tv Bloomberg Markets Asia Bloomberg April 26, 2018 9:00pm-11:00pm EDT
>> this is happening. it is a historic day as north korea's leader meet on the top levels, kim jong-un the first to cross the border. salamat in hong kong. jong-un steps into south korean territory, and he writes in the guestbook, a new history begins now. could this pave the way for a more historic summit between donald j. trump and kim jong-un? we will explore that. this is "bloomberg markets: asia ."
♪ rishaad: foreign relations between the north and the south is what we are looking at, the start of the cold war on the peninsula. we have techrishaad: stocks hopo drive equities higher. we have a dollar maintaining its again. let's look at the taipei and kuala lumpur open. >> stocks in kuala lumpur, singapore, and taipei gaining ground. the focus is very much on korean assets. the sun is rising with the sunset policy. the best today advance since march 12 in the kospi. the 10-year note catching a bid as korean 10-year gilts dropping trading -- 10 year yields dropp
ing trading. we saw an immediate junk in the currency. -- jump in the currency. yuanuptick in the korean anticipated at the korean summit to give it a short-term boost. yield could help rise currencies in the region as well. we have tech gaining ground. gains driven throughout this week. we are seeing weakness in stock that has rallied over the past gainsmonth, some construction s for example losing some of their recent rallies. we are seeing some engineering players gain ground to date. we have had a few different
opinions whether we could see a boost to korean stocks from this peace dividend. morgan stanley saying you can see a 50-60 outside on the kospi. we have the likeswe have the lin templeton and assessment -- templeton investment saying collateral ties rely more on beijing, helping it become more bullish on stocks. we saw the collateral kospi hit an intraday low. we have this inter-korea summit bringing back appetite to this market, rish. rishaad: let's move on and look at the first word news headlines. here is yvonne mann. yvonne: the european union telling the city of london u.k. banks will face similar restrictions to united states institutions, and they should prepare for a messy no deal
divorce. michelle barnier says the strategy -- says the city should expect no favors. the eu government is holding off for a deal based on mutual recognition. the prime minister of malaysia the prime minister of malaysia says financial markets will focus on improving the economy and reform agenda. he outlined a plan to increase liquidity in the equity market and promise more income and corporate tax cuts over the half decade. the ringgit is among the best performance in emerging-market currencies this year. think it is about is0, 370 is faira -- 370 fair value. we don't believe in trying to force the issue. we believe in strengthening the fundamentals. yvonne: japan's factory output expanded for a second straight month in march, as economic growth continued into 2018.
industrial production rose 1.2% from february, when it gained 2%. recent growth has been supported by overseas demand for japanese industrial products, however u.s. china trade tensions could put that at risk. ecb president mario draghi says policymakers declined to discuss the end of the bank stimulus program, or even strengthening currency, as they focus on the strength of the euro area economy. they spent its two-day meeting assessing weaker data. draghi says he remains confident the durability -- confident in durability of the recovery. >> however, growth is expected to remain solid and broad-based. our monetary policy measures, which has facilitated the deleveraging process, should continue to underpin domestic demand. yvonne: global news 24 hours a
day, on air and on tic toc on twitter, and more than 120 countries. this is bloomberg. rishaad: kim jong-un becoming the first north korean leader to enter the south. he is scheduled to meet with in in aboutoon jae- 30 minutes. our correspondent is there. steve, the symbolism is palpable. is there anything concrete likely to come out this? steve: they are going to get to the concrete stuff in about 25 minutes when they sit across the table for each other and go across the agenda items. a historic moment, as i watched it on mars smartphone, wh -- on my smartphone, it looks like a bit of an impromptu
invitation from kim jong-un. , why don't youd into northere, come korea as well? i will step into south korea, and why don't you come into the north? that was a moment, moon jae-in going, well, okay. there is about a foot barrier bulkhead they stepped over into north korea for about 10 seconds. that, according to the news reports in south korea is the top headlines. time, 9:30 hong kong is when they will sit across the table and talk about the issues to get the relationship going. number one, commitment to individual peace deal, to replace the current pharmacist in place -- current pharmacist
place.stice in also a phased withdrawal of troops from the demilitarized zone, and the timeframe for which to do so. number three potentially on the agenda, to establish a mechanism to continue these talks on d ace, denuclearization, an here here carrying the unification flag -- so eventual unification is potentially an though. goal, rishaad: though. rishaad: let's not forget this is the meeting which set up arguably an even more important meeting. arguably, i use the word, between kim jong-un and the u.s. president. steve: that is right.
