tv Bloomberg Markets Asia Bloomberg December 18, 2016 8:00pm-11:01pm EST
the loss of its aaa rating. politicians are worried, economists less so. the malcolm turnbull administration could become the first government to lose it is coveted aaa rating. we are having a look at this. why is australia under threat? sophie: the health of its fiscal position. the administration has been grappling with political deadlock, but given the slowdown in growth, we are expecting this impact on the budget. slightly seeing a toward deficit at 36.5 billion australian dollars. seems they are anticipating the surplus will still be in place by 2021. in may, scott morrison did anticipate that was when the books would be balanced.
there with some caution ahead of this update. we had the finance minister tell was merely a that projection, but not government policy. thead the gdp forecast for -- 2%,17 year at 2.5% sorry, lower than the 2.5% estimated. ,ishaad: this deficit narrowed still predicting a surplus. sap may not be downgrading, but if they do, what happens? sophie: if they were to pull the trigger this week, borrowing costs could increase for the ocean government and some potential fallout when it comes to the downgrade of banks, according to the head of market research. when it comes to the reaction of financial markets, little
response expected in the bonds and currency. movef this given that the has been priced in. the sap had been broadcasting this in july when they downgraded austrian outlook to negative. let's look at a chart on the terminal that tracks the movement of the aussie ten-year bond yield -- actually, we don't have that chart now, but essentially what we are seeing is that in the 30 years since the s&p cut the government rating from aaa, we have not seen reaction in the bond yields wethat decision-making, but are expecting scott morrison to speak and the next half hour, so we will see what else he has to say. rishaad: thank you very much indeed. we have scott morrison talking about what is likely to happen with the economy there 10 minutes from now. let's look at the austrian markets and what else is going
on with markets. we can see some upside in the australian market, up by .3%, the front runner in the region. you did see a spike in the aussie dollar when forecasts came through. it is holding around $.73. futures in u.s. equity after the weakness on friday caused by geopolitical tensions, china seizing that u.s. drone, which did have ramifications over the weekend. you are seeing that play into markets in southeast asia, the nikkei down .2%, also futures in china looking to open lower. it is one at japan, market we are focusing on today because we did see japan posting that trade surplus for a third straight not, although the surplus did narrow.
down by .2% there on the nikkei also weakness in korea, and in the southeast asian markets as well. the other focus for markets this week is going to be looking at those commodity prices. we have seen more of an uptick in the crude price, still holding about $52 a barrel on these continued concerns about production, but also as we see libya join in. on that oil price, and that will continue to give good support to energy players. we are seeing that in the australian session, and likely to see it in the hong kong session as well. week with won still that big drop on friday, down mixed in thes equity and currency markets this morning. right, let's get the first word news now.
relations between washington and beijing strained after china seized an underwater drone and what it calls a gray area. the pentagon says it was operating in international waters. china says it was near a disputed stretch of see claimed by several countries. china said the drone will be handed back him although donald trump said keep it. john and three senators have called for at a congressional inquiry into allegations of russian interference in the presidential election, but donald trump saying there is no consensus among the intelligence agencies over moscow's role. presidentn saying barack obama has no strategy to deal with russian cyber attacks. 1200ng has ordered factories to suspend or reduce production in this year's first red alert for pollution. authorities strengthened emergency measures after the alert was issued to restrict vehicle usage in an effort to clear the air.
beijing is one of 23 cities under smog alerts. it is an expected to improve before wednesday. the road surface on the hong kongzhuhaimacau bridge will be completed by the end of the year. they are covering the pavement with asphalt and save 45% of the deck is finished. the project is 50 kilometers long. work began seven years ago and is expected to cost more than $10 billion. emphasis for the chinese economy year, prudent and neutral monetary policy. that was the word from the country leaders wrapping up their work conference. what does this mean, looking ahead? rosalind: economist picked up on the word neutral, not just prudent, but neutral. tighteninghifted to and use of the word neutral
signifying monetary policy will be marginally tighter next year than this year. the u.s. fed raising rates and saying there will be more coming, three more perhaps, next year. china threatening as well, so two of the world's biggest economies tightening into next sinceso the first time 2006 that we are seeing this. monetary, china's policy is undergoing an overhaul. economists don't see any change in interest rates in china next year. if they are tightening, they will be doing that through money markets rather than interest rates. who knows whether there will be three or fewer reate hikes from the fed next year. rishaad: it was strange because this one was 100% in december. for ap talking about it
week and it was quite refreshing. chinese leaders emphasizing controlling financial risks. good luck to them, some would say. rosalind: for china, it seems like it has become extremely important, particularly asset bubbles and property prices being one of those areas of concern. officials did say preventing and controlling wrists to avoid asset bubbles will be a priority next year. beijing has laid out steps , including limiting loans. one statement was houses are not to be inhabited, not for speculation. it was underlined by another high-level official saying high priority needs to be given to preventing and controlling risks next year.
they must concentrate on deflating a property bubble. so property is a huge focus for chinese officials going into next year, something they are focusing on. right, looking ahead, the president of the asian development bank telling us why he's worried about rising protectionism. our exclusive interview later on in the program. just ahead, where to put your money as the trump rally starts to fade. ♪
straight, up .3%, but the nikkei and the kospi under pressure. listed developer blaming shareholder dissent for its decision to abandon plans to issue new shares to fund a transit firm. vanke was ready to pay $8.6 billion, but major shareholders could not agree on the deal. lotte hasa's hotel retained its duty-free shopping license and seoul, korea. its parent is being investigated over allegations that it paid money to a friend of park geun-hye in return for business favors. prosecutors placed travel bans on top of business leaders. the world's all this bank is
launching a share sale on monday to raise more than $5 billion and avoid a government rescue. the bank will sell stock to institutional investors through thursday, while the offer to retail investors will end on wednesday. the price a number of shares is expected to be determined i demand -- by demand. the dollar gaining against major thes after data showed currency climbed the longest since 2015. let's bring in michael price. we have seen so much prized in with the dollar, is it overvalued now? michael: well, especially in foreign exchange markets it is difficult to determine value. the u.s. dollar is the undisputed king of the foreign exchange market. the question is when could we see a reality check and a sense
of reality? i think it is potentially climbing the wall of complacency. the long dollar trade is long in the tooth. the eighth year of the bull market, potentially indicating that, yes, we are long in the tooth here. rishaad: i like one comment you made in the research. of, is the u.s. equity market a mirror image of summer 2015 in china? michael: sentiment looks like it. most expertsthat tend to agree on something, then it tends to be working out the other way. china last year in the middle of the summer, everyone was bullish but the market looked overvalued
and overstretched, but there was euphoria in the chinese markets before it went into serious correction. the u.s. equity market looks similar to me, the euphoria stage. the real question for investors to think about next year is whether that transition from a -driven market to a fiscal driven market is without execution risk. governing by twitter could lead to execution risks not fully appreciated. tohaad: i'm going to come that concept, governing by twitter, but scott morrison talking at the moment, michael. thisould you characterize state-of-the-art strain economy ,nd the australian market given what is happening to china, you can look through
that prism if you wish. that prism if you wish. michael: australia have benefited strongly from the china growth story. the china growth story is now rebalancing. that is the question, in 2017, see a currency regime change in china that would potentially have negative implications on australia? , soseems to be an old thing increasingly less likely to have a good sovereign credit rating, and that is the debate and dilemma, what is a safe risk asset anymore? rishaad: stick with us. we are getting over to the australian treasurer, releasing midyear economic and fiscal outlook. so-calledng his budget review. here you go. , means the budget australia's fiscal outlook is in a better position today than a year ago.
