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tv   Asia Edge  Bloomberg  April 3, 2016 10:00pm-11:01pm EDT

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cold. hong kong completes its rescue deal, and -- can move ahead without fear. twitter. on without further review, let us look at the trading day. not treating because of a public holiday, but for others, it is business as usual. this is what we are seeing, did we have got japanese markets during in on the arquette. a stronger win on the exporters. strong gains are coming through australia, 9/10 of 1%.
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the falling crude prices, we are seeing very strong gains in sydney. strong gains are coming through from singapore, malaysia, interestingly malaysia being the net oil exporter. we've had comments coming through from the saudi deputy deputy prince of saying that if iran does not do anything, they will not do anything either in terms of getting supply free. on the downside, the energy sector, resources down. we've got word parsons down by 2.5%. bhp is downon -- close to 2%. resorts is down 1%. we are seeing returns in decline . the leading decline is in the
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new york session. we are expected to see a downside when it comes to these exporters from the back of that did a lot of analysts -- that. should the yen hang onto these gains and we dollar continue to maas is down by 5%, toyota by 2.5%, nissan by 2.5%. a double whammy for the currency, as the sales numbers come through from the u.s. market. rishaad: the oil market is full after saudi arabia said that it would only freeze production if iran did. japan also saw its first weekly thesee after it saw comments coming from saudi arabia. why did they spoke the market so
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much? -- spook the market so much? arabia andsaudi other producers start talking about the freeze, they have been a little bit questionable about it. these latest comments are adding ammo. iran is just coming off of years of sanctions lifted in january. they have boosted oil protection to 3.2 billion barrels per day. they are still -- still have a billion barrels shy. these comments last week from salman show that this oversupply is not going to be magically erased overnight. rishaad: absolutely. there's other news out of saudi arabia. this could be the big one, with the country saying that they are
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sell a portion of the state-owned oil company. this is the end of the -- is this the end of the oil age? dan: it might be. they are selling a little bit less than 5% of the company, but this is the biggest company in the world, containing 270 billion barrels of oil reserves. at the current rate they are pumping, 73 years worth. they have used oil proceeds to and keepocial services life as good as it has been. at hisman is looking lifetime and saying, you know, one day sooner than later, we will run out of being able to just rely on these oil fields. they are willing to make a $2 and can sovereign fund
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then use these dividends to prop the country up. rishaad: a very much. -- thank you very much. looking at a conundrum for glenn stephens and the reserve bank there. >> the dollar decline is why traders are causing a rate cut in australia even as the country's growth outperforms most developed economies in the last year. the currency has raised nearly 30% since last year. it looks like even the boj governor's negative rate policy has not convinced businesses that sustained rate prices will hold. the japanese company cut inflation expectations for the next five years.
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boj is according to a report from march. a year from now, inflation is expected to be 0.8%. -- got hisillionaire hand on the prize after a four-year pursuit. has saidman of foxconn innovation and leadership. tokyo,are surging in rish. rishaad: indeed, looking at the sharp shares, it goes along with what is going on the foxconn. company has seen its shares surge, i'm talking at the sharp shares. it has been a long, hard chase, but it isn't over, is it?
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>> the money is literally in a bank. foxconn put out ¥100 billion deposit on march 31. issueave until october 2 400 million new shares that will give foxconn a controlling stake in the company. attention is increasingly turning toward the turnaround for sharp. rishaad: he has got a job to do, hasn't he? he has a massive list of things to get right. it seems that sealing the deal might be the easy part? he likes to talk about the benefits of hardship, but he has his job cut out for him. shop reversed and operating profit last week. has aactually
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technological edge with its eco-technology, but has struggled to capitalize. with the consumer electronics brand in the solar business, they have struggled to know what to do. rishaad: now, what can we expect from these two companies, now? still looking at the outstanding issues. the major one being what will happen to the 200 billion of preferred shares currently owned by the bank. when we last heard, foxconn was going to buy half of it. that is something investors want to know more about. we will look at the sharp burning results later this month , see how big of a challenge they have ahead of them. rishaad: thank you very much, pavel. tokyo sealing the deal. coming up later in the show, apple's push to flood india with
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cheap phones is meeting a wall of resistance. in china, the latest and usa's recovery, but is it too soon to salivate? -- celebrate? ♪
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rishaad: this puts and out the success of the proposed deal between major producers. but spring and jonathan from sin the -- from sydney. what does this mean. we knew that they were reluctant syrianse up, but unless ravens had come along, but they said they wouldn't. why has this disturb the market so much? disturbed the market.
