund. they are suspending trading in eastern european funds. lion trust asset management is also holding withdrawals and purchases of russian funds until further notice. singapore's biggest banks are said to have restricted trade financing for russian raw materials. sources tell us dbs, oocbc have
stopped issuing letters of credit involving energy deals over sanctions. the decision follows a similar move by at least two of china's largest estate owned banks and lenders in europe. let's do a check on the russia focused etf in japan. pretty much the only etf, and seen as a proxy in asia. it has been collapsing and it continues to do so today. take a look at that etf, currently trading in the negative. of course in the broader market we are seeing risk appetite coming through. the nikkei to 25 up by 1.6%. it is perhaps a buy the dip story. still to come, we will hear from ubs global wealth management executive director wayne gordon on how high he has upgraded his gold forecast after russia's
rishaad: taking you straight to beijing. 9:29. we have a briefing taking place in moscow talking about the export surge we saw last year. at the moment they are addressing the high price of raw materials, shipping, and labor, saying commodity supplies have not fully recovered yet. the chinese commerce minister there speaking in beijing, saying chinese trade has been stable in the first two months
of the year. that coming as we seek two -- we see it's the first of april. we are going to leave it there. haslinda: that's right. facing pressure but when a comes to the pmi, better-than-expected, suggesting perhaps the chinese economy is being supported. and of course you can keep track of developments on live go on the bloomberg. you'll also find the big diary entries coming up today. as well as some of the events you may have missed earlier. for now let's get the first word news with vonnie quinn in new york. vonnie: russian president vladimir putin has restricted all residents from -- it's part of his retaliatory package of measures for u.s. and european sanctions. the russian central bank later clarified the move, saying it only covers new loans.
the european union is preparing for a disruption in natural gas supplies from russia in retaliation for sanctions. you energy -- the executive arm of the european commission is due to cut reliance on russian supplies. the situation in ukraine's capital is being described as difficult and tense, with sirens going off about every half-hour. the pentagon reports russian forces are inching forward in their attempts to encircle the city. and in the country's second-biggest city, residential areas are reportedly being shelled. the mayor is calling a war to destroy the ukrainian people. russia has barred airlines from the eu, canada, and other countries from its airspace in response to sanctions they imposed. russia is the key route for travel between u.s. and asia, but is now off-limits for major
carriers including air france. those airlines and others had already been going around russia or removing some flights from the schedules. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. rishaad: just coming out of the conglomerate. toshiba in tokyo. shares screaming higher, up by the most in 10 months, off the back of news emerging that the vice president of the country has resigned. we also right now have -- being appointed as president of the company. the president himself resigning. so this is taking place. more on this as toshiba briefs the media at 3:00 p.m. japanese time, 2:00 p.m. hong kong and singapore time. this just coming through, as we
have a lot of consternation in this company regarding a review of its plan. reports, new management, an intra manager reviewing the proposal to divide toshiba into two companies. toshiba share price up nearly 5% here. haslinda: that's right. it's expected to brief the media at 3:00 p.m. local time. dr. the markets, seeing massive gyrations, especially in commodities as well. let's discuss the impact of russia's invasion of ukraine on commodities. joining us is wayne gordon, executive director of commodities at ubs global wealth management. wayne, always good to have you with us. talk to us about this king dollar, easing somewhat today. can the dollar continued to be supported? wayne: look, i think it can. particularly against the euro as an example. actually commodity currencies
have been incredibly resilient to what has been significant volatility in commodity markets. as well as the risk off that seems to be across many global equities as well. so with respect to the dollar, the fed clearly are going to continue to move forward on the path of tightening. the market has wound back some pricing with respect to whether they hike 50 or 25 basis points. it is very clear from this -- from the fed speakers. also the impact of commodities on the inflation side is going to play into this. generally speaking think the dollar will be supported as rates go higher. and also particularly against the euro because the ecb is going to have to be more circumspect here. haslinda: interesting to see yuan moving as well, pretty well supported trading at a four-year high. the pboc coming in today,
wanting to contain the strength. where does the yuan trade from here? wayne: we think it trades a little on the softer side. of course on the trade weight data bases it has been very stable and we do not think that will be significantly disrupted from here. but given we have a stronger dire -- stronger dollar buys we think it can depreciate some against the u.s. dollar. we have moderated that to some degree. so generally very stable going forward. which is particularly good for the asian region more generally. rishaad: we look at the dollar which has strengthened quite markedly as of late, especially against some emerging-market currencies. on top of that commodities are priced in dollars. so it is a bit of a double whim he. how -- double whammy. how bad can inflation get as a consequence of this? wayne: it is a really good
question. the country's most susceptible are countries like india, where obviously they import a lot of their liquid energy. in the case of oil, gasoline, etc. beans as well. as well as companies like indonesia, who while the export a lot of coal, they import a lot of oil-based products. particularly those countries and those currencies are susceptible. we have seen in areas like the indonesian currency, where the current account surplus has been better-than-expected. so these current accounts are actually supporting many of these currencies which traditionally would have sold off pretty hard when u.s. rates begin to rise. as i say though, here, probably the higher energy prices that is the indian rupee, particularly against the dollar. rishaad: yeah.