ago, when it was $122.7 billion. 19.5nment payments will be billion less than set out in the budget. 2016-20 17yments and will be nominally less than projected in the 2013. a sharent payments as of gdp has been reduced from 25.2% and isto expected to remain stable. real prize and payments over forward estimates has also reduced to 1.9%. at debt is projected lower 19% of gdp, and one year later , 19%, then decline over the medium-term to 10%. our debt remains less than a third of what the average of
advanced economies are experiencing on net and gross terms and is less than all g7 economies. it also includes a revised estimate of the total value of budget repair measures legislated since the election had more than $22 billion. it also contains a revised estimate of the value of an legislated budget repair measures at $13.2 billion. which includes $12.5 billion in payment savings. this means that in just six and a half weeks, the parliament has legislated almost two thirds of the government's budget repair measures. the ability to secure passage of budget repair measures has been a consistent issue raised by ratings agencies with reference to their assessment of our fiscal position. now there is more work to be done as the finance minister and i know well enough, and the
government is committed to continuing to work with partners on budget repair in the parliament in next year's all-time settings. turning to the economic outlook, this remains positive -- rishaad: scott morrison talking there with that forecast, better than expected actually, growth out of australia, better fiscal position them a were thinking last year. that is the view right now. let's get back to michael price. no real big surprises there. fixing, ad a yuan slight strengthening taking place. tell me, what is the biggest game in town for you at the moment? point,d to get to this governing by twitter and how all that plays out. look, the political risk is rising. as i said, this question about how the world would look like if you move from extreme monetary
-driven market returns to physically-driven market, right? this is to the point about australia and while stray could potentially outperform because commodities are potentially picking up again. i think, if you think about it, are strained dollars, commodities depressed, i think that space of the market, mining and commodities, could outperform on a relative basis in 2017. with regards to the dollar, maybe the dollar has overshot. many see the dollar that is a one-way street. i think may be a lot of that is priced in. don't forget with regards to equities, the consensus view on wall street is now that u.s. equities will perform well in 2017, but historically speaking, a strong dollar and rising interest rates were historically negative for equities, and maybe
this time it is different, but we might see more headwinds going into 2017, and the trump rally we have seen, do look at the long-term charts and put everything into perspective, it looks like a euphoria rally at the end of mobile market, not the beginning of a bull market. rishaad: michael, great talking to you as ever. next, shinzo abe has grand plans to incorporate automation as a solution for an aging and tracking population. ♪
trying to make more robots, not only things, but deal with some of the challenges for people. i'm talking about challenges brought by the aging society here. absolutely, so there have to be concerns, but are there real concerns over job losses? >> not really. here is why. as i mentioned, the population is declining, so you have to have more people or machines. we recently visited a struggling osaka.y town outside of socce ratherntioned they would have more machines that people from abroad. right, well do why people in japan have quite different attitudes towards
robots compared to say americans or europeans? >> that's true. in the u.s., for example, robots are seen as something terrifying, but one of the experts i spoke to for this story mentioned that culturally speaking in japan, the people have massive affection for robots, which partly comes from an animation character like astro boy. are viewed as friends and companions, rather than just killers. at least that is the case here. rishaad: thank you for that. joining us from tokyo. right, job cuts across several units in the face of slowing growth after aggressive expansion. layoffs started in the last few between 1000-3000 people in i.t., human resources, and sales. tripled and now has
rishaad: this is "bloomberg markets: asia". i am rishaad salamat. have you been looking at what is going on with the gold price? we have a cracking story showing how prices have fallen for six straight weeks, the worse streak for the precious metal in the year. up,owing costs going dampening demand for gold. also that correlation or non-correlation trade moving in the inverse direction of the dollar, the dollar strengthening as a result. gold prices currently going down. let's look at this chart,
showing you how funds are as an asset, their rico. this has been happening ever since september on a sequential basis. six straight weeks, right here as well, hedge funds cutting their net longs for 5-6 straight weeks for gold. to what's happening equity wise, the open in hong kong, shanghai. juliette: yes, markets opening lower. that is what the futures were signaling. some weakness in u.s. markets on friday after china seized that u.s. drone, quite a lot of geopolitical tensions over the weekend, and some downward pressure on the shanghai markets and hong kong, lower by .4%. playersthese energy under pressure even though the
crude oil price around $52 a barrel. the nikkei has been in the red so far this morning, down .4%, hurt either geopolitical tensions, but chopin did post trade surplus for a third straight month, although that surplus was weaker than expected. some weakness coming through in the southeast asia markets. .1%,hilippines lower by but this is where you are seeing strength. we did have the budget update coming through today from australia, the australian market still holding on strong, up .7%, and the aussie dollar got a boost. higher, up tracking by .5%. there are a few stocks we are keeping an eye on. have got a better jump than that. expectations he could jump higher, but we have found out that a prominent short
seller has also targeted this company, also targeted by muddy waters last week to seven west media one of the worst performers, down 8%. nintendo continuing to fall, quite a few disappointing reviews for the super mario run game. the offshore renminbi stronger after the pboc strengthen the yuan today. 6.95. rishaad: thank you very much indeed. china, november new home prices rising and 55 thans month on month, less october, 62. new home prices rising the exact same number of cities, 65 year on year versus 65 in october. looking at these new home prices
% year onhey are up 29 year in beijing. in november, month on month, shanghai off a fraction, but atr on year, doing better 34.8%. that's what we have at the moment. let's find out what is going on elsewhere, bp cementing its relationship with our dobby. -- abu dhabi. 2% stakeay 10% for a inadco. why and why now? >> we have been working here for 75 years with adco. did is a strategic relationship here in abu dhabi. are disciplined
financial framework and meeting our obligations in the u.s., it took us a while to make this great investment with abu dhabi, and the key element is we have used the shares and abu dhabi will be a 2% owner of tp. -- of bp. it continues a very long-term relationship. that is important for us. ,he economics are good for us good for our shareholders, and for bp, it brings in a strategic owner of the company. bp has worked here along time. i believe we have shown what we can do technically and with management capability. with themve and work as a company and bring our best people and resources into it and maximize future recoveries of
abu dhabi's resources. we have a lot of experience and working in managing big oil fields, water flooding, and the technical things we will bring. as well as a deep sense of responsibility about the privilege of working with the national resources that of abu dhabi. in many ways, these are the crown jewels of abu dhabi. >> should we take this as a sign that now is the time for oil majors to begin ramping up investment? >> one has to have some confidence in the price. we have really retooled bp to get ourselves to an efficient level. a year ago, we were saying $60, now we can do it at $55. remain verye will disciplined about the capital we spend, the projects we select, but it is time for bp to start growing now. we have worked through so many
difficulties in the u.s. that the company as now well positioned for growth towards the end of the decade. historic deal by opec for the production cut, and an even more historically significant deal. how do you feel about opec and the future of oil at the moment? >> i think it is significant what happened on november 30, non-opec countries seriously talking about reducing their output. you have opec. some people have said opec is not a real organization anymore. it doesn't actually bring things together. i think opec is an important organization. this agreement is significant. you can see it in the curtailment notices going out in the middle east. i know because we work in russia that there is a schedule of reducing output from russia, so i think it is very serious. between $55 and $60 seems realistic for 2017, and
growth continues with demand in china and north america. donald trump has nominated rex tillerson as a potential secretary of state. is he the right man for the job? >> he knows leadership around the world and knows how to get things done. he is a very serious person. think he will do a great job, not just because i am in the oil and gas industry, this is a man who knows the world and how to manage global organizations. >> we know donald trump is potentially more friendly to the oil and gas industry than his predecessors, what does that mean for you and other oil companies? >> surprises are happening all over the world. a lot of the world has been surprised with what has been happening in the u.k., even the hasrendum in colombia which gone back in another direction was a surprise, the elections in the u.s. were a surprise.
i think we are in for moore surprises in 2017. industry, 7,-term 10, 20 years out, so we will navigate and work through this. bp has its financial framework and disciplined back and will adapt to circumstances. rishaad: bob dudley speaking with tracy alloway. donald trump has caused further tension with china over the seizure of an underwater drone. we have more on the drone of trauma next. ♪
trump? >> it would be, there is speculation it would have in a reaction to what trump had to say on taiwan, and others speculating it was a reaction to scooping this and drone out of -- water was a reaction to yes, that's right. weeks in sydney last talking, and he made some remarks about the south china sea, which could have been considered to be aggressive from the point of view of the chinese , but to be honest, i don't buy either of those. i think this was purely opportunistic. the chinese had an opportunity to seize the drone and probably had been wanting to get hold of one of these drones for eye while so they could have a look at it. >> john mccain has said what about reverse engineering. >> they have their own drones. these drones are available on
the open market. you can buy one if you want one, but i don't think any had been sold to the chinese, and i think the chinese are interested to see what this drum can do, what is in its bank of data, so a opportunistic idea to scoop out that drone. rishaad: donald trump also tweeted, keep the drone. is he doing damage here? he has done is extremely provocative. first of all, china's taking the then was provocative, but trump inserts himself into it and what he says makes it even more provocative. what he has heard to say about the one china , accusing china building fortresses in the south china sea and that china should not be doing that, so he is constantly pushing.
but remember, he is the president-elect, not the president. china is continuing to be muted and its response to this controlling from trump. -- controlling from trump. the real question is what will be policy after he takes presidency. we're just getting a breaking news story from malaysia, the malaysian ringgit has the climbed to the lowest level since the 1998 asian financial crisis, dollar strength playing out here. dollar worth of the highest since the 1998 financial crisis, the ringgit the lowest since then as well, quite something. right, let's move on and have a check of the business flash headlines. airbus has suffered a blow to program, iran380
dropping the plane from its fleet upgrade. tehran reduced its order in a revised contract the superjumbo. airbus has already cut production as demand dwindles. the only carrier to give the aircraft a major role in its fleet. ukraine is to nationalize its biggest lender following the failure of its rescue bid by billionaire owners. the fate of the bank has loomed large over the central bank efforts to stabilize the industry. uber's middle eastern has been vietjet $1 billion. careem was founded in 2012 and
some emerging-market currencies under increasing pressure by the dollar, not least the malaysian ringgit, now falling to the lowest level since 1998. the yen coming back against its american counterpart, the japanese yen 117.45. weakerave the won moving , .1% as well. the dollareld, retreat taking place, affecting the yuan fix a half hour ago. at 6.93.fix a little bit of strengthening, but we do have it in a range as well. of5 was a low since the end august. to australia,back scott morrison speaking as he releases his government's midyear economic and fiscal outlook. is the budget review.
