tv Bloomberg Markets Asia Bloomberg July 25, 2018 10:00pm-11:00pm EDT
." there is always a bit of caution in reno by now what a trade negotiation with president trump involves. have a positive take away from the trump-juncker meeting. amething of a deal that looks step away from a transatlantic trade were carried it looks like the asian regional economy holding up. a bit of resilience. rishaad: -- joining the semiconductor party. many companies have come in at ahead of estimates this reporting season. the chip business is doing well. we are looking at them and what is going on market wise. sophie: asian stocks mixed, but the yen below 1.11 against the
dollar. on the backliding of disappointing earnings, but the topix on the upside. automakers reaching an agreement. resilience for second-quarter gdp growth for korea export, looking fairly decent. note the prize, semiconductor performance helping there a lot of the burden. we are seeing chipmakers lead gains of the cospi. samsung electronics boosting cost .6 percent. chinese stocks are headed lower and we have the hang seng declining. tech shares weighing on a benchmark. tencent a model for decline is on the hang seng. zte under pressure. check out the yuan, onshore
rates. has erased itste advance, but overall, the yuan could be set for the first weekly rise in seven. the philippines, psc rising. foreign inflows are returning and so we have manila stocks trading at a six-week high. haidi: thank you. let's get you to first word news with paul allen in sydney. late facebook tanked in trading after having missed estimates on second-quarter revenue and daily visitors. the stock lost billions of dollars. one of the biggest reverses in business history. facebook's first financial stumble in three years hollowed a quarter in which data privacy came under harsh scrutiny. the first signs of user unhappiness about data protection. mike pompeo faced anger in the senate at the start of a hearing
on president trump's policies on trade and russia. the foreign relations committee chair said there were serious doubts about u.s. strategy. pompeo defended trump's decision to meet one-on-one the president putin last week in helsinki. he offered few details. i had a number of conversations about what transpired in the meeting. i was present when he and president putin gave us a sense. i also had the chance to speak with sergey lavrov and the russian bureau. i think i have a pretty good understanding. the british government is said to be weighing a radical option to break the deadlock over brexit, but may enrage the northern irish party. officials may allow the eu to impose its regulations on the province when the risk -- rest of the u.k. breaks away. it would be a backstop that d khan is on the
way to victory, but opponents are crying foul. of they it is ahead former premier. it shows him winning the most seats, but falling short of the majority needed to form a government without a coalition. the number of people killed by fires in greece has risen to 81 carried rescuers are making a house to house search in the countryside around athens and a -- they fear many more casualties will be found. aircraft are trying to determine if the fire was started deliberately. arsonist have targeted forwards -- forests around athens to clear for development. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. haidi: president trump has
reached a deal with european commission chief shot clock juncker. avert disaster for now. liquefied natural gas and soybeans and lower industrial and tariffs on both sides. juncker says washington and brussels will hold off on other tariffs while the negotiations proceed. >> we had a big day. very big. we met right here at the white house to launch a new phase in the relationship between the united states and the european union. a phase of close friendship, strong trade relations in which both of us will win. if we areed that making submission process on other issues, this can be done from one day to another. in the globalring market strategist from jpmorgan asset management.