deal or any kind of reconciliation with the united be somethere first must sort of agreement between north betweenh korea, koreans themselves. we're getting a statement from the united states, saying they appreciate close relation between its allies, south korea, and looks forward to robust in preparation for betweenntiff meeting president donald trump and -- th e planned meeting between president trump and kim jong-un. it is near the end of april. we are expecting this at the beginning part of june. it seems to be inferring it could be sooner than that, at the end of may in a few weeks time. let's bring all this
together and bring in emerging markets. between president donald trump and -- th eour guest joins us from singapore. as you put your geopolitical hat on, first put your markets hat on. what do you make of it? >> clearly a historic day, as you highlighted. the year before we would never have expected this. indeed, 2017 was characterized by missile firing over japan, by heated rhetoric. it is a major day, a historic day. as you highlighted, i would expect good things out of this summit. i think the markets have got ahead of themselves a little bit. one should remember the north korean leader is an extremely sharp negotiator and strategist, however vicious the regime is. he will want some sort of in order win from this
to go into the u.s.-north korean summit with some degree of leverage. rishaad: has he been brought ofough into the idea realpolitik, or is it the idea of sanctions that are biting? that is key here. >> i think it is a combination of both. important, from china, not just the united states. it is realpolitik. north korea wants regime change off the table, and better economic times to help secure its regime and secure its economy. the question is, at what cost? we will see in the negotiations between north and south korea
today and in the following days what the cost on both sides is expected to be. rishaad: what, then, changing hats, arewhat the cost on both s the implications for markets, investing, and the broader picture there? >> the south korean equity market has historically had what is called the korean discount. is, is, korean equities have been cheaper on a pe basis than other markets because of the potential threat from north korea, the threat of conflict to whatever degree. you would expect if there is a landmark deal as a result of this, that would gradually go away. that would be potential one implication. also the foreign exchange markets would move to price that in with a stronger korean yuan, assuming the economic cycle allowed for that. those are two potential
implications. it is a big if if we get an landmark deal, and whether that deal is more than words or actual action. rishaad: an emerging markets specialist -- we will be having a further look within in a bit more detail. we will get more analysis of it later on in the program and look at the political implications about 20 minutes' time from now. this is bloomberg. ♪
that is the message kim wrote in a guestbook at that venue. it is the summit between the two koreas, the first in 11 years, the first held on south korean territory between two leaders. let's have a look at this and get the implications. the realistic goals, or realistic achievables are this -- at this venue? >> i think there are three main areas of focus. there is the denuclearization of north korea and the peninsula as a whole. there are improved inter-korean relations. obviously third, there is the peace treaty in terms of moving from an pharmacist -- an ar mistice and ending the korean
war. the first one is probably the hardest because the north korean regime has a strong incentive to keep its nuclear weapons given what has happened to regimes notnd the world who have given them up. i would expect out of this summit improved inter-korean relations and solid steps along that path. yes? rishaad: i just wanted to tell everybody, these are pictures of the two leaders sitting down at the moment as they begin these talks. of these talks in the past have long said pyongyang will turn to interminable rounds of diplomacy, which generally are meant to ease the pain of sanctions. in the past, they have given the country more time to enhance its weaponry and also win aid for
unfulfilled, often, nuclear promises. >> that is a fair point. we have been here before, not necessarily in terms of official summits, but in terms of talks. in the past, north korea used this type of occasion as a delaying tactic in order to modernize its weaponry and continue on that path. one has to be cautious in terms of actual outcomes, no question. certainly a historic potential for something meaningfully different. rishaad: it is different this time, or is it? >> [laughter] well, for a start, we have an official summit. we also have a summit as the result of the initiative of south korea. let's not forget that, as opposed to the united states. following the events of the pyeongchang olympics, potential warming relations between the
the u.s. summit. it will take quite some time. it is not going to go away anytime soon. certainly that is something global investors are looking at in korea with attention also on cycle.nomic some of the data coming out of asia, not just korea, has been on the weak side. on the weak side. there is concern, focus not just with this summit and not just with u.s.-china trade tensions,
but with the state of the economic cycle in asia, and whether that remains positive or whether there are signs of slowing. rishaad: kim jong-un has been talking. this is him talking to his south korean counterpart, i should say the president of south korea, reflecting on what he said in the guestbook when he spoke about an age of peace. he offered to meet regularly, kim jong-un. let's make good results and have openhearted talks, let's hold hands and look to the future together. the south korean president saying the world eyes and ears are focused on their meeting. will most of this be reflected market-wise in what happens with the korean won? >> yes, that is the most obvious international expression of positive expectations out of the summit. with theseen that
market-wisekorean won rallying. that would be the best in terms of expressing a positivekorean . that would be the best in terms of expressing a positive view out of the summit. rishaad: of course then we are looking at what could happen next. beijing we will be looking at closely as well. we have the white house posting pictures of this too. >> they have been playing again for quite some time. this is not new. what do they want? peace treaty, warming relations. would they accept denuclearization? opit remains to be seen.
