Skip to main content

tv   Bloomberg Markets Asia  Bloomberg  July 23, 2018 9:00pm-11:00pm EDT

9:00 pm
rishaad: we has a modest gains after a positive rose in new york. investors are watching the alike fine. rejecting china president's claims of currency manipulation. this will be determined by the markets. alphabet sees wall street shares climbing. better than anticipated sales and improving at business. in hong kong, i am rishaad salamat. haidi: i am haidi, instead day. -- in sydney. how much are volvo shares worth?
9:01 pm
markets: asia.rg rishaad: markets coming on right now. let's have a look at what is happening in singapore as we get out of the gate. shares are moving to the upside but it is flat. , these are actions of our. rising bongos are approaching that 3% panel, 2.95 percent yield on the 10 year. haidi: speculation over the bank this.an tweaking it is wakening the bond market from its slumber. you can see that 10-year aussie benchmark as well.
9:02 pm
elsewhere looking at market trading, getting started, this is for taipei and malaysian stocks as well. they are failing to gain traction. we did have some gains coming through from the wall street session. let's look at how we are setting up for china where all of the action or inaction is happening. action for see some the movies on monday. futures are pointing higher. i will show you one. they're looking to extend above the 683 handle. this will cut the forecasts for the yuan to 685 by the end of this year. this is as the currency deepens a six-week side. policymakers are similar letting go of some of their target around the deleveraging campaign. we are watching for that potential left.
9:03 pm
be the best two-day gain since august of 2016. china unearthing measures. including these measures that help us banking shares on monday. construction stocks were also listed. there is more talk of a potential super cut in the second half of the year. the chinese can is continuing to capture the country's imagination and fears. even xi jinping calling the incident shocking. this is after a since they tumble. you can see hello john makers being taken along with it. 17 players being followed by the daily limit. they are taking measures to contain that fallout. they were restricting's -- sale shares. we will be going to what is happening with the white house. they are upping the ante on paris. let's get the first word news
9:04 pm
with paul allen. : president trump says the u.s. will not accept bad trade deals in the year of economic surrender -- he says it is over. he says the u.s. has been taking -- has been taken advantage of for too long. the president's anger over trade does has led to dispute with allies and opponents across the world. theresa may enter top diplomat admit they are preparing for a no deal brings it. talks with brussels have stalled as the eu says it doesn't have a clear idea of what they want after the split. jeremy hunt told germany that britain won't step back. they are to keep close ties with the single market. we arere making sure prepared for no deal. the government is stepping up his preparations for no deal.
9:05 pm
it only makes sense to be prepared for more contingencies. i am working to get a deal that parliament will support. this would be a good deal for the u.k.. >> googles parent jumped to make trade after posting another strong set of results. is an awesome hundred million more than analysts were expecting. google's ad business or 24%. mostly on mobile and automated messages. apple that reported to different product profit figures to account for a $5 billion fine for the european union. global news, 24 hours a day, powered by more than 27 journalists -- 2700 journalists and analysts, i am paul allen, this is bloomberg. china is entering a new easing phase. software figures were may boost the monetary condition. tom mackenzie is watching this.
9:06 pm
a pretty clear policy shift. tom: it seems that there's easing bias that we are talking about is starting to allies. this was shared. they put out the statement saying that they will pursue a proactive fiscal policy. i am going stimulus, it is likely that they will be walking back from some of these tougher deleveraging moves or deleveraging targets. this comes after a number of moves that we have seen from the policymakers in china.
9:07 pm
we are seeing those loser was around asset management. they give the financial sector a big -- bit of a lift. we have these reports on the fact that some of the banks have been told and encouraged to buy some of this low-grade bonds. we have had three cuts to the reserve requirements and speculation, voices now in china suggesting that you may get one more in 2018. it seems to be pushing back against some of the deleveraging taking place. we saw that they drop up in june. there was this concern of the private sector won't be getting the credit that it needs. it will start is the. that is what you are starting to see some of these spigots listened by policymakers here to try to make sure the credit is going to the right places. classic balancing act that we have been talking about. they don't want to see that financial risk double up to the service. they want to make sure that credit is going to the right places.
9:08 pm
if you don't see the step up in private investment, you could get one or possibly two more this year. china is also pushing back against donald trump's claims that they are devaluing the currency or a competitive advantage. what has beijing been saying? tom: this is no surprise. this is from a foreign ministry briefing. u.n. -- using the aren't using the yuan as a tool. would benefits from this drop. it is within that banned of 2% on either side. there are some economists that would support this view saying that the macroeconomics and what we are seeing in the feds and the u.s. and the pboc, the weaker yuan has jumped.
9:09 pm
the offshore was about 6.83. weakness again today. it is now a key component in this trade were between washington and beijing. at least as trump sees it. >> thank you for that. let's go over to singapore and let's speak to kelvin tay. we know that these tariffs on the way. they are shown to have very little economic impact. however, the second impact is known to be doing worse. do you think that has largely been ignored and people are of the two complacent? i think it depends on which markets were talking about. equity markets, there has been some complacency.