that you have the agriculture side of things. and that complex is really -- the price is going up as a consequence of what is going on in eastern europe. give us a sense of what your targets are and which are the ones to watch out for in particular. wayne: sorry, i missed the start of your question. industrial metals, is that correct? rishaad: no, i was talking about agricultural products. wayne: sorry. sure, absolutely. the key commodities there are generally week -- wheat and corn. russia is one of the world's largest wheat exporters. ukraine is quite a global force in the corn market these days. increasing area significantly in recent years. there is a number of holds in
agriculture as a result of these conflicts in the ukraine. first is around the prices themselves. so clearly, a number of ports of the black sea are not taking cites at -- bites at the moment. those ports are closed and that will limit the exports of some of those commodities out. in particular at this point, corn and wheat to a large degree. the second round is interesting, and that is with respective fertilizer. russia is a significant global exporter of key fertilizer components such as nitrogen, dap. as those prices rise, tempted to maybe use less of those commodities. that puts yields at risk in a number of countries as they enter the spring planting period, particularly for europe and the united states to some degree. and the third thing of course is we still have, albeit moderating, a pretty active la
nina event currently sitting over parts of the united states as well as brazil, argentina, and so forth. those events are causing dry conditions. the drought situation in the u.s. has deteriorated somewhat, but there are still very dry conditions in canada. so it's not just the ukraine russia issues that are creating upside to agricultural commodities. it is also these weather-related facts. from here, if the weather was to deteriorate in the u.s. as we approach spring planting or weather conditions remain poor in canada, we can expect seeds will move sharply higher, potentially topping $20. haslinda: we cannot talk to you without touching gold. i mean, it's a shining metal yet again. where do gold prices go from here? you have revised up your
projections. wayne: we certainly did. part of that was in recognition of the volatility that's being caused with the issues in europe. it's been a great hedge against a lot of the risks we face. that should support gold prices around these elevated levels that target at the end of june, 1850. we revised that up $100 an ounce in relation to the risks. longer-term we still see downside to gold. the reasons are key for us. first, we think real interest rates in the u.s. will rise into the second half of this year. second point is we have a stronger dollar buyer. so hopefully these geopolitical risks begin to simmer down, and that leads to a little bit more of a benign risk environment on a global basis. i really hope that. as we go into the second half,
then we will expect to see downside of gold and we have a target of around $1700 as a result. rishaad: wayne, always a pleasure. wayne gordon there. going to return now to what is going on with the ukraine. jamie dimon saying disconnecting russian banks from the swift system may bring unintended consequences including third parties finding ways around the penalties. he spoke exclusively to bloomberg about the situation and sanctions. >> i defer american foreign policy to the american government. they have a lot of experts in national security and economic policy. hopefully they are doing the right things to bring it to a conclusion quickly. and my heart goes out to the ukrainians. this is a humanitarian crisis to them.
>> talk to me quickly about swift and what it means to the global banking industry if indeed these sanctions have been proposed. >> there is misinformation. the government is going to decide how to use sanctions and swift. sanctions say they cannot do business with you. swift says i can use a communication to do business with you. i can still do business with you and there are a lot of workarounds with swift. they are different tools used for different reasons. banks are talking to the government. the issue is not because they are for or against any particular thing. war does not always follow the path you want. sanctions do not always follow the path you want. >> but the question of workarounds is very important, because that seems to be a concern. if an alternative system is established and gets traction, that can present a real risk to the financial stability of the west. >> they could just stop it by telling us.