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jonathan: the market is saying that if iran can produce for five dollars a barrel, why shouldn't she? i do expect to give this some time. these countries that are certainly looking at financial , there is potential for a freeze. are you looking at a price range for oil between $35 and $50 per barrel? absolutely -- jonathan: absolutely. if the price of oil is down near that he was 35 or even lower than that, then you would see a lot more words, a lot more harsh words being said.
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i think the oil market is pretty much in a range. it is weighing on the downside of $35 and we don't want to see in above $50, because we will get more from the u.s.. that is how it is for some time with oil. rishaad: let's move to the other elements of the commodities complex. you're saying this is turning into a buyers market -- excuse me, sellers market from being buyers market. when we seeing here with iron ore? numbers weome of the are seeing, particularly out of the u.s. and out of china are encouraging. remember, in china they are not just going to stop stimulus. they're looking to reduce capacity, and when you see the combination of the 2, you get a , even givenron ore
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the amount of supply coming on the market, will have a good spike. we like to think that we will in place fora low iron ore, and given china, i think we will gravitate to the top side. we could either see more of a sellers market emerge over time. rishaad: oil and iron. do we see a general turnaround when it comes to commodities, particularly the basic resources? jonathan: i think so. following the u.s. dollar, how the market is reacting to the politics and the fed, how they see it, i think the turnaround in commodities is going to be based on what the u.s. dollar does. things are being bearish. we are seeing spikes in the commodities. i get a sense that the market is
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saying, "if it is going to stay in this environment for some time, why are we in the u.s. dollar, should we be bringing investments back home?" i think the u.s. dollar index has been on that 50-70 level for some time. we could see a fell upon the dollar that could support the commodity sector. rishaad: and gold, naturally? jonathan: it's been a bit boring. the reasons to buy gold have been hard. we have obviously seen a good rally. 1270 now. i see the dollar under pressure, ic gold spike quite readily. a dollar for to be gold.
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we'll see that price go back up to 1270. those dovish terms are perhaps official policy. jonathan: that's the hard thing, you have to find a captain in this respect. if that's what's going to happen, that's what going to happen. i think obviously, people really do want to save. you look at inflation, and it's moving, but not in a drastic way. at the end of the day, whatever comes out of the fed, it will be prolonged in any case. i think the time has been set for this dovish period. you really will start to see significant growth on the economic side and the inflation and that stance will actually change. rishaad: janet yellen is
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preoccupied with what happens in the employment situation and has good news with that on friday. report showingbs how the jobs had been created, but actually wage growth numbers, which are pretty good. jonathan: yes. i think that is the positive thing. when you're seeing the economy start to respond, then you do start to see things moved to the top side. -- moved to the top side. see that inflationary since the fed wanted, we are down below the forecasted levels. , the wage growth is one aspect, and if we see a trend develop, that will be a trend that yellen will like. as a result, she might look at a little bit of a dovish turn. at the moment, it is important to keep the stimulus and the economy growing. that's what we want to see. rishaad: thank you, jonathan. jonathan there in sydney.
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let's look at the stories making headlines around the world. investigative journalists are saying a new data leak reveals were leaders and politicians and celebrities hiding money in shadow companies. this is the result of a panamanian law firm, which denies fostering illegal acts. protect theey would dignity of vladimir putin, after claimed to million dollars in transactions are related to his associates. more pieces from the missing malaysia airline has potentially wash up in -- washed up in the indian ocean. 2 parts found in
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mozambique are almost certainly 370. nmh the plane disappeared almost two years ago. about 800 passengers in our apart from kuala lumpur, less than 20% of the usual capacity. discontinuing its flights until next year to brussels. you're watching bloomberg news. rishaad: coming up, the philippine bank heist investigation is shifting its focus. nila after ao ma very short break. ♪
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rishaad: now, having a look at the philippine senate situation, and $18 million i were highest is shifting focus on how the money was laundered. what has happened to the money? what is the latest? >> good morning. based on the testimony collected, you're looking at around $61 million of this money going to the casino system. $30 million of that has been spent. official to statements, $31.8 million can be seen as retrievable, if traced to local corporations, and if the courts were to act swiftly. overall ok, what is the action from the -- reaction from
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the investigators? >> well, first of all, the banking system sorof the phillippines has been declared sound. is note saying this going to affect the banking system in general, but it is a question of perception and how investors are looking at regulatory systems in the philippines. that is one thing that investigators are looking at, and others in looking at how the elections are going to happen. a lot of reform needs to be placed together within these next few months to avoid further scrutiny and backlash from the investor community. rishaad: honestly could the --ate blue-ribbon community the senate blue-ribbon community will be meeting tuesday. what will they be talking about? >> what the senate hearings are about are supposed to be in aid of legislation.