9:10 pm
i don't have u.s. equity markets are in any way reacting to the growing trend between the u.s. and the rest of the world. i think where the asian markets are concerned is there coming operative sharply. asia is now basically trading near where it started at the beginning of the year. china and asia in particular have come off pretty sharply. they are not trading at a dead -- 5120% discount. i was think at the reaction has been mixed. in some markets, they have been stronger. in other markets, they were not affected yet. rishaad: how would you advise your clients to prepare for what might happen? kelvin: we have been asking them to rebalance and readjust their portfolios. we believe with the current --vision to the u.n. -- yan
9:11 pm
yuan. some of the stocks have nothing to do with the trade dispute itself. this. trying to stagger that not been able to get into this in the past 12 or 18 months. in asia, it is cheap right now. 6.80.an is at staggeringually been the investment into the sector. this: i want to brought point. this is one way of looking at what shop was talking about. -- rishaad was talkuing about. this part that is
9:12 pm
skewed by the index, is this tell you that the fragility of the market is something we should be looking at here is to mark -- here? could this be a development in this trade war? kelvin: absolutely. concerned,re rish is on a database is -- daily basis, you could see this jump like a did early on. volatility is a lot higher than last year. don't forget that volatility was at historical lows. we are still a little below the 80 year average. i don't think we are going to exceed that. the chances of the 200 billion more with extra tariffs coming through, we think that is likely to come through at this point in time. we think the markets are priced
9:13 pm
into some of the other classes. where the u.s. equity market is concerned, i don't think that risk has been priced in enough. it is likely to breach 20% year-over-year. haidi: i have a quick question safety scandalne that has enraged all of china. what does it tell you in terms of whether or not we should be thinking this is a red flag. kelvin: this is what investors need to be aware of when you're investing in companies like that. more of that will happen in the future. we can't assume this is a one off. china's exit going through what a lot of the west has gone through. they were actually starting to industrialize. don't forget that in the last three or five years, a lot of
9:14 pm
these ruptured not just in china but in japan, germany and the diesel emissions scandal. or of these emerge. when we invest, we have to be aware of the risk we are investing in. we have to not but all of our bigs in one basket. -- eggs in one basket. haidi: kelvin tay will stay with us. on, volvo cars may have hit a speed bump with evaluations far below estimates. this is bloomberg. ♪
9:15 pm
9:16 pm
you are watching
9:17 pm
bloomberg markets. at 678. is 678.91. bankinge high-level liquidities that are reasons for why they should skip the operation. from get some thoughts kelvin tay. the dollar is not really doing very much. another legl seeing down when it comes to yuan weakness. i want to get your views on what came out of that state council. greater a shift toward fiscal spending. how does that inform your stock picks for china? kelvin: this is brought up in the broader perspective of the
9:18 pm
fact that they were going through this last year and in that sense, is the need to type in this dispute. that will be very negative for the various classes and in particular the bond market. we have seen some of the issues default. the currency has actually weakened this year. some of the data has been coming out. that is actually a reaction to that. i don't think it is a deliberate action in the part of the pboc. nonetheless, on a short-term basis we do expect that the chinese yuan will trade weaker. it might actually reach a touch yuan isven where the concerned over the next couple of months. rishaad: i will bring up a chart here.
9:19 pm
what it is saying is that the yuan is not just weaker, it is weaker against a whole gamut of currencies. you are just alluded to this. is this reflecting fundamentals race to thece a bottom? kelvin: is about fundamentals. when you look at global exports across the board, they are softening. not all domestic exports were coming off sharply. that is not a surprise. the first quarter numbers this year were very strong. we don't expect global exports to be able to sustain the number for the rest of the year. we have been seeing that the first quarter numbers were way too strong. you should see some softness on the data coming on. this was a delivered attempt to
9:20 pm
appreciate the county. u.s. he pointed this out. -- you had actually pointed this out. we see the chinese benchmark here, they are really following this. this is to the most in about two years. this is an early session. is this really best entre speculation that the bank of japan may be tweaking the control policy or is it on signs that the stuff is already taking place? >> there is the sudden realization or moment of reckoning. >> it is an suspicion. this will increase the yield of about 0.2%. sparkore, this should
9:21 pm
something with a japanese banks are concerns. expect the bond market to move on the back of that. you need to do that. the fact is that the japanese central bank is now actually controlling as much as 95%. if the japanese government was year, then this next they really need to ease off on this as well. we do expect some form of measures to come through in the next week or so. rishaad: thank you for joining us, kelvin. you can use gtd go. you can look at the charts that we have been featuring. you can catch up on the key analysis that we have been
9:22 pm
featuring. this is bloomberg. ♪
9:23 pm
9:24 pm
haidi: how that jumped after reporting a strong second quarter. google is still raking in marketing dollars from advertisers and that has helped the company moved the on costly regulatory troubles in europe. but get more on the trading action. in terms of that reaction, what are the biggest takeaways for investors out of those numbers? >> the shares jumped 6% in extended hours. that will translate into a strong tuesday on wall street, --ticular for the fans fangs. it won't bring momentum back to the stocks. the other thing is it was about mobile advertising that was really the highlight. second-quarter sales, minus the partnership has came to 20 -- 2.4 billion. that was during the second quarter.
9:25 pm
the advertising business grew 24%. most of that came from mobile and automated ads highlighting the mobile advertising that did very well. they had go with that huge five going dollar fine and ordered it to change its android soft where. bold -- will there be anything like that on the conference call russian mark -- call? >> how does this going to impact their revenue going forward? they had like it is not that big a deal. this is the largest antitrust fund in history. we just found out about it last week, it was for violating competition law with the google and android mobile software, they bundle things. the eu does not allow that. let's listen to the ceo on why
9:26 pm
this is not a real problem. >> we will always take the constructive approach. we will take the due process available to us. we are also looking for to finding a solution. show up in numerous android users and so on. there is more work to be done. i think it will become clear as we go along. i am confident that we can find a way to make sure that android is available at scale. even after the record find, the company still generated $3.2 billion in net income. the gross margin beat estimates by the widest margin since 2010. rishaad: thank you so much for that. that was su keenan. the countdown to the open here in hong kong. .1%.market wise, it is up
9:27 pm
the open for the hong kong market is coming up next. this is bloomberg. ♪
9:28 pm
9:29 pm
counting down to the start of the trading day. that is the weakest one we have had in a year. this is all against this backdrop of donald trump suggesting that what we have is a currency manipulator for its manipulation taking place in beijing. deals -- yields are moving to the upside as well. china is trying to kickstart the economy to some extent as well. last but not least, we have a
9:30 pm
day where it was a mixed performance, u.s. equities have been the big story that. the victimant again of donald trump's higher. is a lobbyist for amazon. that was on the backdrop of alphabet having falling revenues. this is the tale of two markets with shanghai and hong kong coming through here. they are extending gains for a third session. i want to show one segment. chinese backers are continuing to show a tumble. fellow drug makers are continuing to slide. over in hong kong, something is adding a quarter of a percent. yuane seeing the offshore continuing to slip.