hoping for a surplus in the 2021. let's see what he sang in addition to all that. >> what is happening in profits growth, and what we need to see is people on more, to see people and companies and people profit more and invest those profits back and businesses. that's why we are pursuing the int enterprise tax plan as we are. back toget the budget balance to ensure that we put australia in a more resilient fiscal position to deal with what can the external threats and shocks in the future. i set that out in september and i over this year.
system and to make it more competitive. to actually pay down debt over the medium term requires a strong growing economy, and so these two things need to work together, and that's what i believe we are seeing in this document today and the budget i handed down. rishaad: right, let's leave scott morrison there. a slightlycast narrower deficit this year. still looking for a balanced budget by 2021. avoid andey will stave off a credit rating downgrade. this is him staying the transitionsconomy from the investment phase to the aoduction phase despite
downward revision to real gdp forecast. right, to something as they would say completely different. latest film "great wall" has raised more than $66 million during its opening weekend. our asian media editor joins us now. why is this film getting so much attention? you point out, it's a blockbuster, and it is backed by a billionaire, the second richest man in china. do a his big bid to coproduction with the big hollywood star, so a lot of focus on what is the formula to film that will appeal to china's booming market and also sell around the world as well? this has been the first film that has really put that altogether from the chinese side. ofre has been any number films that hollywood has produced something that will sell in america and china as an
afterthought. this film is selling in china with the rest of the world also, so there has been a lot of focus on opening weekend, how it is distributed across the country. if it opens big, it will get in more theaters and boost the final box office tally quite a bit. there have been questions about china's move the market. it has been slumping the last three months. past 3-4e growth the years, and it is slumping and people are wondering if it is because of the lack of hits or because china moviegoers are not spending as much money now and not opening as many new screens. this big performance answers that question. given how much hollywood has come to love franchise films that spohn pools, are people already ?"lking about "great wall 2 >> it was spoken of as a test
case for the china-hollywood coproduction. it was shot at a massive complex that will be the largest film studio in the world. it was shot there. he is offering subsidies to hollywood film companies to come there and shoot again, so even if there is not a sequel, this is a formula closely watched and we expect other filmmakers and producers will be following that formula where they get a big bankable hollywood star, put it with a very well known chinese director, and use a chinese theme and try to sell that around the world, so that much will be a franchise. rishaad: thank you very much indeed there. right, let's talk to you about the force. it remains strong with disney after rogue one has the second biggest december opening ever,
only beaten by last year's star wars release. 155 millionllected dollars in theaters in the united states and canada, and disney says it took $290 million worldwide. it debuts in south korea next week and in china on january 6. the global diamond industry is betting on millennials to boost growth, and that is especially the case in china. debeers saying china is important. what their survey has found worldwide is that in china, 70% of diamond jewelry is bought by undere millennials, women 35 by 70% of diamond jewelry in china. a huge source of potential growth for the diamond industry in china considering millennial women are a decade
away from prime earning years, so that will be of the growth driver for the diamond industry in general. rishaad: marriage rates are falling in china. you would think that would impact the diamond jewelry industry, wouldn't you? the number of marriages was projected to fall in china because demographically the number of women who are in that age have married before. that is impacting the forecast for growth, but diamonds in china are interesting. unlike the west, chinese women don't associate diamonds with marriage or eternal love. it's more a mark of celebration and that they are doing well. we are seeing dimon companies that are pushing out more designs that are practical, less necklaces,rings, but earrings, appearing to the fashionable, young millennial. well, let's talk about
divorce in china as well. that is on the way up. how does the industry deal with that, if at all? right, so divorce is trend, ay on an upward divorce rate of 2.9 per 1000 marriages. you would think that is not a good sign for the diamond industry, but actually what the diamond industry has found in the u.s. is that people spend 20% more on their diamonds for their second marriage, so while it is too soon to say in china, the diamond industry is optimistic about the potential for second marriages to become a big growth driver for the diamond industry in china. rishaad: thank you very much indeed. you what we have got on the way.
it is almost 10:00 a.m. in singapore, 1:00 p.m. in sydney, and 9:00 p.m. on the eastern seaboard of the united states. from bloomberg's asian headquarters in hong kong, i am rishaad salamat. ♪ rishaad: prudent and neutral, china's leaders saying they will work harder to rein in risks with a focus on property speculation and debt. the yen strengthens on japan's third monthly straight trade surplus.
any worsening of australia's deficit could see the loss of his aaa rating. politicians are worried, economist, not so much. straight to the market action. but negative in many markets are let's find out what is going on here. yes, definitely a mixed picture to start this new trading week. you are seeing the regional index higher, also, coming through on the australian markets and new zealand as well. oil and gas sector, crude oil rallying above $52 a barrel, and defensive players getting a bit but financials not looking so good, and some weakness in tech players, which rallied quite hard in asia and the u.s. session late last week. having a look at the worst and best performers, shanghai has
now turned negative, but hong kong one of the worst performers, down .6%, so continuing that weakness we have seen on the overall hang seng index. the nikkei in the morning session down by .3%, not only yen factoring into this, but the trade surplus coming in narrower than expected, although the third trade surplus in three months for japan. a look elsewhere, the crude oil to buy another 1% at the moment, but that is having some ramifications on the the only oilggit, exporter in asia. it is falling, down by about .1% at the moment against the dollar. did see the, we malaysian ringgit touch the lowest levels since the 1998
asian financial crisis. the japanese in yen, which hit that 118 handle on friday. 117 point 54, and some strength in the offshore renminbi, the pboc strengthening is movingix, so that higher, up by .3% against the dollar in the offshore renminbi. markets, you are seeing generally yields lower across the board, except the australian 10 year note come up by two basis points. a little bit of buying and bonds across the region. rishaad: thank you. right, let's get to first word news. relations between washington and chinag strained after seized and underwater drone and what it calls a gray area. the pentagon saying it was operating in international waters, while china says it was
near a disputed stretch of c. washington says the drone will be handed back, although president-elect donald trump tweeted that china should keep it. john mccain and three other u.s. senators have called for a congressional inquiry into allegations of russian interference in the u.s. presidential election, but an advisor to donald trump is no consensus among intelligence agencies. saying president barack obama has no strategy for dealing with russian cyber attacks. a third straight month of trade surplus in november, imports fall faster than exports. shipments overseas declined at the slowest rate since 2015. exports fell .1% last month from year ago. droporecast had been for a of 2.3 percent. exports had declined 10% in october. beijing has ordered 1200
factories to suspend or reduce production because of this year's first red alert for pollution. authorities strengthen emergency measures after the alert was issued on thursday to restrict vehicle usage to clear the air. beijing is one of 23 cities in china under small alerts. the air is not expected to improve before wednesday. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. right, china's attempts to rein in soaring property prices seem to be working. in only prices rising 55 of 70 cities, fewer than the previous month. of the cooling measures working here? rosalind: that does seem to be the case. 55 out of 70 saw an increase, down from 62 in october. that is something authorities do want to see. shenzhen, one of the hottest
property markets, new home prices fell month on month. rishaad: year on year, they were hugely out. rosalind: shanghai, new home prices falling. beijing remaining unchanged, but is what wear prices are looking at the shenzhen up by 28 percent, shanghai by 34%, and beijing up by 29% year on year, so cooling measures, yes, they do seem to be working, but if you look at the course of a year, home prices have jumped in china, and this is a key concern at the meeting, the central economic and were committee meeting, property bubbles were a key focus for them. going into say that next year, they will concentrate , andflating asset bubbles
property is one of them. it will include limiting loans for speculative home purchases and eliminating excess housing supply. some economists have seized upon this comment, houses are to be inhabited, not for speculation. authorities continue to really scrutinize prices and clamp down on them. rishaad: what about when it comes to the economy going into next year? you mention something about reducing these bubbles. asalind: managing risks is key focus for chinese leaders going forward. they are very worried about asset bubbles in general. prudent andabout neutral monetary policy, so sees monetary policy marginally tighter, a slow process, but you have the fed forecasting three times next year, china looking like it is
tightening as well, so the world's two biggest economies tightening next year, the first time we have seen this since 2006, but china's monetary policy is going through an overhaul. see anyts do not increase in exchange rates next year. other priorities include making progress on supply-side reforms, something that chinese leaders have been saying for a while, but they want to push forward with that going into next year. rishaad: right, we get back to australia, it could be the first austrian government and 30 years to see the country lose its coveted aaa credit rating. aeasurer scott morrison sang balanced budget is in sight for 2021. let's find out more. let's start things off. start off with the highlights here.