know so far from president trump's negotiating style and diplomacy style is rarely a one-way trajectory. do you think markets are taking too much positivity from this agreement that doesn't have a great deal of detail and we aren't really sure how ironclad it is? guest: it is still a positive step in terms of trade, but there is more to be resolved on the trade front in the relationship between the u.s. and china, which are also watching carefully. good, it is good to have news amid the fact we are looking at an earnings season that is looking brighter. --n we look at the revenue's revenue and earnings beat so far, that is positive for equity markets. we continue to like the equity markets, we moderately overweight equities with fixed-income. we still prefer the u.s. markets in terms of the earnings story and of course, any positive news
on trade will also give a leg up to equity returns. there pockets of opportunity after the recent selloff of volatility emerging in e.m.'s, or is the momentum -- you would want to be pretty cautious in this space? : i think we are neutral on e.m.. just waiting for more news on the trade. still waiting for what happens between the u.s. and china trade relations. here, we would like to see before we go back into e.m.. one thing to watch out for here is what is happening with the renminbi, for example. the renminbi has been coming under pressure, given the -- widening differentials between the u.s. and china. the pboc is glad to let gradual depreciation in the renminbi despite the weakening in the theese data and response to
trade tariffs they are receiving. until we see more stabilization in the renminbi and in terms of the dollar, where the dollar has been pretty strong, we still see strengthen the dollar and the dollar funding costs are rising. the headwinds are still there for e.m.. that being said, any positive news, you will see technical rebound in terms of the e.m. space. pockets of opportunity are arising, but more the fixed income as opposed to equities. the asianf high-yield, for example, some of the chinese property names have been got hidden hard. -- hit hard. we are still positive on u.s. equities, given what the macro environment is looking like. aboutd: to that point, renminbi weakness -- i am going to drag this out from my gtb
library. it shows how the authorities have tried to push swift payments to get the internationalization of the renminbi out there. yuan areve risen -- of in blue. we had a peek in 2011 of nearly 3% in global payments from china in the rmb. we have seen this depreciation in the white line of the yuan as uncertainty. are you worried about the ramifications, broader ramifications of yuan weakness in this part of the world? what if it exports deflation into the region? general,i think in what we are seeing is some volatility in the renminbi, but in the long run, it is still positive on the renminbi.
in terms of internationalization of the currency. the fact that china is going to be moving toward an elevated reserve currency status in the long run and if you look at renminbi holdings, we expect that arise with inclusion of more in the bond inclusion and they msci inclusion. in the long run, we are still positive on the renminbi. in the near term, there could be volatility. also in part because of the trade tensions and pboc is allowing this tragic will depreciation and -- in the currency. there will be a limit to that because ultimately, you would not want another repeat of the 2015, where we see this orderly capital outflows. currently, we think there could be some downside or pressure in the renminbi in the near term, but i think in terms of the longer run, we're still positive on the renminbi.
, has it made you change any of your portfolio decisions and asset allocation? we're are currently running neutral on china. in terms of what has been announced by the government acently in terms of allowing more proactive fiscal policy, that is positive the china asia equity markets, but what has been depressing sentiment somewhat is the renminbi. we still need to wait for stabilize asian before we engage a bit more in terms of the china equities. for now, we remain at neutral and await more news on that front. , are we looking at a point -- an inflection point when it comes to the bond market and how quickly can things change? you see the big move in the japanese 10 year yield since
last friday. it is pretty significant. we are looking at getting more hawkish commentary from mario draghi. the fed is still tightening. there is still a question over if they tighten too much given the uncertainties over trade. are there quite a few risk factors when it comes to how drastically the picture could change in fixed-income? i think for the 10 year bond yields, they are correlated around oil. what will be driving the 10 year treasury yield higher -- higher, towardd the ecb moving policy normalization. what we heard from the boj, it is still too early for them to move. you look at inflation numbers, they are still slowing and far away from the boj's target. the boj will revise down their inflation forecast. if you think about why they are doing the tweaks, the key is
communication as to how the people -- boj communicates to the public as to why are they making this tweak? why are they raising the 10 year to benefitabove 0% the banks at the expense of the real economy because by moving yield higher, it means real yields will be increasing. it has to communicate more clearly in that you don't want the yen strengthening because that will lead to a weaker inflation number and that could derail all the positive impact of the controls the boj is doing. i think the boj will remain accommodative and vicki is, how they communicate the story. in terms of the ecb, they have made it quite clear they are only going to hike in the second half of next year. in terms of what is going to push the term premium higher in move,s., we expect some
we still see that pretty anchored. we look at the growth, where there is still some concern from trade. please stick around with us. jpmorgan's jasslyn yeo staying with us. she mentioned the ecb. we will look in more detail at the bank of japan and the fed ahead. plus, the southeast asian sweet spot. thailand's stock market has seen stellar short-term performance. a look at what is behind that growth. this is bloomberg. ♪