sanctions are very targeted and clean. depending on how you apply it you can apply it in multiple ways you cannot get around. there is no workaround for that kind of section. i'm an american patriot and i'm going to do what the american government tells us to do. swift is more about the unintended consequences. what countries you hurt, what people are going to do workarounds, how you fix that. the government itself once you have an open conduit for energy payments. there are a whole bunch of issues they have to work through. haslinda: that was j.p. morgan chase chairman and ceo jamie dimon speaking exclusively with bloomberg. coming up, the demand for bitcoin surges as russia seeks cryptocurrencies to evade sanctions. more on that. this is bloomberg. ♪ this is bloomberg. ♪
haslinda: all right. bitcoin back in focus. demand has exploded as the russian ruble collapses under a slew of sanctions. both the u.s. and ukraine are seeking help from major crypto exchanges in halting russian individuals and entities from using digital transactions to evade the sanctions. su keenan joins us with more. cryptos has been flying high since the weekend. su: this was initially
unexpected because crypto's have now broken their ties to the s&p 500 while stocks have been down, they have been higher. let's look at the sea of green. ether, bitcoin and alt coins all moving higher as many in russia moved to use cryptocurrencies to do business in dollars and euros and there is an expectation we will see more of this because we are seeing it already play out in a huge way. as fighting intensified we saw bitcoin trading in the ruble, which has collapsed. and in ukraine's currency, surging to the highest since may. concern that cryptocurrency exchanges are being used as a way to evade sanctions. and while the u.s. is still trying to figure out how to police crypto they have reached out to major exchanges and asked them to help at least halt some of this with the targeted users. check out some crypto-related stocks. they are also flying hyder --
higher, including coinbase. the u.s. ask all russian aggressors be blocked igs. there has been pushed on that for legal reasons. you will see all this pushing bitcoin above the 50 day moving average. that is a key level of support. it should go much higher from here. rishaad: we have global banks and oil companies stepping up on financial research is on russia, the latest of which is mastercard. they say they have blocked multiple financial institutions from the payment network as a result of these sanction orders. is russia feeling the impact? su: we understand russia is feeling the impact. it is not just mastercard and the banks. take a look at what oil companies are doing. shell is quitting its russia gas pressures. bp announcing it is exiting at stake in the russian oil firm. let's talk about the banks tightening financial resections.
this -- financial restrictions. this is really targeting commodities. we have a slew of banks. three of singapore's largest banks restricting trade financing for russian raw materials. all this according to people close to the matter. citi disclosing it has $9.8 billion in domestic and cross-border exposure to russia as the sanctions are imposed. this is the only one of the largest u.s. banks to break out extra exposure. jp morgan and other banks have frozen funds with exposure to russian assets, and j.p. morgan chase also excluding russia from two esg sovereign bond indexes. so with the russian ruble collapsing, it's clear there has been an impact. can those with resources in russia evade some of this? that is the big question now. rishaad: su, thank you. su keenan having a look at not just crypto, but the impact of
news out of toyota. they will resume output on wednesday. remember it idled when supply was hit by cyberattack. it's investigating for any possible links to russian involvement. toyota resuming its output on wednesday. the world's top climate scientists are warning that there is a closing window to prepare for a hotter world. in a 3500 report, they say climate--related impacts are already widespread and in some cases, irreversible. it is warning that countries must do more to save billions of people from floods, droughts, and other hazards. rishaad: bloomberg energy finance accounting for all oil investment surged in 2021. renewable energy accounted for almost half of that spending.
at the same time the electrified transport side of things saw the fastest growth in capital expenditure. still, investment must triple in the next few years to get on track for net zero by 2050. let's bring in head of apac research. which other countries are attracting the most investment in the transition we are seeing towards net zero? >> china is the clear leader of that $750 billion. china accounts are about half of it. after china, the second country is the u.s., and that accounts for 50% of investment. germany is third place. its investment was about $47 billion. all the other countries are odd about $100 billion. haslinda: when you take a look at the current trend, are they
enough to meet the paris agreement goal? ali: no. there are three sides to this. these investments are essentially for mitigation. and we expect to be able to be on a pathway that aligns us with the paris agreement goal. we need to increase investments to above $2 trillion annually as quickly as possible. and for the second half of this decade, from 2026 on, we have to be at an annual investment level of $4 trillion. there is also the adaptation part which is what the latest report looked at, and there we're not seeing enough investments. rishaad: the governmental panel on climate change, one of the things we are looking at closely as europe's reliance on fossil fuels coming from russia. can europe replace that? ali: if europe wants to maintain its climate goals, then it is a bit more challenging.
of course if europe wanted to give up on its climate goals, it could try and reduce some of that dependence by increasing reliance on domestic coal instead of imported gas from russia. if europe wants to get its climate goals it has to accelerate investment in renewables and other technologies while also consider a debate on nuclear power. haslinda: ali, thank you so much for that. let's check on markets. let's call it a rally. it looks like all sectors on the asia pac benchmark in positive territory. we have perhaps investors mulling over the move from russia. in the commodity space we are seeing an easing of prices for gold. but oil remains elevated. we're keeping a very close watch on the yuan, trading at a four-year high. the pboc intervening to contain
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key sales dry up. and china to gain in for berry despite holiday and virus disruptions. haslinda: looking at the equity markets, we have risk on, pretty much green across the board. but there are still risks. further escalation in ukraine. also keep a watch on swift, whether it includes energy related transactions. that might weigh on markets. looking at benchmarks and asia. china, hong kong and positive territory. hong kong pretty much flat. reversing early losses. china in focus, it's pmi beat expectations. we will watch the yuan, currently stable. also keep a watch on the federal bank of russia. -- central bank of russia. yuan denominated assets could
weigh on that currency. the pboc saying it is not quite comfortable with the yuan's strength. it came in to fix it, weaker than anticipated. iron or surging by 4%, brent crude also on the upside, currently at 98.70. the bond market looking like this. we have indonesia, the yields giving up about two basis points. perhaps investors are looking for some shelter in the bond market. rishaad: let's have a look at what is going on overall for regional benchmarks. this is the regional benchmarks, the msci asia index. all major ones moving to the upside. energy not quite as buoyant as usual. the biggest gain are thus far this year in that particular index. industrials, 1.1% up.