sophie: the key number is that budget deficit. a shortfalljected of 37.1 billion australian dollars. forecasts show 36.5 billion are strained dollars, but the government does see wider deficits in the following three years. cutgdp growth forecast was to 2% from 2.5%. line with economists estimates given the gdp contraction in the third quarter, and the process of balancing the books, here is what morrison had to say. midyear economic outlook confirms the government's plan to restore the budget to balance remains on track. in mefo, the budget is projected to return to balance in 2021. is worth mentioning the terminology here, projected
to reach surplus by 2021. on sunday, the finance minister cautioned that it is projections, not government policy, to achieve the surplus by them. , isaad: the point here is this enough though to stave off that ratings downgrade that has been threatened? downgradedjuly, s&p the outlook to negative over concerns over the government's ability to implement reforms. parliament has legislated two thirds of budget repair measures, but admitted more work needs to be done, political gridlock could remain a challenge. morrison highlighted the need to push through a corporate tax package, but the labour party is strongly opposing this. the chances of them cutting the aaa rating this week, a 40% chance likely, but they will wait to may, that is
the consensus given no new measures were announced, and likely more next year. rishaad: thank you very much indeed for that. looking at the australian economic forecast. india, primeing at minister narendra modi's cash ban may have all been done in vain. we will head over to mumbai for details on that. plus, more reaction to the latest home prices in china. shimao property is next. ♪
for what could be one of the biggest share sales ever. the decision is still "a work in progress be ar." he also dismissed speculation that saudi arabia would reduce investments because of the law. te group is being invested gated over allegations it paid money to a friend of park geun-hye in return for business favors. prosecutors slapped travel bans on top business leaders. leading developer is blaming shareholder dissent for the decision to abandon plans to issue new shares to fund the purchase part of a transit firm. stake inted to buy a shenzhen metro group and was ready to pay $8.6 billion, how well over major shareholders could not agree on the deal. has promised to not plan
any major asset moves over the next month. china propertyt prices showing signs of cooling. implementing measures to curb high prices and curb speculation. the senior manager at shimao property is with me now. >> i think the numbers are expected. now these cities have tightening measures in place, so the majority of measures that have the biggest impact on this set of numbers, mostly the price permitsd the issuance of , so i think these numbers are
in line with expectations. rishaad: what does it mean for developers at the end of the day? transactions are still happening, aren't they? ofwe think it is a sequence the launches of their projects. the local governments are trying to squeeze out some of the issuericed projects and permits from the lower-priced projects, so it is just a sequence. we don't think apple to apple prices or projects themselves are declining. it hugelyf course differentiates itself when it comes to tear one, tier three, and tear for cities? >> indeed. tier three and tear for still suffer from -- rishaad: would you say the curbs are working? >> the curbs are working in
those cities. beijing slight down tech month on month, even shenzhen, but you're on year, that's crazy. 9% for beijing. >> yes, still crazy. it is because of the population the economies for these higher tier cities. rishaad: what does the chinese government do from a national perspective about property prices looking into 2017? wille central government not impose tightening policies nationwide. as i mentioned, tier three and tear for cities are still suffering. we feel those policies remain local government oriented. rishaad: there are other steps that can be taken by local authorities, aren't there? there is talk of punishing property propertyheir
empty, a sure sign of speculation. >> that is very hard to implement. rishaad: it can be hard to implement, but there must be ways of doing it anyway, such as electricity. why leave your property empty when you have rental demand anyway? i don't understand this. to buy a good rental, right? rishaad: right, even in tier one cities, they could actually be making on something on that as well as the appreciation. >> the mindset of chinese people, they lack investment channels, so they just buy the property and either leave it and enjoying the price appreciation. about what happens
next year looking at 2017? what about the possibility of higher interest rates? there is talk of tightening from have ac, could that detrimental effect when it comes to the property market? >> definitely, monetary policies are more effective than punitive measures. it depends on the market next year, but now we hold the view that it still increases 10%, the liquidity is still driving the market next year. rishaad: at the end of the day, our tier one cities in china, are they in a bubble? >> yes, we agreed that tier one cities are in a bubble, but we don't expect the bubble to burst because as i mentioned there is still abundant liquidity and people still migrate to tier one cities, and as i mentioned, lack of investment channels in china. rishaad: thank you so much for joining us. >> thank you for your time.
markets trading when it comes to the asia-pacific, this is what it looks like. there we go, off by two thirds of 1%. again on the currency markets, week miss their. shanghai down, nothing unusual. slight recovery. korea was flat, and taiwan and singapore, let's have a look at how they are doing, there we go. the kospi has turned positive.
taiwan down .6%. singapore, the lion city, off .6%. trump, further exacerbating tensions with china over its seizure of the u.s. navy drone. the president-elect we did that that beijing should keep it. we are having a look at the china move. how far is it a reaction to what he has been saying? he has been upping the ante with china and bringing tie one into the mix as well. >> that's right. i don't i that argument. there is the argument that the onecomments on china policy angered beijing. there is also the argument that harry harris was in sydney last week and making some remarks about the south china sea and how the u.s. wasn't going to
more or less let china take the south china sea over, but i think this was probably a more opportunistic expedition from the chinese. glider drone collecting information, and it hits to the broader point that china is constantly arguing about, that it does not want to be surveyed as much as it has been by the u.s.. this collider was taken outside wasa's claim -- glider taken outside china's waters. so china has gone into waters which are clearly not china's and scooped up this drone, and that is what makes this extra provocative, this action. rishaad: trump did tweet saying, why don't they just keep it. is there damage being done here? like anseems extraordinary thing to say. once again, it is trump tweaking
from the hip. he does not seem to think through policy before he tweets about it, and when he does that, you have the possibility of doing major diplomatic damage with the chinese. it's a bit like taking that phone call from the taiwanese president. how much thinking went into that telephone call. the arguments out there are that a lot of thinking did go into that telephone call and that this was something the trump team had been working on. point is though that the chinese are trying to be muted in the response. they recognize that trump is still a private citizen. he is just the president-elect at the moment. he is not dictating u.s. policy to see china is waiting what exactly is trump going to say once he is president. if he continues to shoot from the hip like this, he can potentially do a lot of damage to u.s.-china relations. this a more
aggressive stance being taken by beijing? does it mark a in policy as well? >> the idea of going in and taking this drone, some people w talking about the new gravestones. up to now, china has been taking incremental steps, never big enough to warrant a hostile or physical reaction from anyone, so what we saw is that it started to build the islands on these artificial reefs, and now we are seeing china putting guns on the islands. china says this is just self-defense. next thing you know, they might be putting missile systems on the islands. rishaad: with a very long runways. >> yes, they have long runways. everything china has been doing so far is just enough not to
prompt any reaction, but it has been changing the strategic map in the south china sea. coming and taking drones like this, it looks like it's moving into a different type of provocation, so we will have to watch carefully and see, does china continue to do this sort just inn or was this opportunistic action and a one off? rishaad: thanks a lot. been hearing from the australian treasurer scott morrison about the state of the economy there, outlining that they expect their budget deficit to be in surplus by 2021. moody's, all of this was the credit in danger rating, the aaa sovereign rating we do have in australia. moody's saying that the credit metrics that australia possesses are consistent with a aaa rating , so that is what we have as
10:29 a.m. in hong kong and beijing, these are the first word headlines. china's leaders expressing a greater drive to rein in risks, exercising prudence and neutral monetary policy. president xi jinping and has top economic policy lieutenants wrapped up a conference fouling to safeguard the financial system and deflate asset bubbles. another blow to airbus, i ran now dropping the a380 from its fleet upgrade, reducing its order to 100 aircraft in a revised order that will no longer include the a380.