the differences are more stark than west and east germany. the cost of unification will be prohibitive to south korea. i think the market should focus on more realistic expectations, the cost of unification will be which is better relations between north and south korea, and a peace treaty, then look at the issue of denuclearization, which is tough to get over. rishaad: denuclearization means different things to different people. >> exactly right. rishaad: where do we go from here? next summit ideally, he would want something deliverable, wouldn't kim jong-un, to show he in aespect and is
negotiation to -- is in a position to negotiate when he meets with donald trump? >> that is my view, kim jong-un will want some sort of win to go to the summit with donald trump means it in terms of an improvement in relations, and also that will be an important hedge against the risk that u.s.-north korea summit doesn't work. terms of he can then go to china and i achieved progress in the summit with south korea, but the u.s. and south korea summit was impossible --that is an hedge.nt that is why i am more hopeful about some sort of deal out of this summit. rishaad: this is the thing i have been banging on about, what
is the upside for president trump? there seems to be little. where is the upside seems to rest hedge. that is with the north korean leader. >> south korean aims are different to those of the u.s. korea's first priority is war and an attack by north korea. the u.s.'s aim is denuclearization of north korea. in the past, it had been regime change. war and an attack by
north korea. aims are different. that is why the two summits may see different results. rishaad: let me bring up a chart. yo can't see it, but it shows how the chinese pressure to north korea. plunged since august, it has been firmly in the red, on to north korea, forcing them in essence to do something and earn the foreign exchange they desperately need. one could arguesee different re. rishaad: let me bring up a chart. -- the real pressure from the wallet. >> the real pressure has been from china, given china is north korea's biggest trading partner. china has the biggest leverage politically and economically, has been employing it.
rishaad: this is on the scene in victory harbor at the moment. we have an historic summit taking place a couple kilometers away from here, which is that leadership meeting between kim jong-un and moon jae-in, a historic summit taking place. it was the south korean leader who moved very briefly for about 10 seconds into the north, crossing over the 38th parallel at the demilitarized zone. we had kim jong-un going in the other direction. market wise, what do we have? it is a day where we are seeing a rebound for technology. strong earnings coming through companies such as
apple. the dollar has been holding onto gains. amazon, intel managed to come out companies such as apple. with second-quarter profits ahead of analysts forecasts. the open in hong kong is upon us. sophie: we wait for the latest industrial profits from china, we have economic indicators signaling growth at a weaker igh. as trade disputes we optimism for both mainland markets. shanghai composite adding 4/10th of 1%. 1%. seng rising over checking movers in hong kong, we have tencent gaining ground, rising over 2% this morning after wiping out some $114 billion in value, when it fell 20% from its january 23 high. energy stocks among the best
performers on the hang seng. latest results show it is one step closer to making money again on crude. petrochina is due to report results, along with chinese lenders in the wake of china construction bank, which is rising after performing -- after reporting margins improved. rishaad: we have breaking news coming through from china at the moment, releasing march industrial profits data. if we look at the previous month in february, we have a figure of 10% growth year on year. that figure has gone down togerly to 3.1% -- hugely 3.1% growth. nominal gdp may show a few signs of aging downwards.