the market 6/10 of 1% to the upside. arguably a relief rally taking place across this part of the world. russian forces shelling ukraine's second largest city of car give -- largest city. this as both sides agree to meet for more talks on ending russia's weeklong invasion. the latest hit to the russian economy, the u.s. has banded transactions with the central bank and also targeted the russian wealth fund and ministry of finance. this follows worst rations on russian lenders and other companies. that is all playing out at the moment. haslinda: as the u.s. and europe keep tightening the screws on moscow, vladimir putin is building his own financial defenses. let's get more with our editor, kathleen hays. let's discuss russia's
retaliatory actions. kathleen: as the sanctions have continued to mount, in a matter of days, not knowing how much the u.s. and eu were willing to do, russia in the early morning of monday, the central bank came out, rocketing the key rate higher. the russian central bank pushing it up to 20% from 9.5%. of course that is because the ruble was getting pounded as the trading day began. you've got now the ruble having fallen in intraday trade to the lowest level on record. they are doing what they can do with the key rate. it is a big problem. the bank of russia saying they are doing this because financial conditions have drastically changed. again, putting that mildly.
bloomberg economics essay sections have already created a financial crisis. russia's recession will probably be even deeper than expected. and of course, putin also banning russian transfer of rubles abroad as it tightens capital control. the u.s. firing back, tightening screws because the sanctions so far have not stopped vladimir putin. again, banning all transactions u.s. citizens and u.s. businesses with the russian central bank. they say these moves will immobilize any of russia assets held in the u.s. so russia cannot get at its foreign exchange reserves it needs to defend the ruble. janet yellen saying it will limit russia's ability to finance destabilizing activities as they launch this war on ukraine. again, the sanctions continue to mount. as you said, the russian forces continue to advance on ukraine,
and it remains to be seen where this all goes. russia's economy will be in trouble, but right now, ukraine's people and military are in trouble. rishaad: kathleen, we've had washington fire right back at moscow with sanctions on the racial central bank. how severe are they? kathleen: they are pretty severe. russia has about $630 billion of foreign-exchange group reserves. lucky for them, china, the people's bank of china holds about 13%. china could step in and help. but if you put together what the u.s. has done with sanctions and what the eu is doing as well, they have about 40% to 50% of that $630 billion under wraps. that is something russia cannot access. another concern is this could --
it will be a big recession for russia's economy and it could spill over into eastern europe. it is something people think ultimately could affect the global economy. you know, this is a new part of the wargames being done. it is dangerous certainly for russia, it is dangerous for the world. for now, it is hard to believe it has been hardly a week we have been watching this come together, watching it unfold. already a lot of really negative consequences and probably more to come. rishaad: all right, kathleen. kathleen hays there. we are going to have a look at the eu, u.s. and united kingdom agreeing to exclude a number of russian banks from the swift system of international messaging, used by thousands of
international institutions this may force russia to rely on china. let's get more from robert green , the nonresident scholar at carnegie. we heard from the chief executive of jp morgan earlier saying there were ways around this. not saying they would do it, but a bad actor could get around these moves set to ban swift in russia. is it seen as a sort of hard-hitting penalty that some said it was a week ago? robert: without a doubt, a full band, a full disconnect of russian financial institutions from swift would indeed be a significant measure. that is not what it seems will take place.