airbus has cut production as demand has dwindled. emirates is the only airline to get the aircraft a major role in its fleet. scotland says it wants a new referendum if it is forced out of the european union by brexit. adding to pressure on the prime minister theresa may, who has promised to listen to the people before opening talks in brussels by the end of march. the road surface on the hong kongzhuhaimacau bridge will be completed by the end of the year. engineers are covering the pavement with asphalt and say more than 75% of the neck is finished. is 50 kilometers long and work began seven years ago. cost morected to have than $10 billion when it opens 12 months late in december next year. day,each and every
something like 2600 journalists and analysts in 120 countries. this is bloomberg. "bloomberg markets: asia". as tokyo heads towards lunch, other things we are looking at, not in the least trade data. juliette: yes, and japan going red,at lunch break in the down .2% as we continue to see the yen way into this, and also japan posting that trade surplus for a third straight month in november. in courts continuing to fall faster than exports. having a look at the hong kong market, chinese stocks listed in hong kong are on track for their lowest close in a month, the , concernedown by .6% about construction firms, and insurers coming under pressure amid speculation that the government could step up efforts andontain property bubbles
curb outflows. above $52 a barrel. petrochina the top performer on the hang seng. kospi mixed. a boost from australia, treasurer scott morrison talking today about mefo, energy players leading gains. goodealand also having a start to the week, up by .6%. some stocks we are keeping our eye on. this is one we were watching on friday, up by 2% as it resumes trade. a prominent short seller the latest to short this company after muddy waters. down over 9%.ia nintendo going in on the lunch
break down another 5%, the longest slump since june. the super mario game very popular, but reviews are not so good and concerns about how nintendo is going to continue to generate revenue after the phenomenon wears off. strengthenedinggit a little, still down a little. one blocking that trend against the dollar that is generally weakening most other currencies today. japan posted a trade surplus for a third straight month in november as imports fall faster than exports. chief willureau give us a main idea of what the takeaways were here. >> sure. it is fair to say that exports than imports, and
therefore the trade surplus rose. was interesting was exports to asia, notably china, rose 4.4%, the first of rise since february. we had the yen turnaround and we can quite a lot over the past month or two, so obviously that is helping. economists we spoke to suggested tot we expect exports continue to recover, aided by the weaker yen, and also a recovery in the u.s. economy, so looking slightly more optimistic on the export front. ,ishaad: right, the question is not to dociding maybe anything. what can we expect from them? i think it is safe to assume that the boj will stand pat tomorrow. it economists surveyed by
bloomberg last week unanimously showed the boj holding current policy as is. tomorrow, the focus is now shifting towards next year, and any signs of tapering that they might signal. the view is that they could do this as early as april next year. as i mentioned, the yen has more inn 10% weaker than it was the previous meeting in november, so obviously that is going to be a big boost for the boj, and yields have also been because of the rise of treasuries in the u.s. partly. muchad: thanks very indeed. joining us there from tokyo. right, chinese savers snapping up u.s. dollar investment products eager to convert their yen into other currencies.
this is an exactly a vote of confidence when it comes to the yuan. >> that's right. we know they have been trying to squirrel their money offshore. this is a way they can hedge against the yuan downside, but not take their money outside, not try and squeeze around those quotas. now chinese banks are offering come at of these wealth management products, u.s. dollar and australian dollar accounts at home, offering a lower interest rate, 2% to 2.5% versus 3% or 4% on yuan deposits, but there being snapped up quickly. rishaad: one lot came in and they were all gone in 60 seconds. exactly, but it is still a small portion of the $21 trillion worth of savings. financial diversification can't be a bad thing here.
is it a worrying trend when it comes to china's policymakers. is inevitable. china did not used to have savings options. the middle class is looking for ways to hedge their bets it did. it is not so worrying as long as the tide does not become a flight, so that's why we are seeing them ratcheting up these restrictions. weeks, january 1, comes a new quota and every chinese person will be able to move $50,000 of savings abroad. if 1% of china's people do take that up, that is seven hundred billion dollars in outflow right there, so there needs to be a steady trickle not a flood. behaad: we shall indeed watching out. thank you very much indeed. malcolm scott there. has been cementing its long-term relationship with abu dhabi with a $2.2 billion deal for a stake in one of the
emirates largest oil concessions. bp will release shares to pay , giving bp 82% stake in return. why now? >> we have been working here for 75 years with adco, important work ep has had here. honest, given our discipline financial framework that we have had and meeting our obligations in the u.s., it just took us a while to work to the point where we can make this great investment with abu dhabi, and the key element there is that we have used the shares. i'll go down he will be a 2% owner of bp. for bp, it means another 160,000 barrels a day to the girls we produce in abu dhabi, so continuing a very long-term relationship, that is important for us. the economics are good for us, accreted for our shareholders,
and for bp, it brings in strategic owner of the company, which i am also pleased about. bp has worked here are long time. what wee we have shown can do technically and with management capability. we will move and work with them as they go through their transformation as a company and bring our best people and resources into it and help ask a eyes future recoveries of abu dhabi's resources, and we have a lot of experience in working in managing really big oil fields. i think that is one of the things we bring. as well as a deep sense of responsibility about the privilege of working with the national resources of abu dhabi. in many ways, it is the crown jewels of abu dhabi. >> should we take this deal that now is the right time for oil majors to ramp up investments? >> one has to have some confidence in the price. we have really retooled bp,
getting ourselves down to an efficient level. we has said we will rebalance at a $55 oil price. a year ago, we were saying $60. now $55 is clearly in sight, so we will remain very disciplined about the capital we spend, the projects we select, but it is time for bp to start growing now. we worked through so many difficulties in the u.s. that the company is now well positioned for growth towards the end of the decade. saw a historic deal by opec with the production non-opec producers joining in with some of those production cuts. how do you feel about opec in the future of oil at the moment? i feel it is very significant what happened on november 30, non-opec seriously talking about reducing their output, you have opec. some people said opec is not a
real organization anymore, it doesn't actually bring things together, and i think opec is an important organization. this agreement is significant. you can see it in the content on it -- the curtailment notices going out in the middle east. i know in russia that there is a schedule of reducing output from russia, so i think it is very serious. 60 prices between $55 and dollars seems realistic and 2017. growth in north america and china continues, so demand. trump has nominated rex tillerson as a potential secretary of state. do you think he is the right man for the job? he knows leadership around the world. he knows how to get things done. he is a very serious person. a great job,ll do not just because i am in the oil and gas industry, this man is a man who knows how to manage
global organization and knows the world. is potentially more friendly to the oil and gas industry than his predecessors, what does that mean for you and other oil companies? >> surprises are happening all over the world. , even thein the u.k. referendum in columbia, which has gone back in another , was a surprise. the elections in the u.s. were a surprise. i think we are in store for moore surprises in 2017. we are a very long-term industry, seven, 10, 20, 50 years out, so we will navigate through this. bp has its framework and discipline and will adapt to the circumstances. rishaad: bob dudley speaking with tracy alloway there. up next, the great walls great moviematt damon's enjoying a blockbuster opening
rishaad: a quick check of the latest business flash headlines. job cuts across several units in the face of slowing growth of two years of aggressive expansion. the layoffs started in the last and will for etihad affect people in divisions such as i.t., human resources, and sales. tripled overhas the past eight years and employs 20,000 people. 's middle eastern rival careem has been valued at $1 billion after receiving a 100 million dollar investment, representing a 10% stake in the company. founded in 2012 and raised $60 million last year to expand in the middle east,
africa, and asia. it is working with credit suisse to raise $500 million. a sale launched on monday trying to raise $5 billion and avoid a government rescue. pasachi's pricing shares, and price will be determined by demand. matt damon's latest film, the "great wall", and enjoyed a blockbuster debut in china, raking in $66 million, coproduced by legendary ease, a division of wanda group. why is this film particularly important? why is he getting so much attention? know, the china movie market has been the subject of huge attention from around the world, a lot of
investment by chinese moviemakers. growthe a lot of there, and this film is a test of that. it is produced by legendary, the ,ompany that wang jianlin china's second richest man, page $3.5 billion for. they need a hit, and it looks like they have one now. it is a $150 million film, so they had an idea that it would be a block luster. that kind of investment gets people watching. this is the first big coproduction where you have a hollywood star and a bankable chinese director, well known, celebrated director, the guy that did the 2000 eight opening and closing ceremonies at the beijing olympics, so there is a lot of attention focused on that. it is picked to have performed well and seems to have done that. the other point is that box office sales have been slumping the past few months after year
after year of 35% plus growth, really amazing growth, so that was raising a lot of questions, is cinema demand down are people willing less to go to the theater? or was it a lack of hits? there will be people betting that it was a lack of hits and that they can coproduced more films like this one, they will be in for success. we have hollywood loving franchise films, and also franchises that spawned sequels, so when can we expect the return of "great wall" or "greater wall" or something like that. "greater wall" is a great idea. you know they have thought about this in planning the movie. sensea franchise in that that it is a coproduction where you have a big hollywood star and a major director coming together. it was shot at wang jianlin's
new studio complex, bill does the world's largest movie studio complex. subsidies tod hollywood producers to come there and produce films, so this is a conceptual package. taking a chinese icon and paring it with these directors in a way that meshes the two cultures and the two countries, and it is designed to have that kind of east and west appeal so that it is a global hit. that is what they are aiming for. of other a couple films coming along the way that are going to follow that same track. rishaad: thank you. joining us there from tokyo. right, telling you what we have coming up. two weeks to go on the deadline for india's cash band. has the move achieved its
property numbers showing a cooling, beijing and other cities snapping month on month appreciation. itwill take a look at what means for china's 2017 growth forecast and how that will weigh on gdp. peter lewis of peter lewis consulting joining us. toggit, the fall continues the weakest level since the 1998 asian financial crisis did we will be looking at why the currency has been hit so hard on a day of dollar weakness. and of course, these spat over ,rones, the president-elect donald trump, lashing out at china and saying it stole a u.s. navy drone. we have had chinese leaders staying quiet, but some state media releases suggesting that may not last long, particularly as he enters the white house in january. we will get some analysis on the implications of that. having a look at india
at the moment. he economists cutting growth expectations for the country and suggesting the prime minister narendra modi's cash ban may have backfired. the move to scrap high-value notes. let's get more as we head over to the financial capital. what is the potential impact on the economy? what is being said currently? >> it is a tough one to answer. estimates as we have been speaking over the last couple of been that growth estimates and the impact is difficult to figure, but early indicators are that the intention with which this gi monetization of the currency was made has not gone to script. some numbers indicate that it may not have gone according to script at all.