9:31 pm
this is a china's shift toward using. we are washing for more policy signals from china after a notable change in the state council meeting. it is favorable to sectors sensitive to investor demand such as industrials and materials. we are also seeing a move in the bond state 10-year gilts. rising seven basis points. the last word on what is going on with the currency as the offshore rates are moving toward a one you love. internal andth external mountings. this is also against a basket of currencies hitting in august low. calvin -- kelvin tay said that the chinese yuan is not appreciating against the dollar. haidi: this is the start of the
9:32 pm
trading session and china. in hong kong as well. this is a heavily retail dominated market. the onshore market is individuals driving 85% of china's equity trade, some of them seem to be throwing in the towel on what has been a pretty up-and-down few years. this pessimism is evident with the lowest market turnover amongst a must for years. let's look at all of this. they have a bit of a sense of humor about it. we are seeing jokes circulating social media about how stocks make absolutely no money. it is the eighth bear market in 10 years. you can press -- sense frustration. it is not just of the jokes going around, the black humor they are using to talk about this. we are also seeing the lowest
9:33 pm
turnover. it is very indicative. retail investors are the majority of the turnover in china's equity market. also, mutual funds are pulling out. they are cutting the equity holdings in the second quarter to just 13%. that is the lowest since the earliest data that we have which is 2003. the increase their bond holdings. you can see the risk off sentiment there. also, it is not just that, we also have stock accounts growing , the growth in stock accounts has slowed every single week. since january, it shows how waning interest, we are seeing waning interest in china's retail investors. it is not surprising given that trillionts have lost 3 dollars since -- $2 trillion
9:34 pm
since january. it is quite a loss of confidence for the retail army onshore. rishaad: we have been here before. we see how they go from one asset class to another. >> exactly, turnover is so high. it is a speculative market. that was one of the criticisms they had when they wanted to add these stocks. rishaad: tell me about the jokes going around. one of them is the most sincere about of everlasting love from the husband. all losses from trading stocks. the other one was going around mother's day. the shanghai composite was at 2000 points when my mother took me to kindergarten. this was when my mother took me to high school. when iints from graduated from university.
9:35 pm
i wish my mother everlasting youth. perhaps they could not give up their day jobs. let's have a look. on's look at what is going on first word news. paul: japan's manufacturing segment lost momentum in july. the decay pmi came in down from 53 in june. it is the lowest since november 2016. output declines and the index for stocks have finished. afters through to june reaching a 30 year high. mexico is said to be stepping up efforts to clinch agreement -- an agreement by the end of august. president trump is talking about a dramatic deal in the works. he says he has having positive
9:36 pm
talks but declined to give details. he said he is not aware of any deal but he says he is open to talking to the trump and ministration. the greek government has called for help to bring wildfires on the outskirts of athens under control. to fire front on either side of the capital have left at least 20 people dead and destroyed up to 100 homes. dozens of people have needed hospital treatment for burns, firefighters from across greece are battling the flames, act up by water bombing aircraft. are showing a possible showdown this week as the company prepares its final offer. the positions at the company and union remain far apart after more than six weeks of talks. union leaders rejected the first opera which included no real pay rise and a bonus about half of what workers were expecting.
9:37 pm
the philippine president has called for legislation to call the fastest inflation in five years. this brings wealth and power be on the capital. in the annual address, they asked congress to remove caps on rice imports. he also called for constitutional changes to establish that arose him while bowing to -- andhis will be a relentless chilling event. thanad: powered by more 2700 journalists and analysts in more than 120 countries, i am paul allen, this is bloomberg. mentioned --as
9:38 pm
mentioning, china investigates new easing measures. joining us is ken cheung. ubs ag wealth management. i think the pboc was saying that there easing bias. it was in regulation. this was a strong bias and also, i think it was quite shabby in recent months. it is shocking the markets.
9:39 pm
they believe it is rather steady. it is from the 612 or the 616. they give up defending the currency. it is really shocking. right now, i think investors are testing the pboc tolerance. i went to the pboc, they said they would be aware that after bunch ofg touch and eating measures, it will go further. ken: i agree with you, i think the pboc is easing bias. regard, they said the remnants would be weakening. it is very different from this.
9:40 pm
i think the pboc is -- i think they are adjusting this. rishaad: this is on the of a sweet spot for the pboc. they are getting this weakness without the outflows. how far do you think they will let it go? will they intervene at any stage? will they continue to allow it to fall? ken: investors are asking this question. i think the pboc is thinking about how to stabilize this. historyat the very long of the exchange rate, it ranges pastsix to seven over the years. i think it is a target for the pboc.
9:41 pm
they will try to introduce conduct to stabilize this. weakness, itrther will really reinforce market expectations on the pboc. they may be using weakness as a trade were true. war truth. this is a bit worrying. think the widening of offshore spreads -- it is traditionally indicated it should be monitored for the expectation. dohink the pboc would not anything to the management. target is onnly
9:42 pm
the exchange rate. be need to be ready. rishaad: are we seeing any followthrough with this? muchre talking about how black humor there was with this. about theere jokes yuan. this was another huge pressure on the equity market. wherever the yuan was weakening before, that was for foreign investors. any chinese assets were depreciating. they may be try to hedge against that weakness. we are seeing that. of course, there are other concerns. withve had the weakening signs of increasing slowdown. it is the trade war and everything else. people have been exiting.