i do think the concerns over cips, it is worth putting those in perspective. cips total volume in 2021 was a minuscule fraction of the total transaction that were transmitted via swift. rishaad: it is a messaging system, that it amounts to a settlement system, does it not? give us a sense of how the ban works and ultimately how the economy there will suffer as a consequence. robert: one interesting case study to use on what happens when financial institutions get disconnected from swift is iran. in 20 18, several iranian financial institutions were disconnected from swift. there are indeed workarounds, as
jamie dimon was alluding to. nevertheless, i think what is currently happening and what we are seeing with regards to russia, something like this has not happened at the scale it is currently happening, particularly with the degree of eu and u.s. coordination. we are really seeing a significant paradigm shift in global payment. i would also note that one of the big things to watch with regards to swift and u.s. sanctions are these exemptions for energy related transactions. interestingly enough, a very large share of russian energy transactions are dollar-denominated. some estimates find that could be one third of russian revenue is the energy sector. one of the questions is to what extent the swift disconnect and the sanctions that will likely
continue to rollout, how it will impact russia's energy sector specifically. haslinda: we know china holds about 13% of russia's fx reserves. do you see china perhaps freezing those assets? robert: it is hard to say. i would say the broader assessment that what we are seeing happening is going to drive china and russia closer together are certainly correct. one thing to keep in mind is the central bank swap line the pboc and russia have. it is certainly plausible that beijing steps in to provide substantial financial assistance to russia. what that would mean and those relationships between the central bank that would entail, what that would mean in washington will be very interesting to see. as we know this morning, russia
central bank was -- haslinda: there is so much concern about contagion. put it in perspective for us. how integrated is russia to the global economy. the world does rely on it for gas and oil. robert: i am not an energy market expert, but i can speak to the payment systems and financial risks in the system. i would say, at least from the u.s. perspective, i would be concerned about the contagion of more significant sanctions against russia. some of the concerns do seem overblown. at the same time, there are certain european financial institutions that do have significant exposure to russia. i would say the most significant constraint on more severe sanctions and policy actions, particularly involving swift,
are the energy markets and the large share of russian exports that are energy related and large share of u.s. dollar denominated and euro denominated payments flowing through the financial system related to energy markets. for me, that will be the most interesting thing to watch in the days and weeks ahead, to see what actions will be taken related to the energy market transactions, and we will cease the apps -- see steps taken to curb the ability of the dollar denominated energy payments to and from russian firms. rishaad: what about cryptocurrency denominated settlement? is that why we are seeing such a volatility in that space and how to companies avoid sanctions using cryptocurrencies if they cannot all -- can at all? robert: there are a lot of
analytics companies out there and certainly plenty of good actors in the cryptocurrency space who are doing a lot to mitigate the risk of sanctions violations. i think it will be interesting to see what extent citizens in russia, as their banking system experiences an unprecedented crisis, to what extent they will turn to cryptocurrencies is going to be interesting to monitor. within russia, there have been disagreements among policymakers as to how to regulate cryptocurrencies. likewise, as we know in china, for many years they were back and forth about how best to regulate cryptocurrencies. i do think what we are seeing is on one hand a risk cryptocurrencies are used by bad actors to circumvent sanctions, and on the other hand, you are seeing ordinary russians and
folks in russia and ukraine who are not able to access traditional financial intermediaries turn to cryptocurrency during this moment of crisis. it really is an interesting situational development that as we look historically at major shutdowns of banking systems and anything resembling -- one new variable is the introduction of crypto assets. haslinda: great insight. robert green from the carnegie endowment program. let's get the first word news with vonnie quinn in new york. vonnie: the eu has adopted sanctions on some of russia's wealthiest tycoons in response to moscow's invasion of ukraine. the list includes a handful of billionaires not already hit by sanctions in the u.s., including a metal tycoon. also the owners of alpha group,
and the owner of a major company. the eu is working on penalizing more oligarchs. plans to impose unilateral sanctions against russia, making singapore the only southeast asian country to do so. the government will also block certain banks and financial transactions to the country. the measures are set to be announced soon. hong kong said to be planning a citywide lockdown to ensure -- is effective. reportedly the drive will start after march 17 with officials planning to test residence three times over nine days. the vaccination program will continue to operate. details are still being worked out. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. rish?
>> we have done that before and it did not make a huge impact over the long haul. >> there is room if needed to put sanctions. >> i think you can see an effect ascension on russian energy. >> this is an amount world can afford to lose. haslinda: our guests on the outlook for energy markets. global commodity prices surging with russia's invasion of ukraine disrupting shipments and sending shockwaves across markets. let's bring in our energy reporter to break down the biggest moves. the disruption expected to continue, especially trade in the black sea. stephen: yes. there is a big issue there, because ships don't want to go
there. they are worried about the impact. insurers do not want to ensure them. with the black sea off-limits, that is disrupting trade of commodities across the board. it is having an impact on trade flows and causing higher prices for a lot of different assets. rishaad: this is it, isn't it? we've got prices going up across the board, wheat and corn. we've been looking at that. supply-side inflation coming at central banks and that is behind to deal with, is it not? stephen: it is. how do you dampen that? how do you stop that from happening. this inflation was already a big worry for the central banks before the russia/ukraine war started. before this invasion, there were already tight markets. we were already talking about
commodity led inflation. this conflict adds more upward pressure and it will make it more difficult for the central banks as they have meetings over the next few weeks, to decide what to do and how to target this. rishaad: our energy reporter. you can follow more on that story and that subject and the days trading on our markets live a blog if you are a terminal user. you can get a market rundown and commentary and analysis from our editors. you are with bloomberg. ♪
bring unintended consequences, including third parties of finding ways around the penalty. he spoke to bloomberg about the ukraine war in sanctions. >> i'm going to defer foreign-policy to the american government. they are very smart, they have a lot of economic policy and hopefully they are doing the right things. my heart goes out to ukrainians. this is a humanitarian crisis. we are announcing later today ways to help them, and hopefully more to come. >> talk to me quickly about swift and what that means to the global banking industry if these -- industry, these sanctions. >> the government decide how to use sanctions and swift. sanctions say they cannot do business with you. swift says i cannot do communications with you, i can still do business with you. there are workarounds. there are different tools used for different reasons. the banks are talking to the government.