sales depend on cash transactions and are down significantly. if you look broadly, the number to watch out for is the october-december number on the gdp front, but most private forecasters for the full financial year have cut down gdp forecast from 7.7% to 7.4%. two main points, the messaging , to take blacke money and fake currency out of the system, it's not clear whether that messaging is working. ok, what can we expect from the government. i'm sure they will put a gloss on this. >> they are. even on friday, prime minister narendra modi addressed parliament when he defended the
monetization move and called it a move to empower the poor and willdigital payments result in empowering the poor. you are seeing a shift. so far this was about black money, putting an end to two counterfeit currency that led to terror funding. now this is being pitched as a move towards a cashless economy and how this will empower the poor. the government is going all out to defend the move, but the proof in the pudding is that the action in parliament, which has ,een acrimonious, the action the budget will be presented on february 1, and more importantly , we've spoken about the goods and services tax. nobody really knows the political fallout of that and how much that will be delayed. thing is people
have been depositing their money into banks, i guess, that has been part of the intention. good for the banking industry though surely? >> it is. there has been a surge in liquidity, but short-lived special cash is a reserve requirement. so liquidity has been stable. rishaad: great talking to you. have a great day. joining us there from mumbai, looking at how this cash ban may have backfired in india. that is it for "bloomberg markets: asia". is up for the next hour and the big stories of the day. ♪
asia getting off to a softer start. tokyo taking a breather after six weeks of consecutive games. let's get the details now. julia: not the strongest start to trading. marketsa lot of asian underwater but some doing ok. a lot of the weakness is in hong kong. chinese stocks listed in hong kong on track for their worst in a month. aboutll have concern curbing capital outflow so that is having a lot of impact on the developments. also insurance stocks down. ine upside coming through the energy space. crude oil still about $52 a barrel. looking quite strong. a bit of a choppy day on the shanghai.- on the
don't read too much into that big run upcoming in on the close. we are seeing weakness, the yen strengthen against the dollar. that seems to be most of the currency trade today. a lot of currencies pushing higher against the dollar. we had japanese data coming through in terms of the trade surplus. the third straight month of trade surplus. southeast asia markets looking a little weak. australia looking good. also new zealand where you are uping the oil and gas sector on the over know -- overall regional index. doingealth care stocks quite well today. having a look at that currency
market. the malaysian ringgit is certainly want to talk about today. citizense only current -- currencies weakening against the dollar. concerns about capital outflows. we continue to see the oil story play into effect. asia -- oil being asia's largest exporter. 4.4802.the dollar, it earlier touched its lowest level since 1998. also worth watching, it is actually strengthening the most in around two weeks. pboc after the strengthened it today. we have been watching the aussie dollar with the treasurer talking about the budget update in australia. unable to hold onto that 73 handle today. china's attempts to rein
in soaring property prices appears to be finally working. prices rising and 55 out of 70 cities in november. that is fewer than the previous month. we have been tracking these numbers. they are finally taking effect. >> we have been seeing gains in new home rises falling month by month. in november, new home prices gained -- thes take a look at some of big cities. shenzhen, new home prices down by 0.3%. beijing unchanged. as you see the effects of the cooling measures that have rolled out from september in many cities and locally as well, administrations have also
brought out extra curb on properties. year over year we see the processes jumped. shenzhen up by more than 28%. than .8%. by more this is what authorities are concerned about. this big jump in prices. cooling measures to some extent but they are worried about property. this is one of the things the committee meeting was working at , they need to find a way to deflate and control financial risks. officials laid out steps on deflating the real estate bubble, including limiting loans for spec it is homes, purchases, and limiting supply. coulde said the property not be struggling. they have also said from this meeting that houses are to be
inhabited, not for speculation. do notthat they really like property speculation going on. china, of course, they are moving to tighten the economy and even allow the possible impact of that. they are more effective in terms of cooling down the market. it really depends on the market next year. 10%.ow we hold a view that the liquidity is driving the market next year. market plus in the where else are they going to put their money if not property? not a lot of options for them. we are likely to see property being a popular pick. this comes at a time when we see a shift in tone about policymakers, what they want.
have policies changed? rosalind: a big focus is managing risk. another thing is looking at a prudent and mutual monetary policy. some economists are saying that mutual is the key word. he will bank of scotland saying china has shifted to tightening already. tighter policy will be next year than this year. we have the fed signaling more hikes coming next year. we have china signaling hikes coming up next year. monetary alla, the see is going through somewhat of an overhaul. economists are saying they are not seeing the interest rate changes for china next year. if it does tighten it will be the money market and interest rates. in thethe big economies
world look like they're going to tighten for the first in the world look like they're going to tighten for the first time together since 2006. other focuses for china include -- haidi: a fine balancing act. thank you so much for that. trump -- lose its aaald rating. a balanced budget by 2021 remains -- us through the highlights of what the treasurer had to say. >> the number is the budget deficit. billionall of 37.1 aussie dollars. today the forecast shows a now or deficit for the current fiscal year. government has seen wider deficits. 2.5% estimate in may. due to contraction we saw. here is what he
had to say. >> midyear economic and fiscal outlook released today confirms the government's plan to restore the budget to balance remains on track. the budget is projected to return the balance in 2021. sophie: it is worth mentioning the keyword -- projected. we had the finance minister say that this is a projection, not government policy. haidi: you have him defending the plan to try to grow the economy. we have heard from a couple of ratings agencies. is it enough to enable them to keep that aaa? sophie: maintaining australia's rating, saying its fiscal mattress are broadly in line with other aaa ratings. applauding the governments prudent assessment of commodity prices.
while the volatilities remain such as possible housing correction and access to external financing. they do expect the deficit will be wider for longer than projected given the weaker nominal gdp growth environment and difficulties around revenue collection and spending. cutting is of s&p 40%. the s&p put the country on notice in july after a tight election downgrading the outlook to negative over the government's ability to implement fiscal reforms. done twoiament has thirds of budget repair measures but he is admitting that more work needs to be done. this admits plutko gridlock which could tighten. -- political gridlock. we are looking to see what he will do to soothe concerns over us joy of becoming -- haidi: sophie, thank you.
it's get a check of the first world headlines. john mccain and three other u.s. senators have called for a congressional inquiry into allegations of russian interference in the presidential election. saysor to donald trump there is no consensus among the intelligence agencies over moscow's rule. mccain also said that barack obama has a strategy for dealing with rushes cyber attacks. ordered more than 1200 factories to suspend or reduce production in this year's first regular for perdition -- pollution. almost nine times internationally expected safe levels. beijing is -- is one of 23 cities in china under smog alerts. the air is not expected to improve before wednesday. the surface on the bridge will be completed by next year. engineers are covering the payment and same with a 75% is finished.
the bridge and tunnel project is 50 meters long and began seven years ago. it is expected to have cost $10 billion when it opens finally in december next year. global news 24 hours a day powered by with a 2600 journalists in more than 120 countries. this is bloomberg. we have the great wall cruising to be the great haul, as matt damon's film enjoys a blockbuster debut. the process appears to be falling. what this means for the economy and the yuan. this is bloomberg. ♪
the latest business headlines. nintendo took a tumble with the debut of super mariota run, only -- super mario run. 8.4%.sses are at it had nearly 50,000 reviews in the american app store. china's leading list of developers blemish shareholder dissent for his decision to abandon players to fund -- they wanted to buy a stake in the metro group and was ready to pay up to $8.6 billion. major shareholders could not agree on the deal. to plane promised not any major asset moves over the next month. korea's hotel has retained its duty-free shopping license along with two other companies. its parent are being investigated over allegations it paid money to a friend of the
president and return for business favors. prosecutors reportedly slapped travel bans on the top business leaders. as we have been talking about, channels property sector has shown some signs of cooling after authorities issued a series of measures to contain high prices. we have had many rounds of these curbing measures. we're still seeing it decline between a 10th of 1%. is it a start of a proper cooldown down when it comes to the property market? >> it is significant. in shanghai property prices have slowed for the first time in 22 months. and 20 months in beijing. the measures are having an effect and they have targeted everything. the targeted sales, mortgages, tightening up the definition of a first-time buyer. it is having an effect.