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the council of the philippines is submitting a set of recommendations as part of legislation that hopefully this or the next congress will file when they resume session in july. there has been a set of sessions on lifting the bank secrecy law, one of the most restrictive in the world. oakley that will close loopholes in terms of making these incidents happen again in the philippines. rishaad: thank you very much. joining us there from btv in the philippines, as we have reported, we have a massive document leak from the law firm mossack fonseca about world leaders, corporations, and celebrities using offshore banks. >> this comes from so many leaders. former world leaders and
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were leaders. 128 public officials and politicians. this has been a year-long investigation, and it has been a long time in the making. onnamapapers is trending twitter. 11 million documents have been released in this data leak. a lot of investigative journalism went into this. one of the pieces of information that came out was something about ties to vladimir putin. edward snowden is currently in there, seeking refuge but this refers to the panama papers showing there were at of transactions with ties to russian president vladimir putin. thekremlin accused international consortium of investigative journalists which published the report of a
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"information attack" on putin's wealth. says thesekesman questions have been asked hundreds of times and answered hundreds of times. nothing to say there on these allegations from the icy ij. -- from the icij. minister, note the president, but the prime , says that iceland has not been positively per trade since the mighty ducks two. he has not resigned yet, but there have been calls for him to do so.
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definitely, a lot of interest in social media on this. rishaad: mcgivern much. up next, china's ambitious new plan for six of their banks bad debt problems. we have the details, coming up. ♪
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♪ a look at our top stories, asia-pacific stocks starting the week on the up. regional benchmarks stocksing, japanese shopping a four-day slide. oil a racing its gains for the year, saudi arabia saying it will only cap production if iran and others follow pursuit.
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-- follow suit. iran has ruled out a production cut for the time being. foxconnares has chairman terry glock completed the $3.5 billion bill. they revealed liabilities that may show an operating loss. ,harp having a breather hour-long lunch break in tokyo. we have quite a bit of action elsewhere despite china markets being closed for the holiday. , risk onng good gains attitude in asia despite crude prices retreating, as well as a number of pieces of data being to the downside.
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retail sales in australia flat against expectations of again. sydney stocks up a 7/10 of 1%. weakness in the dollar ahead of the rba decision. the rate cut decision still on the table despite the aussie dollar strength. look elsewhere, nikkei 225 up as it takes a break. percent, up by half a malaysia up by 4/10 of 1%, despite oil price retreat we have seen. the saudi deputy prints saying that if iran does not come to the table, saudi arabia won't either. the aussie dollar extending declines now. the retail sales number down.
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the yeno seeing strength story continued to play out. 111 handle, ag at two-week high against the u.s. dollar, certainly weighing on currencies and stocks trading in tokyo. analysts saying the yen strength firstwill be a conundrum of japan companies as they go into earnings seasons for the next quarter. rishaad: thank you. generator power granted three licenses to build its giant coal mine in central queensland. the expectation is 11 billion tons of coal over its lifetime, grading thousands of jobs. environmentalists are not happy with this. paul is in sydney. it is a troubled history, a troubled project, and it is
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going ahead it seems. it has been going ahead through all the difficulties. there are 160 environmental ,onditions attached to the mine also beset with a few financial problems due to the price of coal, bureaucratic issues, and geography challenging, too. i have been out to the area where this mind will be built. it is in the middle of nowhere. that, 600 kilometer rail line will need to be constructed to get the coal to point. the coal terminal will require dredging as well. createdated 5000 jobs at the peak of construction. they say they will commence construction in 2017. rishaad: given all the trouble and expense involved in building coale have an area where
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is cheap. how does this mine make money? paul: that is the question. , wellton out of newcastle off 2011 highs, but they use the price asiews the coal temporary. that answers the price question. the environmental questions continue to linger even with all the conditions imposed. they are concerned about the potential impact of water-intense coal mining on the water table, in environmentalists concerned about the dredging of abbott point, very close to the great barrier reef, so vigorously opposed as well. the plan to continue with construction in 2017 eight still be on the optimistic side. we will have to wait and see. rishaad: thanks for that.
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china may allow banks to convert the equivalent of $150 billion of bad loans into equity. this coming a report from a business data provider in china. tom mackenzie is with me now. how is this working? we are getting some insight into the steps the government may take, and what they're looking at is taking those bad loans from state owned enterprises and converting that into equity. what were concerns around that might mean for the balance sheets of the banks. the process is likely to spend three years, and it is our first inside into what the government is thinking about the economy after the national people's congress. rishaad: you are talking about bad debt becoming bad equity? tom: we've heard voices from the chinese bank itself.