each war doesn't always follow the path you want. people will be thoughtful and how they go about these things bid >> the questions of workarounds for swift is important, that seems to be a concern. that if an alternative system gets traction, that could present real risk for the financial stability of the west. >> sanctions are very targeted and specific and clean, and depending on how you can apply, you can apply that multiple ways and you can't kid around. there are no workarounds sanctions. nor should there be. i think there is more worry about unintended consequences. what countries do you heard, what people will do workarounds, how you fix that. the government wants to have an open conduit for energy payments. there's a lot to work through.
rishaad: j.p. morgan chase chairman and chief executive jamie dimon speaking exclusively with ed hammond. news coming out of the ministry of commerce, china holding a news briefing in beijing. they are saying they hope china can keep normal trade with russia and ukraine. also saying they hope russia and ukraine can achieve peace as well. that is a wish shared by many. a quick look at chinese markets. we had managers indices out earlier, showing the manufacturing side of things have recovered. we were expecting contraction and we got extension -- expansion. shanghai composite up about one third of 1%. china's manufacturing activity gains last month and despite a holiday and also despite virus disruptions as well, we have
sentiments among larger businesses improving. smaller ones not so much. the stats saying the index rose to 50.2. we are looking for a contraction of 49.8. of 49.- [announcer] imagine having fuller, thicker, more voluminous hair instantly. all it takes is just one session at hairclub. introducing xtrands. xtrands adds hundreds or even thousands of hair strands to your existing hair at the root.
rishaad: approaching half past the hour. we are also approaching a decision out of the reserve bank of australia. interest rates there at the moment, 1/10 of 1%. looking at no change from the vast number of economists we've been talking to. against the backdrop of a country seeing its equity market moving to the upside, steady as she goes. asx 200 up over 1% currently in the session in sydney. the decision, looking at the
cash rate, 1/10 of 1%. that would be unchanged from before. also perhaps looking at what they are saying about inflation in australia as well. also things they can't control as much either, inks house prices as well. we will be hearing from the rba governor, getting his take on what is going on with the economy as we do see right now, the decision coming through, and as expected. haslinda: that's right, keeping it unchanged. this is on the back of pretty much strong employment and demand. governor lowe pretty dovish. we've seen underperformance of aussie bonds. the currency trading higher in the lead up, in the days ahead of this meeting. today trading just slightly
lower. no change for the rba, keeping it at 0.1%. rishaad: also just talking about the reserve bankers making some statements, talking about what is going on in ukraine, also talking about that being a major source of uncertainty. looking here at the commitment by the central bank to be supportive of the economy through supportive conditions, talking about persistent inflation and how persistent it will be here as well. they are prepared to be patient in monitoring inflation. one would hope so anyway. saying the economy remains resilient as spending is picking up as well. wage growth remaining modest into the economy resulting -- remaining resilient as well the reserve bank talking about australia's household balance sheets in good shape too.
haslinda: don't forget the rba has an inflation target of 2% to 3%. governor lowe has said only stronger wages growth can get australia to that level. today, no change in terms of the rate, and as you said, inflation has picked up according to the rba. it has moved more quickly than anticipated. keep a watch on that. you can also turn to your bloomberg for more on this. you can get commentary, and analysis from expert editors. let's get the first word news from vonnie quinn. vonnie: the situation in ukraine's capital is described as difficult and tense by its mayor. sirens going off about every half-hour. the pentagon reports russian forces are inching forward to encircle the city. the country's second-biggest city, residential areas are reportedly being shelved.