3.1% is the figure year on year. talking of data, we had some out of the tokyo statistics office well, perhaps some better news for kuroda and his boss shinzo abe. let's get that and the rest welr news of the first word news with yvonne mann. economic growth continued into 2018. industrial production rose 1.2% february, when it gained februd 2%. output climbed 2.2% from the previous year. recent growth has been supported by demand for japanese industrial products, however u.s. china trade relations tensions could put those at risk. is counting on lobbying by eu nations to help ease u.s. sanctions, warning of chaos if the situation is not resolved. washington had hinted at easing
its measures. ofare being told delays resupplying aluminum. mark johnson behind bars in new york, taken immediately to prison after he was sentenced to two years of currency rigging. his lawyers appeared stunned as the judge rejected his request to surrender at a later date. head was foundk e a $3.5of front running billion claimed water. comedian bill cosby could die in prison after being found guilty of three kinds of indecent accurate assault. a pennsylvania jury convicted him of drugging and attacking andrea constand in 2004. a jury could not reach a verdict last june. jwill be sentencehe -- he will be sentenced at a later date. >> today this jerry has shown
what the #me too movement is saying are women are worthy of being believed. i think the jury. yvonne: global news 24 hours a day and on-air powered by more than 2700 journalists and analysts in more than 120 countries. mann,nnan mann -- yvonne this is bloomberg. ♪ rishaad: our chief asia correspondent is our man on the spot. a historic moment , moon jae-in stepped into north korea, albeit briefly for 10 seconds. kim jong-un went to the peace house and signed the guest register, the historic signature. we don't know much about kim jong-un. we don't know what his penmanship is like.
we don't often hear his voice either. we are getting news from those at the peace house hearing his voice, really sometimes for the first time. broadcast youthe jong-un, butkim you don't hear his voice. they were commenting he doesn't have much of a northerner accent. he would fit right in in the center of seoul. he wrote in the guestbook, "a new history begins now for a new eace."tion of p they had a casual conversation, which the press was allowed into. kim jong-un said let's hold hands when they jong-un, but you don't hear his voice. cross the demarcation line, let's make good results. those are kim jong-un's words. moon commended kim for his decisiveness in making that summit happen, and agrees with kim that they need to talk with open hearts. it was a bigsay
present to the world by having this huge agreement. we are having more comments as well from kim jong-un. he says they should meet frequently to make up for lost years. in fact, the pharmacists -- armistice was signed years ago. kim says we can't go back to how .hings were before on a bit of levity, he said he hopes kim enjoys the cold noodles he brought from a restaurant. likenoodles does not sound hopes they, but one are good noodles. rishaad: ones hopes that they are. more on the implications coming
rishaad: we are back. this is bloomberg markets. a 30% slump in operating profits this fiscal year. this is an automation systems maker. income ofing at net, $1.4 billion. quite a significant shortfall. deutsche bank saying -- said it plans to cut more than 10% of u.s. jobs as it withdraws from areas where it can't compete.