9:43 pm
maybe there is a silver lining. rishaad: there are ways of getting money out. this some of this coming down to people sending money out of the country? stuck in thishis part of the world where emerging markets are having emerging dollars repatriated -- repatriated back into the u.s.. we didn't see this kind of phenomenon right now. this is larger and on the other hand i think the pboc is really interesting. this is an international currency. this will be much easier for them to convert. they will be saving into the u.s. dollar. compared with two years ago --
9:44 pm
we did not see much. rishaad: it goes to the spread with the offshore yuan and the onshore yuan. that is reflected here. if you go with the offshore yuan, it is easy to convert into dollars. ken: this is a one-off. that is the reason that these are widening. other point, how concerned are you that this will escalate into a serious currency work? can see how donald trump react when he feels like people are playing him. twitterget all capital messages about what the pboc is doing with the yuan? ken: if the market recognizes that the pboc is engaging in a currency work, they will rise
9:45 pm
up. strategy forest china right now is to commit to airlines. i think it will make the other trading partners angry. it will be more difficult for china to get out. we will continue with what we have on the way. we are not looking at not great expectations. investors have valuations love. that story and more on the way. ♪
9:46 pm
9:47 pm
haidi: time to take a look at some of the market movers. sophie is looking at this vaccine scandal attracting from stern words from president she
9:48 pm
-- president xi jinping. by thehave this falling limit -- on -- technology is rising as much as 17.5%. they are announcing new business activity. this will feature three detect those it. we are seeing chinese construction stocks gaining in hong kong. you're seeing a decline on expectations that financing will be easier to access. this oil build is getting. -- gaining. rishaad: we have initial feedback sent to value volvo below estimates. that means that it could stay private.
9:49 pm
china was thinking as much as 30 billion. peerses this compare with such as daimler and bmw? >> the initial range of 30 billion was several multiples above. now that they have seemed to lower the price range there talking about, it is a slight premium to peers like bmw and daimler. tesla as well. what does this mean for the company's ipo here? >> if they're not getting the valuation date were originally the valuation could become it in hong kong.
9:50 pm
they were planning on listing in hong kong as well as sweden doing to do a listing. this hong kong has -- market has traded. do you have any other clues as to the tries for the valuation? >> i think it is the hong kong stock market trading down. also, the peers like bmw and i might have been down since may when the 30 billion valuation target was made. rishaad: let's move it onto what is happening elsewhere with the ipo bonuses gaining popularity among chinese companies. a billion dollars. there are no strings attached in some cases. let's go to our asian tech reporter. >> we are starting to see a pattern emerging among all these
9:51 pm
technology ipos that are happening this year. that is the fact that companies are getting big multibillion-dollar bonuses just for going public. we saw one of the filings with e-commerce company coming out of china. what is this concept over ipo furnaces? >> it is attracting attention. we have seen stock awards given to ceos around performance targets, things like getting your revenue up or your profits up in a certain amount of time awardsng those big stock to ceos for performance. we have seen that would elon musk and tesla. here in china, what we are seeing is this no strings
9:52 pm
.ttached situation congratulations. we are proud of you. just a little eye-popping because of the situation where there is no kind of performance goal attached. >> is that a red flag for investors? >> that is the point. if these founders are already such a big part of the company running the company, having more voting power over the company, could they give themselves bonuses anytime they want to? could this be more bonuses for themselves to come? isally, the best kind of a the payments that are tied to performance. when you see a company giving up
9:53 pm
payments without any performance targets, it raises a red fight for investors going away. -- red flag for investors going forward. banjo. was shelly let's get you a quick check of the business flash headlines. iphonesst i found -- are said to come up short against rivals. they all trail the latest offerings from samsung and google, especially with internet speed. the iphone is lagging behind. rishaad: this group europe cheap overuit after being passed to another for ceo. be ship is trying to
9:54 pm
steadied after the sudden loss of market. haidi: analysts are raising new questions about the future of tesla after it asked supplies to give back some cash. that his newists model of paul them into the black. said -- thet he'll appeal mean something could be wrong. tesla has tried to ramp up production. rishaad: berkeley is said to be consuming to consumer banking in india. the bank withdrew from the business in 2011 but we are told that it aims to rebuild this operation through digital channels. this is in australia and april 2 years after walking away. 90 is raising pay for more than 7000 staff around the world after an internal review of compensation. it will boost salaries 10% over the global workforce across all
9:55 pm
jobless, like he also changing how it determines bonus payouts. from now on they will be faced less on specific individuals and teams. there are plenty hit about shrubs iran threat. is he going to the same playbook he used for north korea? fire and fury. terminal descriptors are reading about goldman sachs. the david solomon era is kicking off. over on tictoc you can catch a look at the tokyo 2020 mascots. we will check out the stories that are trending online, on twitter, on the terminal. wanting more to come. this is bloomberg. -- 20 more to come, this is bloomberg. we have a hacker of
9:56 pm
trading there. we are taking a look at what the mix is like. financials are actually helping. we are looking at what is happening in terms of some of these movers. seng, that was the yuan fix earlier. 35 stocks are rising on the hang seng. 12 are on the way down. this is the offshore we are looking at. 6.83 against the dollar. this was the weakest in the year. 6.78 in essence. that is what people are looking trumpy closely as donald was accusing the chinese government of exit manipulative its currency in the face of these trade issues as well. that is a subject that won't go
9:57 pm
away for the time being. we will move on and discuss what is happening with health care. the chinesehead of health care research. she will be joining us sporting minutes from now to discuss these event in china. -- events in china. ♪
9:58 pm
9:59 pm
rishaad: currencies making headlines today. the dollar weakening to a one-year low in japan, slipping ing p.m.i. last month. . and scandals over fake data this is "bloomberg markets: asia
10:00 pm
." >> the u.n., we're getting resistance from the pboc with that second certainly reflecting the weakness and now we're seeing the onshore low dropping to a one-year low. the nikkei will continue to watch that when it comes to emerging market f.x. rishaad: and of course every line in the sand seems to be brushed over with so what's the next line in the sand? equity markets in this part of -- let's go to
10:01 pm
the big movers out there. >> we have china signaling it is willing to promote growth. averaging 1.5 kt . we do have the offshore rate just below the 6. 3 against the dollar. japanese shares alston up. 1.11 against the dollar and japanese bank continuing to rally. perhaps some optimism around a potential tweak of policy from the b.o.j. let's switch it out to check in on global bonds with -- where the selloff is continuing. yields climb earlier as much as -- the most in six or seven weeks and chinese 10-year yields almost rising as much as seven basis points. one of the segments we're
10:02 pm
watching on the mainland as well as hong kong, chinese construction stocks, which is on the up as the government is set boost instra -- infrastructure. this is anticipated given the announcements on monday. >> immediate reaction there to the outcome of that tech counsel meeting. sofa, thank you so much for that greater fiscal spending and softer measures being added to loosen monetary conditions. tom is watching all of this in beijing and in does sound like a pretty clear policy shift. tom: it certainly appears to be edging that way, of course, officially we haven't had any announcement around monitor poems changes. the pboc, their official line is still that monetary is neutral.