the mayor calling it a war to destroy the ukrainian people. the u.s. has banned citizens and companies from doing business with the bank of russia, the russian national wealth fund, and the ministry of finance. the treasury department says the move effectively immobilizes any -- janet yellen says the market targets putin in his inner circle. russian president putin has restricted residents from sending hard currency abroad. the band covers foreign-exchange transfers and is part of his retaliatory package of measures toward u.s. and european sanctions. the u.s. -- the central bank said it only covers new loans. the u.s. and allies discussing a coordinated release of about 60 million barrels of oil from their emergency stockpiles. this after russia's invasion it
-- of ukraine pushed up the price of oil. there focused on a discharge of 30 million barrels from u.s. and an equivalent amount from other countries, there were decision has not yet been made. the eu preparing for disruption in natural gas supplies russia in retaliation for sanctions. eu energy ministers discussed various scenarios monday. . meanwhile, the european commission is due to release a strategy to cut reliance on russian supplies, about one third of their energy. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. rish? rishaad: local media in hong kong reporting the city will be imposing the lockdown of its 7.5 million residents during a massive testing blitz. it is aimed at stemming a surging rate of infections been we have new covid cases in the
territory soaring past 34,000 on monday, causing the city to temporarily take the step of isolating every covid patient. stephen engle is also right here in hong kong. a cynic would say this is an indication of failure, but what are we hearing? stephen: a big sigh before i start this report, right? the naysayers have been saying containing the virus is a bit futile, given the numbers. 34000 and counting yesterday alone and 87 deaths. it is getting depressing. i don't mean it to affect my reporting, but i am doing the math. you are going to lockdown the city for nine days, test all 7.5 million people three times over those nine days, and restrict their movement. if you test positive, you are supposed to go into isolation. hong kong university in the most
recent report says the peak of the current fifth wave as they are calling it will see about 625,000 at least cases that will be hospital worthy. meaning they need to be seven days quarantined at least. that is nine times more than even the higher end of projections for the number of new isolation wards hong kong is building. they are going to do a massive testing blitz over nine days, uncover a lot of positive cases, and what do you do with them? people are afraid because there is a trust deficit with the government expanding back a few years. they are listening to carrie lam, she was a local media today saying don't panic, you need to trust the government, they will give the information out when necessary because the plan has not been revealed. this plan for lockdown has been reported in local media, but we
are not getting comments right now from the government. i was just at the local supermarket. there is a run on groceries. the shelves are being stripped bare because people are fearful, or fearful of being separated from their families if they test positive and they are of the virus. that's what people are telling me. local media is reporting there will be a nine-day lockdown sometime after march 17, at which point they will do the mass testing. after that, reassessment time again. haslinda: of course this has a lot to do with the pressure from china. some say maybe it is not too bad, just nine days. stephen: that is what michael team told me last week, he is one of the hong kong deputies to the national people's congress in beijing. i gather when he did show up with me last week, he was kind of outlining what beijing
officials want, because behind the scenes we are hearing that beijing officials want some kind of lockdown. carrie lam, to her credit or discredit, has steadfastly said she will not impose a lockdown. here we are in this situation where mainland officials, the top mainland official on these matters arrived in hong kong yesterday for talks. if that is what the mainland is pushing for, a lockdown, there might have to be a change of heart from carrie lam and others who say it will be impossible. as bernard chan, convene or of the executive council told me two weeks ago, impossible to impose a citywide lockdown on 7.5 million densely packed over nine days. you can see the cycle of logic and data that does not necessarily backup what will happen.
we will have to see. between now and march 17 will be interesting here in hong kong. haslinda: lots of invocations for companies. some halting operations for 53 stores. stephen engle, thank you for that. still to come, we speak to mk global on market reactions to india's gdp release and what impact russia's invasion of ukraine might have on the country. keep it here with us. this is bloomberg. ♪
rishaad: you are back with bloomberg markets. india sinks lower than previously forecast economic growth as risks mount from higher prices of commodities amid russia's invasion of ukraine. let's discuss this and more with madhavi arora from mk global. thank you for joining us. your broad view on what this actually means for india, the events in eastern europe and of course the market affects we've already witnessed. madhavi: what we've seen in the third quarter are up. we are probably going into a down dip.
this on-topic you will probably see in the first quarter of next fiscal year having some down because of ukraine impact. at this point in time, i think this will slow global growth and raise inflation next quarter. you would see potential impact on energy, which could alter global energy policy in general. i think we need to understand how geopolitics will play. at this point, the shock may be coming in coming months. after slowing in the fourth quarter of -- quarter, you will have growth impact. at this point we are still working with growth at 7.8%. but there will be a material
downside risk if this drags on further. rishaad: with all that in mind, we see elevated prices coming through on commodities there's not a lot the reserve bank can do about it. it acts as an interest rate hike in some senses. do they stand pat and let things carry on and not try to control things they cannot? madhavi: clearly the geopolitical risks are -- the shocks could hit the economy hard. i think policymakers might not react immediately at this point in time for we maintain rba -- at this point in time.
given that we still have very high -- i think real rates of india look reasonable with emerging markets. which would give the bank a reaction function and we could see normalization. i think globally central banks are watching the events play out, the impact will be higher inflation at a time when global growth is still expanding, and i think they will be continuing to get into sync and i's monetary policy. that means most central bank's across the world will follow suit. india is still undisturbed by -- and i think reaction function is domestically driven. i think they have to push the rate hike to the second half of the next fiscal year, probably after september.