a concrete sign of where the lender is retreating on a global scale. u.s. accounting for more than 10,000 employees, 1/10 of deutsche bank's global stuff. we are told -- global staff. we are told 400 people were dismissed this week alone. >> we aim to be a corporate led global investment bank based in europe with global reach. there is this reskilling, if you if you like,aling, of our anderson -- of our ambitions, making sure we align with that european core. rishaad: holdings down some 16%. don't read too much into that. that overshadowed a rebound in trading. it set aside more than two and
$74 million for legacy transactions that preceded it. managed to keep the wholesale income loss at the 3% level. we believe the situation is not as bad. there are many factors we should be aware of, but basically we are cautiously optimistic going forward and hope to deliver improved profit in the near future. rishaad: returning to our top story. north korean signs a -- if north korea signs a peace accord with the south, the biggest development since 1979. bloomberg has been crunching the numbers. we are joined by a senior analyst. we know the north is one of the poorest countries on earth. take us through what would be needed if it were to open up. perhaps we can use energy as an
example. >> gdp pernumbers. capita is 2%. rishaad: it was higher in the 1960's, that is the irony, wasn't it? >> things have changed. when you look in generation per capita we have crunched some numbers of about $122 billion alone. that doesn't include the roads they would need to rail and everything else. that is one of many numbers. that would take them to a more normalized level in terms of energy per capita. rishaad: unlike the german reunification process, this is even a bigger challenge one could argue, but the populations are much less in the north than they were in the east german situation. they have a ministry of
reunification. they have a reunification fund even. >> other people are more qualified to talk about geopolitics than i am, but one whereby north korea opens up its economy sometime down the road, it opens up in the same way which means 1979, north korea would require hundreds of billions of dollars in investments. where would that come from is the big question. who is going to do the financing? one of our assumptions is it will get a lot of multilateral financing, infrastructure investment bank, and chinese policy banks, such as the china development bank. that would be the main source of initial financing. we are going to bring next guest, joining us
now from beijing. talking about north korea opening up, me guest, joining us now from beijing. bringing in the idea of reunification is perhaps jumping the gun hugely. let's talk about where we are now with this. let's talk about this summit. why is this summit important, paul? paul: this is an important summit. it is historically many ways. the north korean leader has gone into this out for the first time. the north korean leader brought the south leader into the north. these are symbolic gestures. the diplomacy is important. you can think of it like a chess game just starting out. this is the first move. in many ways, this will set the direction for the way this diplomacy plays out. the most important aspect is it is a bellwether for the upcoming meeting between president
trump and the north korean leader. on top of that agenda will be the issue of denuclearization. we need to pay close attention to what comes out of this summit today on the issue of denuclearization, because that from a u.s. perspective and the international community is the most important issue here. inhaad: paul, i will bring joseph as well. joseph: what do you think china's role in this will be? well, it is interesting. after president trump announced he was willing to meet with kim jong-un, here in beijing of course that was initially met with very positive reaction. we are glad the united states and north korea are willing to talk with each other, but it was quickly followed by a high
degree of anxiety. it was not lost on the chinese if president moon met with kim jong-un and president trump met with kim jong-un without meeting with the chinese leader, that would make them uncomfortable. they want to rectify that situation between the meeting between president xi and kim jong-un. in many ways they feel they have a seat at the table. they are watching this diplomacy at the summit very carefully. they have their own agenda and their own interests when it comes to what happens with respect to north korea. they will be paying very close happens today.at joseph: we do know the geopolitics are incredibly complex. if you were to take a happens t. view or make a guess, would you think a gradual opening up of north korea, like china did in 1979, is more likely than reunification, or is
reunification more likely? i think in many ways we are i think in many ways we are getting way ahead of ourselves when we begin talking about reunification and north korea's opening up. the main issue on the table today is denuclearization. i think the american side is especially watching closely to see what kim jong-un is willing to discuss when it comes to denuclearization. if the north korean leader is trying to put forward a proposal where he simply freezes the program he developed, put a cap on it, but is not willing to take steps to dismantle and abandon that program, i think very quickly in this process we will reach a point where the u.s. side is not willing to engage further. we may have a more dangerous situation at that point then we
had previous to this diplomacy beginning. rishaad: i will come to that, paul, but i want to get to how we got here. how far is beijing pulling the strings? we saw that meeting between can and meeting between kima xi. that looked like an errant schoolboy going to his principal be chided. how important is beijing in all of this? paul: beijing is critical. be chided. they join the americans in applying maximum pressure. they instrumented the human ecurity council sanctions -- implemented the u.n. security council sanctions. this has contributed to the north korean leader being willing to step forward in diplomatic activity.