10:03 pm
from what we got out of the counsel meeting yesterday you just referenced. they did drop the word "neutral" interest that statement. we'll have to see in the future if that shift becomes insidelined. we did get a statement saying ey wanted to see more policy measures, tax regimes. it was interesting that the measure wasn't mentioned in the statement. they did say they did want to see a deluge of stimulus hurries. credit swist as well saying this s likely to be supported for merls. heavily depend on nevmentsd and tone. marked shift in certainly credit swis should
10:04 pm
watch for any official changes to this policy shift. >> -- rishaad: tom, stems are being taken that would suggest perhaps this is a new easing bias? tom: that's interesting. the state counsel -- council meeting followed on from a number of measure that is had been enacted. monday we had that rejection into the financial system here. that was a record. we had loser rules around the asset industry here that saw some of the financials rise on the back of that. we've seen some reporting that the banks here have been pushed to guy into some of those low-grade corporate bonds. we've had three triple-r cuments and suggests -- suggestions now hey may get a couple more.
10:05 pm
we've seen a crack dune in the shadow banking areas and we saw that record drop this june. there's concern the money isn't getting to the frivet companies to start investing. . raul: thanks for that. tom mckenzie, our china correspondent. wes goodman is in singapore. wes, what are people making of this? is there even further weakness ahead? wes: yes, that's what's ahead for sure. the pboc has made it clear they're willing to accept for volatility and weakness in the yuan. they don't want a disorderly selloff. they want to have an orderly by kline. there was a ministry of finance official yesterday who said they
10:06 pm
weren't going to weaken the yuan to use it as a weapon in the trade war. from what they're doing with their fixings and the few of what's happening in the currency is that they're willing to allow a selloff and indeed they welcome this. this is what they want as a way to help keep their exports competitive amid these tariffs. yeah, i noticed the latest figure on the yuan is about 6.82? 7 is the next target people are talking about. >> one of the beneficiaries is the chinese bond market as the yuan has fallen. are we seeing that tracking the broader moves across japanese, aussie 10-year bonds as well as treasury? wes: yeah, up until recently, chinese bonds have been doing
10:07 pm
really great. the decline in currency and stocks were sending people into the bond market as the safe haven of government debt. it started last week and today we're seeing that rally undone. you're right, yields are rising worldwide and that's probably part of it. the pboc has taken a number of stems -- we are calling it targeting easying -- taking steps to inject money into the banking system and break up bank reserves. now we're seeing fiscal stimulus measures, including some targeted tax cuts. we're starting to see that all these measures will indeed help growth and bring some inflation with it. all that, of course, would be bad for bonds. >> let's get to you first word news with paul in sydney. paul: president trump says the u.s. will no longer accept bad
10:08 pm
trade deals and the era of economic surrender is over. he said the u.s. had been taken advantage of too long. the event came just two days before a senior e.u. delegation arrives for trade talks. the president's anger over trailed deals has led to disputes with allies and opponents across the world. u.k. prime minister theresa may and her top diplomat admit they're preparing for a new deal with brexit. the effort u. says it still doesn't have a clear idea after the split. britain won't step back, it said. to sell her plan for keeping close ties with the single market. >> we're making sure that we're prepared for no deal and government is stepping up its preparations for no deal because it only makes sense to be prepared for all contingencies but i'm working to get a deal
10:09 pm
that parliament will support because they'll see that it's a good teal for the u.k. >> google's parent jumped in late trade after posting another good set of results. sales of $22. 2 billion. about 700 more than analysts were expecting. reduced by 22%. global news 24 hours of the day on air and attic tock on twitter. powered in more than 120 countries. i'm paul allen, this is bloomberg. rishaad: the united states is backing the farming industry. health care research. >> but up next, will japan tweak its monetary policy or not?
10:10 pm
a japan equity analyst will tell us what he expects next week and the implication for markets. this is bloomberg.