haslinda: the oil prices are way higher than most anticipated. you have to wonder the impacts on india's budget numbers. madhavi: clearly the risk of deficits are rising. it will be significant. just to note, every $10 per barrel increase -- also the government plans to cut -- it would imply a fiscal hit. clearly there will be a fiscal impact which will be material to gdp. depending on the companies. at the same time we will see widening to the extent of -- i think it will be material enough and the government most
likely will bear this affect, which will employ -- imply the pain will be borne by certain classes. haslinda: thank you so much. madhavi arora from mk global. we have an alert, warner media pausing its release of "the batman" in russia. they will make future business decisions they saw on -- based on the situation in ukraine. still ahead, singapore set to welcome the world's top female golfers later this week. next, we speak to a rising swedish star about equality in the sport. this is bloomberg. ♪
haslinda: welcome back. the lpga makes a return to the lion city this week with the top golfers taking on the world's best at the world championship. joining us for a preview in a look at equality in the sport is our guest. good to have you with us and welcome to my city. >> thank you for having me. haslinda: when it comes to pay
equity, what is your take on that? is enough being done and progressing? >> change takes time. for years, it has been a big topic. we can see a lot of changes going on. we are heading in the right direction. all of us probably wish he was going quicker, but it takes time to make people understand how important this is. the tour has done a phenomenal jobs, and the sponsors we have and continued sponsors we have, they are really stepping up. we are trying to bridge that gap. it is a long way. every step is a good step in the right direction we are doing good work. haslinda: how do you respond to views suggesting that male athletes attract more attention, more sponsors and deserve higher
pay and higher price money? >> i would say those people need to watch us play. you reach this level, you cannot have a bad week. the level of talent and ability, everybody is so good. we really are the best players in the world. we get good feedback when people watch us play. it is more about getting the ability to show off, i would say. we have a long road ahead though we are doing a really good job and everybody out here, we know how important it is to grow the tour, the game of golf, and women's athletics. especially golf for us. i would disagree with most people. haslinda: [laughter] in your view, how can company sponsors raise the issue of pay equity? >> i think for us, of us a
chance. give us a chance to show you how good we are, how good we are with clients, with sponsors. we can show how good we are at golf. at the end of it, we are entertainers. we bring entertainment to the golf course, making people enjoy what we are doing, watching us at the highest level in women's golf. we appreciate everybody who was already giving us a chance and sponsoring these tournaments and the players, but it is getting your foot in the game and to see how good all of these women are, it is all i hope for as a member and professional golfer. rishaad: how do you raise -- all of this is going to go hand-in-hand with raising the profile of women's golf. how do you do that? >> i think we are doing a good job. we are doing it day by day.
we are getting better tv spots, better purses. all of the girls here understand the importance of what we are doing. like i said, it is a long journey. if we had the solution, we would not be talking about this right now. i think if everybody kind of feels like they are doing the best they can of raising their own game and the game in general, that's all we can do. we have a great team around is doing great things we just have to stay patient i think at this point and continue to do good things. rishaad: are you going to win? >> certainly. [laughter] unfortunately, you fail more than you win, but i will do my best. haslinda: professional athletes have been very vocal about geopolitical issues and we have a situation in ukraine. your thoughts and response?
>> it is heartbreaking. i feel blessed i can wake up in a bed everyday and feel secure, a lot of people cannot do that right now. it is heartbreaking and we are all praying for peace for everyone. it is a heavy heart. heartbreaking. rishaad: madeleine joining us there. the ldp -- the lpga in singapore. we are looking at the board at toshiba. shares up after it was reported the chief executive will resign along with a senior executive the company might review reorganization plans as well. last month, the company scrapped plans to divide into three listed companies, and stated --
decided instead to split into two. turning to what is going on in -- suspending work at japanese factories after they shut down computer systems because of a possible cyberattacks. a big blow for the carmaker as it tries to resume production after a factory called earlier this year linked to shortages of chips and covid outbreaks bid the affected supplier hopes to get systems up and running from wednesday. citigroup joining a list of banks investigated over employees use of messaging apps for work. the security and exchange commission probe on a regulatory filing. citibank says it is cooperating with authorities. others are being scrutinized as well for using unauthorized messaging services. let's turn to markets. haslinda: let's look at
commodities in particular. a wild ride. especially in terms of the oil market. brent crude as well as of uti crude -- wti crude to the upside. looking at iron ore, also surging. this on the back of china's pmi beating expectations. gold trending lower, 2/10 of 1%. risk sentiment easing. gold at 19.05. -- 1905. here is the picture, we have risk appetite returning in asia. futures currently pointing to a lower open. ftse hundred futures currently down. rishaad: we are headed toward
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