we have a yield curve that is flattening. that is normally an indication that a recession is looming, but is it different this time? jasslyn: well, slightly different this time. what is similar this time is you still see the curve flattening whenever the fed hikes but what is different is the longer end of the bond yield curve is being held lower by quantitative easing. inversion as a signal of the recession, you have to see the curve inverted more to make a clearer case for when the recession will come up next. that is a key. , you could seem potentially some steepening if a backup in term premiums, but in general, the trend is for flattening on the yield curve. rishaad: very quickly, is that
the way you think the federal reserve looks at? -- at it? they don'tthink really put too much emphasis on the yield curve, but i think in general, markets are still watching the yield curve. that is still very important an indicator of when markets peak and a recession. i wouldn't take too much away from that. at --d is also looking variables, but they are looking at the rate versus the real neutral rate. the real net funds rate is running below the real neutral rate. that means policy is still accommodative so we expect a meaninge per quarter, we are still in accommodative ground for the most part of this year and early next year, and
that is supportive for risk assets, which is why we continue to be constructive equities over fixed-income. haidi: i want to throw out this quick chart that looks at inflationary surprises when it comes to asia. there haven't been many. it has been pretty muted on the inflation prints we have seen. that is also tracking the reaction in the asia-pacific. if you take this as an expectation that asian central banks will stay on hold and even ease, does that kind of the virgins picture become more clear and therefore, do you have a number of e.m.'s in asia that will continue to struggle with the impact of the selloff in their currencies and what the central banks will do? in general, we are seeing some do virgins. the growth divergence we are seeing is leading to a monetary policy divergence in the sense that if you look at the u.s.
leadh, we expect growth to giving fiscal stimulus will be taking in in the second half onward. the rest of the world, euro, e.m., we are seeing some slowdown in the growth momentum and inflation, as well. there is that the virgins because in the u.s., wage pressures are gradually building. if you look at the rest of the world, inflation is still pretty subdued. -- in terms of monetary policy, i do see divergence central banks. past -- slowly on the path of policy normalization, but they won't be hiking as fast -- at least the justification for them hiking as fast as not quite there. haidi: we appreciate your time. jasslyn yeo, global strategist at j.p. morgan. in terms of policy in
supportive ofill the asian equity market and earningse fact that growth is still strong. we are positive, but to what we were talking about earlier, we still need to see some relief from the trade tensions between the u.s. and china and we need to see the dollar peak before you want to get more excited in terms of timing, it is too early at the moment. haidi: thank you so much for global marketyeo, strategist from j.p. morgan joining us out of singapore. you can catch up on that interview by using our interactive function tv . also, join in on the conversation by sending instant messages during our shows.
rishaad: gm and chrysler as terroristsngs recap on the auto industry. higher -- prices higher. 's earnings forecast. carmakers in this neck of the woods, our auto analyst. the u.s. is an extremely important market. second-biggest car market in the world. better numbers out of hand i -- hyundai. >> for hyundai, we have a relatively positive view on that south korean auto company.
remember last year, the sales in china plummeted more than 50% in certain months because the chinese were boycotting some of their vehicles. now we are seeing recovery of that and it is a great time. they have interview -- introduced a couple of suvs globally. that is helping them and we will see what happens to the u.s. automakers in china because with the tariffs spat between the may and china, u.s. sales be getting boycotted like the south koreans had last year. that can play well into south korean and japanese. haidi: in terms of the impact on these steel and aluminum tariffs on the likes of nissan? steve: i think that will be an to hear what they
have to say about these tariffs. gm, itlisten to ford and did have a relatively significant impact for ford upwards of half $1 billion on their earnings for this year. we will probably see the same thing from the japanese as well as the koreans. they do have a big operation in the u.s. about half their cars are sold in the u.s., built in the u.s. there will be significant impact. now, we know the tariffs have been put in place back in the second quarter. it will take a couple of months to have an impact, so the second half will be very dicey for these automakers. rishaad: thank you for that. steve man. as we talk about the japanese carmaker, looking at what is happening with the nikkei up
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phase of close friendship. if we are making sufficient progress on other issues, this can be done. paul: canada is against slamming potential auto tariffs and the idea that cars paid with -- made with u.s. parts pose a threat to national security. put a tax on imported steel and aluminum. -- he has used to this argument to put a tax on imported steel and aluminum. we spoke to the canadian counterpart in mexico city. that this could pose a national security threat is absurd. fiat-chrysler boss
has died. he suffered complications from a on his shoulder a few weeks ago. 2004.ned the company in he made the car company the seventh largest manufacturer in the world. global news on air, 24 hours a day and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am paul allen. this is bloomberg. rishaad: one company dragging the index down amidst all the industry groups -- >> assad -- asog. is set for its first drop in three days.