but we have to remember, credit growth overall in china is accelerating. the end of this year, credit gdp, upabout 265% of from 246 this time last year. there is still a credit a new going on. as long as that is happening, as credit is growing faster than gdp it will have an impact on the currency. will see further downward pressure on the r&b which means the castle control restrictions left to stay in place for longer. council comingte through in saying that gdp growth in 2017 come in at around 6.5%. driven by the property market and rip up in mortgages. -- ramp up in mortgages. without that, where is the growth will to come from? >> they will not --
the constructor sector has a big impact on overall gdp growth. they cannot have both. i am of the view that the best thing china can do is abandon that 6.5% target. it is very arbitrary anyway. because it's all sorts of distortions in the economy in trying to meet it. it opens itself to manipulation of data. haidi: it incentivizes at a local level to -- >> exactly. to hit that target. ways, as amany developing, more modern economy, to set arbitrary targets -- haidi: in terms of that developing modernizing economy, look at the latest numbers and you see the leverage is shifting from corporate to a borrowing lend because they are fairly distressed with the currency and debt. greater component of borrowing. that is what you want to see come isn't it? >> there is plenty of room for
households to increase their leverage. households in china are not overly indebted. whichthe corporate sector has a problem and a huge amount of desk. -- of debt. the 10 year bond is at a 16 month high. that is having an impact on the ability of corporate to basically raise money. this month alone we have seen 40 , and it does have an impact. in the corporate sector there will be a problem. but households, they could increase their borrowing and you probably want to see that to make the economy more consumer driven and not to the dependent on spending. haidi: is that a sign of things to come for 2017? >> yes. it was spectacular last thursday. it's a futures go down for the first time ever. there were big moves in the bond markets.
you have with that the prospect of three fed rate rises next year as well. you have all the restrictions going on in china or capital outflows. there is a quit -- a credit squeeze as well. they are really tightening at the moment. it is having an impact on the bond market. haidi: we see a brighter incentive for chinese corporate to go outside to raise dollar-denominated debt. how does that play out for asian debt next year? re: going to see oversupply as chinese companies go across borders? >> there is a lot of appetite for asian debt in general. it is higher in the region than what you would see then in europe and the u.s. it is difficult for companies to raise dollar debt, particularly with all the restrictions. they cannot invest overseas, they cannot move overseas easily.
it reduces their demand to actually raise that debt. haidi: where do you see the yuan going? that has driven the ring to 1998 lows. does that exacerbate panic when you have that situation playing out? >> it does. whether they be stocks, currencies -- when you have moves that the central authorities do not like, they then start putting in restrictions and controls, just make the situation worse. the natural thing for investors to want to get their money out. at the moment we seem to have a trend of moving away from free markets in china, malaysia and elsewhere. maybe markets will find their true value. whether currencies or stocks. that becomes a sofa filling prophecy. it increases the turmoil and uncertainty. haidi: i'm going to ask you what policymakers should do, but i'm
♪ haidi: welcome back. donald trump has further exacerbated tensions with china over a seizure of a u.s. navy drum. the president-elect we did the unmanned vessel had been stolen also that beijing should just keep it. our asia government reporter is here to talk trump and china. was is a reaction to what trump has been doing? >> china is taking the drone. i don't buy that argument.
people have been saying this is a provocative act from china and they're reacting to a trump had to say about the one china policy, receiving a telephone call from taiwan. others are saying it is a response to what harry harris was saying. he was making some comments about the south china sea. i tend to think this is something that was much more optimistic. you cannot say, ok, in response to that we want to get a drone, because they are not so easy to find. you cannot planet. that is why i think it was opportunistic. it would not surprise me if the chinese navy is being instructed to -- if you can get a drone, get one, we would like to see what is inside. personally i think -- this is all speculation -- personally i think this was an opportunistic act and they scooped up this drone inside of an unarmed u.s.
naval vessel which could not do anything about it. there is no way they could even escalated the situation. x-ray, theyit an get a good luck. -- good lok. they have their own draws but not these ones. trump has been tweeting again and he says keep it. >> that was an extraordinary backflip. unprecedented, he spelled it wrong. he said it was an unprecedented move for china to take it. then he doesn't policy backflip and says why don't you keep it? this is an example of trump not thinking through policy, not sending clear messages. this is a big risk. -- not such a be risk now that he is only the president-elect, but want to
becomes president he needs to think very clearly through this policy. he needs to take advice from his policy advisers and maybe he needs to have a twitter account taken away. haidi: what the chinese media has an saying is look, he is president-elect right now, we will give him a pass. but once he is in the white house -- >> exactly. -- at thisnot want stage china does not want to up the ante. one can assume by doing such an act of deliberate is taking a u.s. drone -- and honestly we don't believe the chinese version of events that this drone was causing a popsicle -- a possible obstacle. 500 meters away in full view of the u.s. navy. it seems it had a little --
♪ 1129 in hong kong, and 12:29 p.m. in tokyo. aina's leaders are pledging greater drive to rain and risks snow year, emphasizing prudent and neutral monetary policies. for thes the scene first u.s.-china tuning seen since 2006. president xi jinping and top lieutenants of vowed to safeguard the financial system and deflate asset bubbles. airbus has suffered another blow to its troubled a380 program with iran dropping the plane. order -- touced its
run reduced at its order to 100 aircraft. airbus has cut production by more than half to one plane a month by 2018 has demand has dwindled. emirates is the only carrier to give the aircraft at major role in its fleet. future of the 90 king to could be under threat with scotland saying it wants a new referendum on succession if it is forced out of the european union by brexit. as pressure to therese in may as she promised to listen to the people before opening talks in brussels by the end of march. the road surface on the hong kongzhuhaimacau bridge will be completed by the end of the year. engineers are covering the pavement with asphalt and say more than 75% is finished. the project is 50 kilometers long and work began seven years ago. it will have cost more than $10
billion when it finally opens next year. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. all right, tokyo resuming trade in the afternoon session. let's get back to the markets. we are seeing japan come back online and still holding onto losses, down by .25%, the yen strength story, but also geopolitical tensions weighing into the japanese and chinese equity markets today. the hong kong market is the worst performer in the region, down .8%. chinese stocks listed in hong kong on track for their worst close in a month, a lot of concern about the property developers and plans to curb property in china. fromre seeing upside energy players as crude oil thee $52 a barrel, flat on
shanghai, also korea, taiwan, and philippines, underwater, but australia up like .7 percent, and a strong finish in new zealand, higher by .5%. the currency market is the other thing you want to keep your eye on today. we have seen the dollar lose ground after that strong grand it has been on. strengthenthe pboc the yuan fixed today. the offshore renminbi up the most since september 1 and the strongest out of asian emerging-market currencies. meanwhile, you have seen the ringgit fall against the dollar. at one point, that sharp plunge in the dollar-ringgit relationship, the biggest fall since the asian financial crisis in 1998.
having a look at some of the other currencies, the won under pressure as well. it had that big drop on friday, the biggest plunge and one month, down another .2% at the moment against the dollar. if we have a quick look at the onenese yen, that is currency that is strengthening significantly, up by .3% after hitting that 118 level during the weekend. having a look at the bond market, strength coming through in the 10 year yield on the australian note, up like two basis points. elsewhere, yields lower, suggesting a little bit of money going into the bond market in asia today. haidi: thanks for that. getting data from japan before the boj's meeting tomorrow, posting a trade surplus in november.