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concern thating this is going to shift one problem to another. they want to make sure there is a cap on these bad loans to equity swaps. economists say you could take these bad loans, give it to the banks, cleaning up the balance sheets for state owned enterprises and makes accessing credit easier, and they go back to the banks to get credit at a better rate with some of those bad loans shifted off their balance sheets, creating a cycle of debt that so many are concerned about in the corporate sector in china. rishaad: this is what you are telling me earlier about the ceo of the biggest bank in china, his salary is .3% -- 0.3% of jamie dimon $27 million pay package. rishaad: that does include a
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bonus. of: $85,000 for the chairman cut, and he saw his salary 72% last year. rishaad: why? tom: the government is trying to back off on ceo pay. they are worried about inequality and sending out the right signals, and i think that this is what this is about. austereecoming ourselves, but a sting in the tail for that ceo. he has a bank with a market cap 0.3% ofillion, and jamie dimon's pay for 2015. spare a thought for him. rishaad: thank you indeed. a quick look at some other stories. central bank singapore wants to
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give financial firms more room to experiment with new technology. they say it is hoping to create an environment for experiments to fail "safely and cheaply without major consequences." the authority said it would be up to management to assess risks. tc closed its factories in protest at new packaging rules. is asia's second-biggest cigarette maker come forth to shut plants because it did not have enough time to implement new larger health warnings. governmenty and tussling over regulations, saying warnings must cover 85% of the pack's surface. the risk of a third below average monsoon rain may reduce ,hat the central bank can do
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cutting it to 6.5% on tuesday, the less cut until september of next year, three years of back-to-back droughts would be a once in a century event that dents growth in the indian economy. to crack thet bid smartphone market in india is meeting fierce resistance. to company wanted permission import and sell secondhand iphones because it's previous campaigns have been hit by tight regulations. news -- what is apple trying to do here? a biggertrying to make splash in india, an increasingly important market for apple as the u.s. and china slow. it is the world's second-largest smartphone user population on the planet. apple is trying to make inroads into india.
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holding what has been apple back in india? is it the relative cost of iphones to wages? iphone isly the beyond the reach of many indian consumers, although anecdotally you hear stories about people willing to pay a month's wages itown an iphone, but i think is rising, but not yet at a level where apple has felt comfortable marketing its phones, but that is changing. apple is applying for permission to open its first retail stores, which is really important for an aspirational brand like apple. it is trying to target a market where smartphone demand is poised to surge in the coming years as the middle-class expands. well, it's not just apple feeling this in india, it is globally. >> that's right. you name it.
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they are facing a tough 2016. samsung and apple has warned that the year will be tough, so that is why apple needs another growth engine like india. rishaad: thank you much indeed for that. we have to take a break. it has been three years since the bank of japan began seeking stimulus. is it seeing any success? david has a progress report. is backg business" right after this. ♪
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>> it is 10:43 a.m. in hong kong. these are the stories making headlines around the world. indian police are considering murder charges against people arrested in connection with the collapsed overpass. at least 26 people were killed in the disaster, and officials say building regulations had been ignored.
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andeople have been detained may face charges of culpable homicide. the roadway will was being billed and the project was years behind schedule. police in the maldives had used pepper spray to break up protests by journalist and activists who accuse the government of suppressing media freedom. 19 people arrested in a demonstration against new laws that would criminalize defamation. the maldives became a multiparty democracy eight years ago, but critics accuse the president of the routing civil rights and liberties. north korea says it has tested a new antiaircraft missile. state tv showed kim jong-il on -- kim jong-un watching the launches. officials say they detected a rocket launch, but it is not clear if it is linked to the north korean claims. south korea and japan say they will work together to prevent the north from advancing its weapons program. powered by over 2400 journalists
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and 150 bureaus around the world, this is bloomberg news. i am rosalind chin. , 2013,: three years ago bank of japan launching its most aggressive and unconventional campaign to jolt the economy at a deflation. what has been a congress? -- what has been accomplished? is one, we aren not at that target yet. hastimetable of the boj been pushed back once, and is now to get to the 2% target by this time next year, give or take six months. this is a look at two measures of inflation going back to 2011. this is when shinzo oblique took power, when the boj said this -- abe took our and when
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the boj said they would take this aggressive stance. hereis the artificial blip , halfway towards the goal if you strip out cheap oil. has notess, the boj done favors for the bank of japan for other central banks as well. if you strip about energy and food, you are back to zero. has not moved the needle as much as the boj wanted. again, timetable, six months this time next year, so towards the third quarter of next calendar year. now, have a look at this. can we get this graphic up that shows you where it has worked and where it has not? when you look at profits of japanese corporate scum a function of that week japanese up 9%,iving stock prices