the chinese play an extremely important role. they are north korea's lifeline. without china's support, north korea would be in big trouble. the meeting between president xi 10 kim jong-un was good for both sides. -- and kim jong-un was good for both sides. it allowed the chinese tothe mei 10 kim get back to the rather than watching this diplomacy play out as a spectator. it was good for north korea, because now the north korean leader goes into this meeting and upcoming moon meeting with president trump, with chinese support behind them. they thawed the existing relationship after the chinese put the table, squeeze on north. this is good for the north going into these meetings, with his south korean counterpart and the u.s. president. rishaad: i will ask joseph a
question as well. chinese investment and north anda in -- in north korea the economic relationship is vital. joseph: that relationship has wavered in the last few quarters or so. we are really getting ahead of ourselves, but in a scenario whereby there is a peace accord between north and south korea, where would the investments come from? rishaad: i am going to bring up a graph. this is the required investment estimates. i have another one. if you would like to look at this, please have a look at the function on the bloomberg terminal. total exports for the north are in turquoise. north korean exports to china are in red. you can see there is only a tiny
fraction that threat to the rest of the world. -- that went to the rest of the world. that could be due to sanctions. joseph: given that north korea is so poor, the first stop would be infrastructure. who better to invest in north korean infrastructure than chinese enterprises? they built railroads, power plants, faster and cheaper than anyone else. south korea will have a primary role, but we think chinese contractors will have a very big role. rishaad: with the importance of that, we have talked about how in all this,ing is what of beijing's goals, and how do they align to those of kim jong-un and the south korean president? paul: the thing china will want to watch out for is we don't
have a result in this diplomacy where north korea is aligned with the united states and south korea is aligned with the united states. that would be a significant negative development for china. anda cares about diplomacy denuclearization, but primarily they care about stability. right now where we have this diplomatic activity ongoing, a period of relative stability. the south korean president seems to care most about diplomacy, a lot of talk about a potential peace treaty, normalized relations. again, the u.s. is most focused on denuclearization. to some extent, you could say the north korean leader is playing to both china and south korea in a way he hopes will get leverage in lowering the demands regard north korea with
to denuclearization. if the chinese field there is a period of stability, if the south korean president feels there is real hope for diplomacy, then the north korean leader hopes he will be successfulto denuclearization. if the chinese field there is a period of in getting those two countries to weigh in with the u.s. to lower requirements with regard to denuclearization. the u.s. administration with president trump has not indicated it would be open to any such arrangement. i think that is the key question: forward, what is north korea going to be willing to do in regard to denuclearization? rishaad: paul, great to have you as ever. i will thank our guests. you can catch up with all of our interviews by using our interactive function, tv.
is "bloomberg markets: asia." we are having a look at what is happening on the korean peninsula. an historic day there, as we get this summit taking place between the north and the south. looking at north korean is "blog leader: asia kim jong on crossing over to the south, not before the south korean president moon jae-in actually crossed over to the north for about 10 seconds. what possible outcomes there michael is on his way next. these are the early pictures coming through there. what we can expect from the summit and the respective goals of each leader kim jongside.
rishaad: mr. seems to be being written -- history is being written in north korea. kim jong-un saying the age of peace begins now. he is the first ever leader to step into the south. he told president moon that he felt a flood of emotions as they met. he is aware of the high expectations surrounding the encounter. president moon saying that they must talk with open hearts. in hong kong, i am rishaad salamat. ♪ >> and, he said he had a flood of emotions. ifl he have the same feeling
and when he meets donald trump? we will set the stage of what is being discussed here at the meeting between north and south korea, and how it pertains to a potential summit between trump and kim. this is"bloomberg markets: asia ." ♪ rishaad: we have a korean won reacting to the meeting, and we're seeing gains with the exception of shanghai stellargies, earnings coming out of that. amazon and facebook numbers all helping to propel equity markets. having a look at what is going on, essentially, that isn't it. but the game is not as strong as some had envisioned. sophie: exactly.
in indonesia, coming online, the gci jumping 1.3%. perhaps investors are asking if stocks are keeping up as jakarta stocks went through a bad rally. fallen four straight days this week, set for the worst week since may, 2015. we are seeing an uptick for now. but as it pointed out, the sun is rising for korean assets. the sunshine policy taking effect, the korean won rising days.e first day in six it edged toward the 10.73 handle. the kospi has seen gains after rising over 1%. of like to highlight one stock in particular, this is netmarble, jumping a .7%, as earnings are expected to improve from the second quarter, on the popularity of its new harry porter mobile game.