10:11 pm
10:12 pm
rishaad: welcome back to bloomberg markets. in hong kong, i'm rishard. >> the bank of japan will lead monitor policy and change at next week's board meeting. amid reports the b.o.j. is looking for reduce the impact of policy changes. how much of this is based on speculation or is the market doing something that has resulted in this kind of sudden aweakening from the bond market from here in australia to even
10:13 pm
chinese bonds? -- most i think this is of the big fund managers are off on their yacht from their beaches and people are playing games with -- at the moment. essentially what the bank of japan is doing is the ultimate retirement job. they're not going to have to change policy for a considerable period of time. if you look at c.p.i., however you dice that up, it is still very, very low and the banker is going to have to cut its forecasts. then you're saying yes, but is this sustainable? the amount of eight, 10-year bonds that the bank holds hasn't changed since the beginning of 2017 so buying is pretty sustainable. is it hurting their willingness to legend? if you look at willingness to lend and you have numbers going
10:14 pm
back to 1974. every quarter in which they're the most willing to legend is the current quarter. so the suggestion that they're not lending because of this is quite ridiculous. essentially, does that change your view on things like financial stocks in japan or change your view of the yen, which hasn't been behaving as you might expect with the prospect of longer-term rates rising? >> no, the yen has been a little bit tricky lately. until november last year it was beautifully sitting on that real-deal gap between the japan and u.s. and then the further away you fwep from japan, the more you hear rumors about b.o.j. tapering and part of the problem is, if you go and visit the bank of japan and visit people who've worked there for a long time, they don't want to do
10:15 pm
this so they'll give you a story that the q.e. is going to slow and yet you saw the story over the weekend. they said i don't know where these rumors are coming from. rishaad: there's been some chatter that this b.o.j. meeting coming up could well be a live one but they'd only be biting at the edges, wouldn't they? >> i think what the b.o.j. wants to do is, there are accusations that this is hurting the regional banking sector so what they need to do in this meeting is to say we feel your pain and then they go on doing what they were originally doing. the big banks are well capitalized and making ok returns and then you have the trouble.banks corps in it doesn't matter what the bank
10:16 pm
of japan is doing. they're essentially on a row iting belt of knives anything -- anyway. in they want to help, they'll t rid of some of those ridiculous regional rules. it's not the creation of a monopoly. it's an irrelevance to everybody. roip >> that's a very valid point. has the bank of japan all it can? what can he do should he decide to run for prime minister again and how far is japan away from being out of the woods? >> well, i think if you look at the longer term picture for inflation, it's steadily been moving up. it hasn't been moving up nearly fast enough and it is a mystery to earn including the research of the bank of japan. the supply and demand is
10:17 pm
incredibly tight and prices aren't moving up that much. partly because it's an older economy. what you need is job hopping picks up. with an older population that doesn't tend to happen have so much. if you wanted to get it moving a little bit faster, i would have thought that delaying the increase in the tax hike would have been a good idea. but really what you need to do is put it up in 1% steps rather than this larger step that they're doing. >> if you look at the structure of reasons why price gains have been so muted in japan and other indicators which suggest g.d. pmpt is chugging along. the 19th straight month of expansion, do they need to get to that 2% inflation target it looks like they're never going
10:18 pm
to reach? >> i would have thought -- if you look at the very long run of c.p.i. in japan, it almost never hits 2%. it hit it when he had all prices $140 and the other only time it's hit and it when they had b.o.t. hikes. i think it's quite difficult to hit 2%. as long as they're at 1:00 -- 1%, i would say that's a pretty good target. >> a word onerings. you're pretty optimistic. your expectations are pretty high. the yen, if it continues to be weak, is going play through to exports in particular. what happens if this trade war becomes a reality, particularly for the auto sector? >> sure, really it does hinge on the auto sector. so is trump going to put tariffs
10:19 pm
on the country which has zero% tax on auto parts and has had since 197 . and the other things in a trade surplus with the u.s., it's also had 0% . i would have thought the chances are that the auto turnouts -- tariffs will go, if anything, on europe, which has a thumping 10% in trar riffs. in that case, there's a battle between the u.s. ask china. my way of looking at things is to say if the u.s. and china are going to throw bricks in at each other's windows, you want to be with the country that's selling bricks to both sides ask that really is japan. if you look at game theory models, actually japan comes outs very well indeed. it actually adds to its position rather than taking away. rishaad: nic, always a pleasure
10:20 pm
seeing you. thank you so much. nic smith in that sweltering tokyo heat. catch up with all our interviews using our enter interaction tv. you can message us during our shows. this is for bloomberg subscribers only. check it out, tv go. ♪
10:21 pm
10:22 pm
rishaad: shares of b.m.w.'s partner in china fell off. the german company wants to take a majority control. brilliant china is this month's worst performing car stock in hong kong. john joins us. what's the -- here overall for brilliant share holders? >> it's all about future profit expectations. the chinese car market is the biggest in the world and it's
10:23 pm
growing fast and projected to ow fast in the foreseeable future. o if brilliance were to -- stake in a joint venture, it would miss out on future profit growth. the joint venture accounted for ost of brilliance' profit next year. any lowering would put a district hit on it profit. it would most likely get a sizable payment for any lowering in its stake but right now thfsors seem to be more concerned about the future prospect here. >> what about the broader significance of b.m.w.'s plan? what are the implications to other car mastererers? >> well, b.m.w. seems to be the first mover here. so if it is able to execute a
10:24 pm
deal, strike a deal here and it goes smoothly, it is likely that other global companies might follow suit. all the global carmakers, toyota, general motors, volkswagen, they all we -- rely on chinese joint ventures right now in the country. partners like baic, great wall and all their stocks are down this year, quite significantly, on the concerns that china is opening up its market and b.m.w. would be the first example here to make a move in china. > what's a timeline we can expect here? particularly in house this goes with compliance with chinese rules and regulation sths >> well, nothing is imminent or immediate. although all the global companies are most likely thinking about it home run right
10:25 pm
now. which china announced the possibility for new ownership rules, to remove the caps -- this was in prim. they said the cap for electric car ventures would be removed already this year and the cap for like regular passenger car would be removed in 2022. so nothing is going to happen overnight. this is going to play out in the coming months and years. rishaad: ville, thanks very much indeed. joining us from singapore. a good look at what we have as we head towards that japan lunch break. energy stocks are doing very well here and financials as well. i guess the bond markets -- helps these guys. >> you're seeing rising shares rise on that. the topic index rising to the biggest gain since february.
10:26 pm
gold crest gaining as much as 6.3% after they say the property player is making progress with its contracts and showa steel beat its own guidance on food prices. i also want to highlight kirin holdings. nikkei news reporting the beer maker is ending its budweiser production in japan. the nikkei 2 5 is helping to snap a three daye decline. we're seeing gains across the board here. this even as the nikkei p.m.i. read for july saw the manufacturering sector lose team as hand in continues. countdown that b.o.j. policy meeting on july 31.
10:27 pm
the question is still out about whether or not the b.o.j. will love to tinker around the edges anticipated by some ecologists. this is bloomberg: asia. this is bloomberg: asia. retail.
10:28 pm
under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. streaming must see tv has never been easier. paying for things is a breeze. and getting into new places is even simpler. with xfinity mobile, saving money is effortless too. it's the only network that combines america's largest, most reliable 4g lte with the most wi-fi hotspots. and it can be included with your internet.