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profits on companies in the topix index, but real wages have fallen 1.5%. the figures released last week show that japanese companies cut their forecasts for inflation for the next five years. what is that mean? that's the outlook for pricing. why would you raise wages if you cannot see pricing ahead? that is the inflation read. let's look at gdp growth. power, theo abe took japanese economy is essentially 6%, larger than what it was back then. aina by comparison is about quarter bigger, the u.s. is about 11% to 12% bigger. 9% over the same
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timeframe. when you look at 5% or 6% and the growth in debt, you grow yourself out of the debt situation ideally when central-bank start to buy assets. so not quite there yet. periods wheree the economy has shown some contraction. where it has worked very clearly is when it comes to borrowing costs. the yield curve, before and after, ok? let me just adjust this for you. there is the yield curve. let me bring down the spreads. the yellow line is the yield ,urve of japan before abenomics where we are at the moment, that is the spread or change that has brought down borrowing costs. rishaad: absolutely. this introduction of negative
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rates has triggered a property boom in tokyo. it has led some investors to warn that a mini bubble is forming. let's bring in brian fowler. what is going on and happening in the real estate market right now that is causing these concerns? brian: first of all, it is important to point out that this is a pocket of the real estate market, the prime real estate market in tokyo, a very different situation for the rest of japan. in this prime market, what we are seeing is the returns for that real estate exceed those on and almostrk 10 year a decade, so what is happening is investors are piling in two the real estate in this area. in ginza, private prices are atn all-time high. becauses are piling in
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it is the only game in town. rishaad: ok. is it a bubble? that is what everybody wants to know. brian: it is looking a little , and there is the possibility that if it keeps going like it has been going that we could see a real pop if negative interest rates get pushed back. however, if you think the boj is going to stay on course for further easing and months ahead, possibly lowering interest rates further, which is the consensus among most economists in tokyo, then you could say that the trend should continue for a while. they expects say prices eventually to stop rising before we really get to that drastic bubble bursting moment. so whether it is a bubble, it is certainly having qualities like a bubble, maybe were not quite there just yet. rishaad: ok, where does this
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leave corroded and the bank of japan's policy right now? brian: they deftly have to look ot every two available t ease and stimulate the economy. japanese companies have failed to push through wage increases, a clear indication that they do not expect the economic outlook to improve much. we had the boj corporate price index this morning survey, a component that came out this morning showing that businesses, inflation expectations are falling back. again, getting back to the real estate, this is a case of investors piling in because there is nowhere else to go. those prices are not rising because they think the economy is poised to take off in tokyo. rishaad: thank you very much indeed. we have to take a break. on the other side, history going under the hammer.
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seal going under for auction and a special report. ♪
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♪ you're watching "trending business". i am rishaad salamat. a 17th-century imperial seal to
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be offered for auction in hong kong. bidding for emperor kangxi's "seal of the mandate of heaven" is expected to start around $6 million. we caught up with southern breeze -- with southern these about this rare piece of history. ♪ seal that the largest the first grand ruler ever had cast for himself, and the meaning is the most powerful. it means ruler of heaven and serve your subjects. the market for historical works one,t, objects like this that market has only taken off in the last 15 years since the mainland chinese have stormed the market. ofrecords all the seal emperor kangxi. this one is the largest of them all. you can verify the impression
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matches. the last time that this seal was in contact with this paper was 1781. around accept bids from $15 million. what is it worth? it is hard to determine because it is a symbol of the mandate which means i am the legitimate ruler of china. , this is pure power and an object. there is still that thinking that is ingrained in china, particularly relevant to a collector or wealthy person. a seal like this on which talks of power, it could interest anyone with the means to buy it. rishaad: i'd like to know how much that does fetch. batman and superman get their grips on the top box office spot for a second weekend.
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superman, donna justice-- dawn of collecting over $50 million. topia took the second spot. that's it for this monday edition of "trending business". "asia edge" coming up. do not go away. ♪
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it is the middle of the asia-pacific trading day and this is "asia edge." a look at our top stories. the regional benchmark rebounding from its worst day since mid february.
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sharp among the decliners. he respects the innovation and leadership. oil erases its gains for the year. gie: apple's attempt to crack the indian market. billions ofe had dollars stolen in the bangladesh bank heist. -- $6eal is no steel million is just the starting price for what is being called the most important historical chinese object ever to go under the hammer. we are seeing a rally nd


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