shares rose, a record gaining one day. tech shares, seeing a big boost from samsung, the chipmaker and sk hynix, intel adding a positive outlook for chip many factoring. i would also like to highlight he a motors which is rising after first-quarter profits beat stronger, even as a one and higher incentive has affected earnings. ins chart here, shares korean companies specializing in landmine removal equipment, have surged on these reduced tensions. on the peninsula. the white line is tech. friday, andins in the line in blue is jumping 20%, standing for mine clearing operations. this is helping to sustain rallies in some of these stocks which could stand to benefit from peace talks.
we not seeing much in concrete .etails on these talks rishaad: every time we see those tests, we see a reaction on south korea and related equities as much. something that is naturally grabbing the world's attention. we have paul allen with our first word news. historyanks, rishaad, is definitely being written as they meet for the first time in many years. president moon and kim jong-un exchanged handshakes at the demarcation line. mont stepped back into the north, as a symbolic gesture of corporation. it was a dramatic meeting, which may pave the way for a summit trump.esident japan's factory output expander for a second straight month, as 2018. continued into
industrial production rose 1.2%, from february where it gained 2%. supportedwth has been by overseas demand for japanese industrial products. however, u.s.-china trade tensions could with that at risk. cia director mike pompeo has been confirmed as secretary of state after weeks of debate regarding much of the administration's handling of diplomacy. however, the 57-42 vote shows that he lost the support of many democrats who backed him last year for the cia job. the white house march the appointment as a tweet -- with a tweet. the prime minister of malaysia says the country will let financial markets decide economic policy. he has outlined a plan to increase liquidity in the equity markets and promised more income and corporate tax cuts over the decade.f
the ringgit is among the best performers in the emerging markets currencies this year. >> the markets think that it is 60-3.70 is a fair value. but we don't believe in trying to force the issue. what we are doing is trying to strengthen the fundamentals. global news, 24 hours a day, and on tick-tock on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am paul allen. this is bloomberg. ♪ we have the summit between the two korean leaders. correspondentief in asia, stephen engle, watching all of this. steve, we are seeing some history being made, even though it might not get anything out of >> well, there is always a
risk that this goodwill we have seen initially may not bear fruit, but at least it is a good beginning. and thed of summit conviviality between the two gentlemen seems very genuine. it would be unthinkable, last year in 2017, where we were dragged down by the "fire and fury rhetoric between the u.s. and north korea. now, there seems to be on air of reconciliation, if not, eventual reunification. that is still a long ways off, but this could pay the way for another high-level summit the between kim jong-un and president donald trump. perhaps as early as late may. but it was an interesting site to see the two gentlemen walk hand-in-hand, both to the south and to the north. both leaders went to their respective sides of the demarcation line. that is very symbolic, of course. the first am that the north
korean leader has stepped into the south, since the armistice signed in 1953. so it is truly a historic day. the two german made some great statements. in handg, let's hold and look to the future together. he said, i felt a flood of emotion walking down the steps and meeting moon jae-in at the demarcation line. steeves, thank you. that was stephen engle, our asia correspondent. , henext guest has a story president of vice the u.s.-asian business council. michael, thank you for joining us. i am not going to ask you a sufficient -- specific question, just give me your thoughts on
what is going on at the moment. i think right now, we are just looking at the screen, we are looking at the historic meeting between the north and south korea, and it forms a very good beginning for the 32nd summit taking place here in singapore. i think that they will be looking at several different issues, one of them of course going to be the valuation of the northing on in korean peninsula. the second of course, the u.s.-china trade mission ship and its future. related toer issues cybersecurity, and to smart cities and other parties going forward. so this is the beginning of a very good week in singapore. we will have the ending of a good week in singapore. , next week, talks and i think there is some discussion as to whether or not this will be the time that india decides as to whether or not
they want to stay in, and be a more active participant core member or maybe they think it is not quite the right time for them. at the same time, we are seeing movement on the tpp front, with several countries getting ready or actually in the process of ratifying the agreement. it is widely expected to happen within the next three or four months, which means the agreement will then go into effect with a dramatic lowering of tariffs, potentially over $10 trillion worth of goods. so i think we are coming up to a very good week. in terms over all of the situation, given the tensions between the u.s. and china, i think that certainly, the business community is a bit nervous about this, and many of them are looking to supply chains, and trying to plan for any and all contingencies. it is not at all a foregone conclusion that there will be a