for the nikkei, we do have that energy material space. the healthghing on care benchmark. investors are unimpressed with of an owl summer's drug trial -- alzheimer's drug trial from a japanese company. chinese order started to correct in june. u.s. sales fell due to delay from the auto industry. highrising to a record after its first-quarter profits and ad revenue jumped.
they have see more investment in a chip-testing system. and investment in artificial intelligence into blockchain. we have stocks on the advance. the yen is below 111. the aussie dollar finding itself on the short end. yuan jumping on the back of the gdp data. , a large caps off by a third of a percent. the offshore yuan, accelerating its decline. manila, foreign funds shifting back to philippines stocks, to teh wider -- the wider e.m. space. psc now above 7600 points,
rising for a third day, the positioning ahead of earnings. idi: let's get you a quick check of the business flash headlines. in a regulatory filing, two parties may defer on arbitration depending on the outcome. there is an 18 year partnership between two of asia's biggest exchanges. rishaad: qualcomm is jumping into late trade after saying it will if -- abandon its pursuit of nxp. there would not be an extension of the 44 million dollar bid from china.
trade rations from washington are worsening. >> the decision to move forward without an xp was a difficult one. uncertainty overhang's large acquisitions with this risk. e way against the likelihood of a change with the current geopolitical environment. topping second-quarter estimates with boosting sales of memory chips. $4.9 billion was given to the supplier of chips because the demand for chips remain resilient. equities and thailand -- in thailand, trading starts in just 15 minutes time.
we have our guest joining us. great to have you. we see outflows at a time where we are seeing strong gains for thailand equities. the net for an outflow -- for outflow has come from the geopolitical climate globally. clarified, ao be political roadmap towards an election in thailand. delayedere could be infrastructure implementation by the government. there is some concern from the foreign side. they are investing money elsewhere. strongly onontinues
the domestic front. ailers have plenty of bullets left. growth is continuing to pick up strongly in the thai economy. just to that point haidi was making, what is going on? how much money has been coming out? the red bards show -- bars show us the monthly foreign outflow out of the country. and the rebound. what is behind this? is there a lack of political irrespective of trade tensions? confidence, irrespective of trade tensions? >> yes.
the date for the election has been delayed 3-4 times. the government has been adamant they will hold the election at some point, february of next year. a delay is also possible, but as i would assume the election could be at some point next year, it doesn't have to be in february. if you look at the activity from the political front, whether is the government allowing political parties to force their happiness and unhappiness, as their different variation of policies, the total political ban has not been lifted, but that is in the cards for the next three months. there could be a 3-6 month delay. haidi: one of the extraordinary
things about thailand, it has been very resilient, despite the many years of political uncertainty. is the bigger worry the united states dollar? >> yes. dollar strength is a short-term concern. there is a huge pile of debt in the united states that needs to be resolved. it is a bigger concern to the global investment community as a whole. particular, if you look at the strength of the reserves at the bank of thailand, and the country has much less foreign debt, liquidity aplenty, the country is recovering nicely, exports
are growing. domestic fundamentals of thailand, they have been doing well. the strong dollar is impacting the investment climate in the short-term, but the fundamentals will speak louder in the long-term. the spectrum between beijing and washington -- how does thailand fit into the supply chain, in this part of the world with regard to china? how much insulation does it have against conflict? >> a very interesting point. we are concerned. tradingailand's largest partner, bigger than the u.s. or the united -- the u.s. or the european union. there is a global supply impact if this trade war involves into a real war.