imports continuing to fall faster than exports in japan. our managing editor with us in tokyo, neither of those data points were as bad as we were expecting, but not great good what are your main takeaways from this? >> i think you summed it up nicely, a mixed bag. volumes of exports and imports continue to fall, albeit at a slower pace than forecast. the value of shipments to china rose for the first time since february, and china is japan's biggest trading partner, so if that could be sustained, that would be a reason for optimism going forward. the question is the yen. a lot of analysts and tokyo are saying the yen weakness has overshot fundamentals and makes plain why the yen is rising today. of the boj meeting tomorrow, are we going to get some christmas surprise from governor kuroda? >> i think the smart money says
we will not get a christmas surprise. pat, butill stand looking forward, there are a lot of interesting things happening, reason for optimism in japan. governmenthe tomorrow morning to upwardly revise its forecast for gdp in the fiscal year starting in april 2 1.5% from 1.2% on the back of recent developments, the yen weakening 10% over the last month, oil prices looking buoyant, and that is good for reflationary pressure in japan, and that adds up to the possibility some analysts are saying the court cpi could be a 12-15 months, and the boj could start normalizing policy as early as next summer, either by pairing the purchases of jgb's or by raising its target for the 10 year jgb yield by 25 basis points, so there is
a lot coming down the line, but probably not for christmas. haidi: just quickly, we are fiscal budget announcement this week as well, i believe. , that is another positive for japan, prime ministers abe announced a spending plan that was supposed to start filtering through the economy the last few ofths, inklings of signs that, capital expenditure has been more solid than it was in previous quarters, and we are still waiting to see the full brunt of that fiscal stennis come through. haidi: we will see whether that follows in line with this trend we are starting to come together for 2017 of more fiscal than monetary heavy lifting done. brian fowler, our japan and korea managing editor in tokyo. touch thes ringgit lowest level since the asian financial crisis as investors sell down emerging-market
assets. interesting, this comes on a day of dollar index weakness. what is it in particular about it,ringgit that is making it has been the worst hit out of asian o emerging-market economies. , itike you are mentioning is other emerging markets. had promised to crack down on currency toculators on the ringgit its non-deliverable forex markets. trepidation about capital controls, although the central bank has taken pains to say there is no such thing. haidi: what about fundamentals? thethere concerns about how economy will fare going into 2017 that is also driving this bearishness? >> private consumption seems to
be holding up, an investment is as well. the conley is expected to grow 4.5% this year and is much as 5% next year. morning saidk this the economy seems to be very robust, so that seems to be doing ok at least. into clearly going a faster than expected trajectory when it comes to fed tightening. are we going to continue seeing this negativity, not just across , but other assets as well. i know one thing at play is this high percentage of foreign ownership and it comes to malaysian assets. >> yes, especially in the bond market. we are seeing high foreign ownership there. the the equity market, maybe we see some changes. after seven weeks about close, we did see some inflows coming in, and the could be the start
of the trend of money haidi: flowing back into the equity market. thank you so much for that. haidi: thank you for that. whichg about the ringgit, did hit the lowest levels since the asian financial crisis at one point in the session today. economists cutting growth expectations for india, digesting prime minister narendra modi's cash ban may have backfired. we have more from mumbai. ban been so cash far, and these downgrades are unexpected for india, which was meant to be the great hope of the emerging market growth. what you are seeing is a cut in forecast. it hasn't quite gone according to script. let's take a step back. modi announced the decision to withdraw 500 and out rupee notes to squeeze
currency and clampdown on black money. tore is little evidence prove that those objectives have been achieved. it has affected the life of the common man and commerce across the border has been affected. economists have cut down india's gdp forecast for the full financial year two 7.4%. contraction.als car sales are down for the first time, at the slowest pace in nine months. for majorrs account cash transactions are down as well. losses acrossn sectors, so it has not gone
according to script. numbers for the full year are awaited. haidi: how is narendra modi managing the message, if you will? according toly plan. on friday, prime minister drivera modi defended the and said this was just one step in the larger battle to combat corruption. signaling the government might be announcing a few more measures to tackle corruption, and this might just be step number one. the government clearly is shifting the goal posts. first, they were talking about black money, and now you are seeing messaging change to this move being about the general payments and empowerment of the poor and so on. parliament was a complete washout with the principal opposition party, the congress,
trading corruption charges against each other and no one was willing to blink. action shifts to the end of january, the all-important union budget club will be presented on february 1, and the most important game changing tax legislation. we don't know how far all of this will delay the implementation of gse. thei: that is going to be game changer, if you will, for 2017. are we expecting that to be put through smoothly? things, with these could end up and a political stalemate, if you will? >> your guess is as good as mine. builtthe consensus being , it brought down a
lot of economic indicators. disruptlf is a large ive event. that political consensus is unlikely to emerge. many experts point out that the nuts and bolts are still yet to have fallen into place, so unlikely to happen for 2017. the other aspect is the announcement in 2017 as a mitigating measure after a disruptive event like de-monetization. haidi: thank you so much for that. plenty more ahead. we will talk about china, trump talking tough when it comes to chinese trade and the currency,
haidi: welcome back. this is "bloomberg markets: asia." i am haidi lun. a latest check of the business flash headlines. saudi arabia may list aramco in new york this by the new u.s. law that allows victims of the 9/11 attack to sue the kingdom. reality is considering venues for what could be the biggest share sale ever. the decision is still a work in progress. saudi arabia dismissed speculation that it would reduce u.s. investment because of law. job cuts across several units in the face of slowing growth after years of expansion. sources have said the layoffs started in the last few weeks
and will affect between 1000-3000 people for etihad. etihad staffing has tripled over the past eight years and now employs 20,000 people. uber's middle eastern rival $1eem has been guided at billion after receiving $100 million from saudi telecom, eight 10% stake. careem was founded in 2012 and raised $60 million last year to expand in the middle east, africa, and asia. it is working with credit suisse to raise $500 million. by ourjoined now panelist. thank you for staying with us. had swans that weren't black swans. >> the key will be u.s.-china, isn't it? believe donald
trump isn't yet president. it feels like he is already. >> there is an argument that once he is, he will temper -- >> i don't think he will. i think he has a style all of his own. >> governing by twitter? >> i think we will see more of it. he sees social media as a legitimate way of getting his message across to the people that elected him. he does not trust the mainstream media and thinks it is all biased against him. i don't think it will stop. youou were earlier saying expect tighter controls to remain in china. we do have the yuan at an eight year low, and looking at capital outflow curbs, we are expecting buying a foreign currencies to exceed $50 billion, so how effective are the curbs. effect are having an
certainly on businesses, because they are struggling to do their everyday normal operations, just remitting dividends back to their parent company is moving a problem for some overseas companies based in china. be interesting is that individuals have the ability to move $50,000 out of the country a year, so that all gets reset at the beginning of the year, so it will be interesting to see if the authorities try to curtail that as well if people start to move their money out, because at the will gethe renminbi weaker as long as credit growth is growing faster than economic growth in gdp growth. of course, the other side is the strong dollar. so it is hard to see the renminbi not going lower at the moment, therefore pressure on individuals and on companies to move money overseas. key problem.wth a cree
at the end of last week's meeting in beijing, leaders in china were saying perhaps possible tightening. >> the reason why there is still fast credit growth and it is accelerating is because of the gdp target. as long as there is pressure on the region's to make that 6.5% local, the easy way for governments and central governments to do it is through stimulus. we see this time and time again in countries all over the world where it looks like growth is not meeting the target, they resort back to printing money and stimulus. >> 6.7%? >> no, no. >> it's going to hit its target? >> it's a minimum of 6.5%.
as he only country in a world where we know and february how much it will grow by by the end of the year. gate could morph into something worse. a different relationship with china, a more antagonistic one, one where china does not get a free ride like donald trump says they do. >> this is the risk when you conduct foreign policy by twitter. >> and not think. >> come on, someone did think. maybe it's not what other people would like him to be thinking. >> by his own admission, he doesn't like the intelligence briefing, doesn't read them. he has his own advisors. we are seeing probably the against change simultaneously and foreign policy, economic policy, and trade policies since nixon.
there is an enormous turnaround going on, but at least next and had henry kissinger to help him, who was ironically one of the architects of the one china policy being questioned by mr. trump. a are you going to send christmas card to the white electing ak you for government that will allow beijing to step into the for and global power? at least in asia, or are you nervous about how to deal with this president who as you say is very inconsistent and unpredictable? how think they don't know to deal with him at the moment, and that is why you are seeing a fairly muted response. at the moment, he's not president yet either, so i don't to necessarily show their hand as to how they will deal with the future president. i think they are still working out their response. this is a very uncertain
situation for them. they are not sure what he will do it all they know, they don't like what they're hearing so far. the one chinat policy changed. they don't want to be challenged in the south china sea. >> thank you so much. merry christmas. peter lewis of peter lewis consulting. in just a moment, mix a hollywood star with a local director and launch a blockbuster. matt damon's "great wall" is next. this is bloomberg. ♪
much attention, i presume not just because matt damon is in it? no, it is not just the start. it is the billionaire. it is a blockbuster, and it is one of the fastest-growing movie markets in the world, poised to overtake the u.s. next year, so the billionaire is wang jianlin, the wanda group cofounder. he has purchased legendary, the so thisehind this film, is their first big china coproduction, so there is focused on whether or not this is the recipe for success. you have a bankable star like matt damon, a hot chinese director, the same guy who did the opening and closing ceremony for the 2008 olympics. will this formula work? the opening weekend seems to suggest it will. that is a big relief because chinese box office has been slumping for the past three
months after year after year of gains in excess of 30% the year. has attracted a lot of attention, but there has also been a focus on the question of how much movie do chinese really want to see? do they just want to see the good stuff, or with they come in to see whatever? haidi: we know hollywood loves a good sequel, especially when the first one has been even moderately successful, but do we expect a sequel to "great wall". i think rishaad called it "greater wall?" will see a sequel, we this formula used again, the idea that you get a top hollywood name, pair them with a chinese director, make the film in china. that is very important. they made this one at the studio that is the world's largest now, so there is a big focus their as well. haidi: thank you so much for that.