10:29 pm
which could save you hundreds of dollars a year. plus, get $150 dollars when you bring in your own phone. its a new kind of network designed to save you money. click, call or visit a store today. >> it's 10:29 in hong kong. i'm paul allen. china has repeated no desire to boost exports through devaluation of the yuan after president trump took issue with the currency's montgomery long losing streak. beijing says the rate is determined by the markets and there will be ups and downs. either side 2% to of the daily market. weakened. for exports he nikkei p.m.i. was down from 3 in june and its lowest since
10:30 pm
2016. apple also declined. and stock of finished goods fell. confidence in japanese manufacturers fell after reaching a 13-year high at the ends of last year. mexico is said to be working on an agreement. president trump is working on a deal. he said he's having positive talks with the new mexican president but declined to give details. lopez obrador said he's not aware of any deal but says he's open to talking to prth president trump. two fire front on either side of at least have left 20 dead. philippines president rodrigo did you terto -- duterte has
10:31 pm
called for legislation to cull the fastest inflation in five years. duterte ual address, called for tax reform and constitutional changes to establish federalism while vowing to continue his vibtse crackdown on drug sellers and users. > world will not be sidelined. instead it will be as relentless and chilling, if you will. as on the day it began. >> global news 24 hours a day on air and attic tock on twittered. powered by more than 1 0 journalists and in more than 120 countries. rishaad: thanks, paul. let's have a look at what's moving on these markets. >> asian stocks pushed higher.
10:32 pm
higher bond yields boosting financial shares as signals from china moving to support growth. adding nearly 2% while the yuan has slid to a one-year low as the pboc cut the daily fixing to the lowest level since actually 2007. the moves, chinese stocks up to a one-month high. industrials surging. this has built stocks. government has said a boost to spending for infrastructure prospect. we are saying pain for chinese makers as -- has called the sector that has engulfed that absolutely shocking. you have builders and developers gaining ground on a report that the south grain government is setting up plans to build
10:33 pm
railroads and expressways to north korea. the government estimates team with a total coast for the east coast project, that would be 2.3 trillion wall. pascoe duel sliding after stocks cut estimates and we do have shipbuilders. samson has a falling after second quarter operating losses came in wider than forecast. haidi. haidi: thank you so much. with all these trailed tensions, container shipping is battling to stay afloat. amid increasingly die verge end markets and also a prospect of a trade war but dry vault is one that seems to be ok. how long lived is this recovery going to be and will we be talking about more of trailed tensions in terms of the
10:34 pm
recovery in fwrathe rates? let's bring in our reporter. what's the biggest -- if you see. if you look at china and rates elsewhere around the world. >> good morning, haidi. thanks for having me. the trade on globalization and investors are building in the rising protectionism and we're lk about $200 billion , $500 billion. over the next few years, the olume demand has to be shipped marketly lower. that's why we've seen stocks doing very poorly. i think the latest japanese number seems to be slowing down so second half ghanled seems on a much weaker footing than what was expected at the gipping of the year. doing really well.
10:35 pm
holding up really well. feed so benefiting from growth. rishaad: record production, giving strong export guidance. is that the good news driving that dry bulk market ultimately? >> yes, it is. if you look at the chinese people. actually, we had a big tpwhurm called out but we've seen the margins which are holding up well as of all of these anti-politician measures and we have the numbers which the miners have put out for the second half. it seems that will feed into he important demand. >> that brings us to the biggest onset, the possibility of a trade war and how, i guess,
10:36 pm
we've seen that being reflected at the moment. >> yes, i think. ll i did was failed vishe. not exactly immune but hearing losing the pull strings and if we see the monetary, a wit of that geermed toward, that should boost demand for global. we've seen some negatives on the soy bean but that's contrary to demand fed by our goods. two hearts if i could say for the schipping market in the second half. rishaad: how does the china-south korea rivalry play out? i'm just looking at a chart of total equity and seeing who's in trouble. the se shipbuilders --
10:37 pm
offshore marine. this is samko. which is in singapore. thanelatively less indepth the chinese. chinese are the ones that people suggested they're less likely to have a default because they're in pape -- partnership with the got. how does that play out? >> i think that is true. but if you look at the last 50 years of ship pilleding history. china is going what they did to chain, so the chinese are built much more. in 2008, they had 191. by 20, 25, they should get to almost 55, 30 person. chinese will take this building. it already has a shipbuilding -- but they continue to take market
10:38 pm
share from the koreans. >> is there fully reason may twhie likelihood of defaults across that sector in china is much lower compared to s.p.'s elsewhere in the world? >> it comes down what china has been doing in my time over the last 10 years. they'll have the biggest shipyard. they have costco shipping, which is challenging. likely is the as well as they have a strong sense of charlie: finance. so china continues to dominate this market and only increase the market share of what i call dominance for the chauncey here for the next few years.
10:39 pm
rishaad: thank you. asia pacific transportation. coming up, the scandal that dulled the shine of china's darling drug maker spots -- stocks. ask the implications not just for the people but actually for regulators as well. this is bloomberg.