china has been diversifying their export market over the last 3-5 years. they have been putting goods into manufacturing products elsewhere. they have been probing trade -- growing trade within cambodia, vietnam. markets in the middle east, africa, and latin america. some sort of cushion comes from this diversification. we will see parts going to the electronics sector, the auto sector. the impact is very small and we don't expect a full-scale trade war. haidi: would you be looking at the infrastructure story to materialize in a stronger way? are we starting to see more
strength out of private demand in thailand? prinn: i would look at the domestic related sectors and the private demand. namesf the energy related continue to go up because of the strong oil prices and global growth growing, despite all this potential trade war spats, you are seeing valuation on the energy names. leaders have been bringing the index up over the last one or two years. but the banking sector has been underperforming massively. people are now optimistic a str gdp, stronger than expected consumer data, and confidence will be reflected in the share price, as opposed to some of the consumer names.
they have been performing quite poorly because of this slower growth. they are seeing signs of bottoming out. you want to look at property sectors, consumer sectors, the spending sectors. economy has led to projects getting off the ground. rishaad: are there any regulatory moves afoot to track foreign money into the country? if not, what would you change to make investing more dynamic in the country? prinn: the government has gone
on various roadshows. leaders have been to britain, france, japan, china, korea, and the united states. the government has done a massive amount of work on the international front. a very important law was passed on the eastern economy corridor to make sure there is stability and continuity with the policy of special economics on the eastern seaboard. they should do more on legislation. they will continue to do the regulatory process to cut out the old dinosaurs' laws. china has too many licenses which are impediments to doing businesse. -- doing business. licenses.only 200
china has 1500. we would need to cut out some of these old laws and make lots easier, more transparent, and so the rule of law is respected for the foreign investor. rishaad: prinn, thank you so much. we will turn our focus to another emerging-market. pakistan. we are awaiting results of the general election. this is bloomberg. ♪ berg. ♪
runup to this poll? this is normal in pakistan elections, to some extent. diplomatic analysts are saying the military is going into overdrive in this election. imran denies all of these allegations. it looks like he has a resounding victory. there will be horse trading today. haidi: are we looking at signs of a hung parliament? dan: correct. he is getting close. the vote counting is ongoing. rties said they were kicked out of polling booths and that there were irregularities in the counting. this is being disputed. we are waiting to hear from khan
as to whether he is making progress and negotiating with smaller parties to try to get over the hump. he does have the backing of the military, so it is likely he will come through. what policies he will be able to implement is unclear. haidi: thank you so much for that, our bloomberg asia government managing editor in hong kong. moore is set to retire at the end of november. the first female will be appointed to the board of macq uarie. she will be pressuring the theany in the -- ushering company into the 21st century as one of the world's largest asset
managers. apparenteen the heir for quite some time. her contributions amount to company'sthe profits, encompassing the which theture for company is best known, but also includes asset management and currencies. does this fit in -- she fit in wtiith the founder's legacy? >> definitely. she has the asset management division. that is increasingly important.
businesses that pay steady revenue streams a bit a -- are a bit more instituted in the mna advisory space, and with trading. the company is in very good health, but can she shepherd that forward, particularly as the business environment gets a bit tougher? rishaad: thank you. coming up, the battle of the charts. this is bloomberg. ♪
haidi: it is time for the battle of the charts. two will pick their best charts against -- pit their best charts against each other. >> this chart has been the talk of the town globally. facebook announced disappointing results. that post market plunge says it all. that is $120 billion in market cap it lost in post-market trading today. that is the size of mcdonald's and nike's market cap. zuckerberg's fortune to think about. he has potentially lost almost $17 billion in his fortune.
that takes him down to the number six spot in the bloomberg billionaire index. that fortune alone is going to wipe out 87% of the people on the bloomberg billionaires index. pocket change for mark zuckerberg, but not so much for a want of others. -- lot of others. notaad: that chart does show the fall, but we like the size of the scope of how much market cap was down, and that there could be a potential loss of $17 billion for mark zuckerberg. and is a technical problem not your fault. eric? eric: if you are looking for look no farther than
this chart. you can see on the chart, it's on an uptrend. as the ichiro -- chinese eco nomiey firmsyou can see on the l feel more lucky about chinese stocks if investors do. rishaad: i want to make this a fair contest. haidi, this is them going head to head for the second time. divya won it last time. eric was a sore loser. divya will be the sore loser today. haidi: i feel like you are attributing the technical malfunction in that chart to divya. i think they are both great stories. else is getting swept away by the intricacies of this facebook story.