10:40 pm
10:41 pm
rishaad: back on bloomberg markets. i'm rishaad. >> and i'm haidi in sydney. we're looking at some of the market movers and we're seeing a real reaction across asia in terms of responding to the state council's i guess outcome of potentially moving into a new easing area for the chinese economy. >> and with that there's a shift and focus -- a shift from the economic sector being a priority perhaps. maybe see more financing as the
10:42 pm
government looks to boost spending in that space. even as the company reported second quarter copper production, 7% year on year and the metal players also will be getting a boost as base metal prices are rising after a six- week selloff. china railway up 11%. in hong kong. lows since august 15 swerls the nationals. they take over for consumer place in terms of supporting future equity. we're seeing chinese vaccine makers -- by the daily limit here, wiping out about $2 billion of market value this time. this value on the mainland has been called shocking. rishaad: thank you. serena now is vienna --
10:43 pm
shao. tell what you say has happened here and why it is such a scandal. >> actually, they did this regular information to pharma ompanies in exoin. the fallout, they are missing certain records for a bad shelf life. vaccine -- some of the records actually -- it's not correctly recorded. basically that's a factor of about 215,000 advantage sheens. -- vaccines. with you but we don't know the details yet because i think if investigation is still on. we don't know whether it's a fact. other issues with the vaccine but the bad thing is -- actually, this comes when you have the largest number two largest advantage skeen company
10:44 pm
in china. basically they have product for selling all over the counter in the big cities. a lot of my friends that -- this company is virginia maxine's. so people are in a panic. they don't know whether it's only dispatch or -- awls also have issues. i think that becomes a panic across the country. >> i think the leadership is hid youse and appalling. the thing is you don't know if you had a dodgy dose or if you had a real dose. if you do and have another one, you may fell ill. so this is a ahead for the regulator. it's a huge problem with this company as well. so that's the question. >> yeah, but it's not like an ifpblet case for this company because the -- i think things a
10:45 pm
few years ago were already putting a lot of resources emphasized top quality and then ey also -- inquest their personnel from like 00 people to now 1,000 people in the f.d.a. they these periodic -- are improving but still, i think this is an independent case that's not representing the whole industry's -- that's bad there. >> vienna, it's not just manufacturing the serena, it's not just mastering. it's the entire supply chain when it comes to products like vaccines. i'm a little bit confused as to the ou can say this is not case. when it's a company that makes
10:46 pm
the quarter of vaccines in chone. this kind of thing can happen to a major industry leader in that country. >> i think there is, you know, for the vaccine, they do have a very streaked regulation in terms of logistics, delivery, and everything. there's a lot nk of revolution around this and also, they're also doing their job to check regularly on different bamps of the fructs. however, i think they cannot in k every single think every single factory. they connell do like a sample checkups and even in the facial -- mental facility, it's not
10:47 pm
like -- investigation and molding it to each manufacturer. so i think that's -- because now this whole thing is still under investigation. we don't have a conclusion yet but i still believe off the basics that are the delivery system off the tracks and also the basic regulation is already there for the whole industry. i don't think we need to panic here to say that every drop is low quality and i don't think so. >> just looking at the impact on health care, which has been a favorite pick for so many analysts over the last year or so. you have a market there that's made up almost entirety -- entirely of investors. we've seen the uproar and how much more angry people are over
10:48 pm
something like this than the overall picture. we saw that milk scandal where that trust deficit exists 10 years ago on. will this be you have for the health care sector? >> i don't think so. they one thing i think already gave clear directions for this individual case. they're going do more investigation. also that i going to put 10 people who are in charge of -- if it's a real misconduction. the management team and over companies going to be taking legal responsibility of that. so basically i think the government is doing their job to find out what's wrong and noinitely -- possibly so far strict regulation on this. so i don't think it's antary-wise issue.
10:49 pm
for the whole health care city ries, we've already bounced through a round of quality reforms in the past, three to four years. and implement of various guidelines for the jobs manufacturering process and also i think the latter last year. she joined the international guidelines for draft development. which means that china now is -- the international standard of equal requirement for their product. i've seen -- it for so long and also i've been working in the u.s. with money. >> the country made a lot of progress sayses. i think this knack seen is so special. it's highly relative to public health and people are very sense
10:50 pm
turnover that but it's really a single individual cavements we don't need to worry about the whole industry. > we have to leave it there. serena shao head of health care at credit suisse. you see the reaction from from the president, calling it hideous and appalling. vienna, thank you so much for that. let's get you a cleck check. raising new questions about the future of tezz la after the ompany asked some to give back some cash. the appeal could be a sign that something has gone wrotcht tesla has ramped up billions trying to get production. rishaad: new feared crimes of --
10:51 pm
having lost a senior colleague. quit. up's president has this bridesman, are -- the vital management experiences as he tries to set -- steady the ship. plenty more ahead here on bloomberg, including, it's that time of tay. the battle of the judge.
10:52 pm
10:53 pm
rishaad: it's that time. it's the battle of the shirts. putting their best ones against one another. let's see who's going to be first. i think it's going to be juliet. jules? >> yeah, ladies first. you were just talking to be challenges that the new c.e.o. is facing following the ailing health of sergio marccione. the chap i'm looking at is showing how well the british stock did ask they're listed in the u.s. the yellow line is when sergio became the c.e.o. of the company. the white line showing how well the british shares are doing. look at the blue line, shares listed in the u.s. c.e.o. since he became we're closely monitoring his
10:54 pm
health at the moment and the former jeep head have division taking over the company but certainly big shoes to fill and certainly in the wake of the president of the ferrari chief as well. >> julia, very nice. dave, what are you looking at? >> i'm looking at the b.o.j. the yields and you have these fun -- fund flows in and out of japan. i now guys have been talking about this with your guest earlier, nicolas smith. we can speculate all we want and we really won't find out until they actually announce something, if they do. have a look at our charts. one of the view that is has emerged tore last 24 hours or so is if they do allow yields to go higher, that quindekithe give --
10:55 pm
yields sharply lower. that pushed a lot of money out of japan from nose markets. the bottom is your 10-year yeemed. every time you fete a sharp sudden shift in the 10-year yield. you do get essentially -- in large concentrations of one direction fund flows for give or take about 12 weeks or so. if we do see them pushed higher like those yellow circles at the ottom, we might see flows back into japan. and you know what that means. >> yeah, i've seen that reaction in treasury in chinese bonds. > a last-ditch effort there. uh, it's very hard to ignore how compelling -- what happens to the face of 2.5 trillion in bonds that are health by
10:56 pm
chansechains funds. relationship rish, going to throw it to you. rishaad: for a while -- yeah, i'm going to go with that as well and i think that the fiat and the mars ioane are gravely ill and our thoughts go to him and his family. you can interact on gte go and look at some of the recent once we've been fearing on blue berg. avid, at take the -- take me home next. ♪
10:57 pm
10:58 pm
10:59 pm
11:00 pm
♪ >> google bringing in dollars despite costly regulatory issues. plus, alphabet stocks are up to how the google parent earnings play into the broader tech momentum. and

38 Views

info Stream Only

Uploaded by TV Archive on