trade war. the tariffs announced by the american president are still not in effect, so all that could happen. rishaad: might come i would like to talk about the summit. what are the outcomes, if any, in your view, are possible? michael: i think this is the first summit of two that happened, so this will probably ap foring out a road m the future. i imagine they will come out in favor of continued trade, cautioning of both sides to go slow in terms of the relations between the u.s. and china, and also to go to china, to try to continue to make some progress on changing what is now an seaine of the south china code of conduct, and put some flash on those bonds going forward. i think they will also -- put
boneslash on thosflesh on those going forward. they will also be looking at data privacy, cross-border data flows, things of that nature, as well as agreeing on moving ahead on smart cities and corporative issues around that. rishaad: i was actually going to get to the summit taking place in korea. what would be the outcomes which they would like? i know that there is a meeting taking place in singapore, but talk to me about the events there. how your organization is looking at it in more detail? think thatll, i obviously, whatever goes on in korea is very important. korea, japan, they are two of the largest donors and investors asean.orward, in
with of them are in the asean plus three. anything that happens will be an effect on the campaign, and some flows goingtment forward. goodusly, peace will be for trade. it will mean that volatility will go down, so that more investment decisions can be finalized. so in that regard, even the fact that we don't have any signed agreements or anything, i think it is going to have a positive effect on the markets and on the summit taking place here in singapore, going forward next week. i think those are some of the things that could happen. rishaad: i would like to get to the tpp. ,e've had this to and fro-ing
or the first act by donald trump to drug america out of it. but now there are signs that america might want to reengage -- drag america out of it. do you think it would with the united states on different terms ? michael: i think that would be a very interesting outcome. quite frankly, i know that he said that he was interested, and i think that is a positive statement, i think we ought to follow it up. but i think that if he wants to try and reopen in any major way, any of the sectors or any of the chapters that have been closed, that would be a very difficult thing to do. it took these countries six years to get to the place they are today, they will not turn around tomorrow just to get the united states back and, under uncertain terms.
we don't know yet what the u.s. would like to see out of this, so i think it would be very difficult to renegotiate any kind of agreement anytime soon. rishaad: michael, thank you so much for joining us. joining us from singapore. coming up, malaysian prime in hisr speaks with us first international media interview in three years. we will get his point of view on the nation's budget. also, bank of japan announcing its latest policies. we had to tokyo next. this is bloomberg. ♪
tokyo where we are counting down to today's bank of japan decision, the first meeting .etween the new fed governor he was vocal before he joined the board. does that still hold true? we are joined by our global policy and economics editor, kathleen hays, who is outside the bank of japan. take it away, kathleen. kathleen: thank you so much, rishaad. very specialy a guest, as we count down to the decision.pan's policy no big changes expected, but where the bank is and where it is heading is very important to investors around the world. i am happy to bring back our att guest, portfolio manager alliance burstyn here in japan, an avid follower of all things boj. great to see you again. let us talk about this great up,ing that is wrapping
there are two new deputy governors, broadly speaking, what is the debate today if anything? and what we we hear when they come out? stephen: our expectations for the doj is that it will not do anything because they need code inflation to get closer to anything 2%. , for them to get any normalization tops. is a lot of, 0.9% progress but not enough? >> yes. n: i have had many conversations this week with people who say that they are not 100% sure about when the next elections coming up in september, that he will merge with the power and remain prime minister in japan, what do you think> justiko: our sinner is
like you. we think that he might step down, the probability of that though is very low. on the back of several reasons. the first one i think is that mr. abe has found himself a bad approval ratings, in the lower 30%. many of the voters support another party. the second point i would make is that there are many leaders who have borrowed support from him lately. number three, not covered so much internationally, we think scored a big win last week when he met with president but hen the u.s., basically was successful in getting president trump to agree on a promise to bring the japanese international adoption issue. emotionalething very for japanese in the rural areas, so this was vital for him to
secure the votes in the single oral -- in the rural areas. kathleen: so there is backing for governor kuroda and the aggressive want to terry easing. -- monetary easing. what do think they are bringing to the table now> masahiko: i think that possibility of the new deputy resigning today would be 50-50 to me. i think the doj is still very inh alive, pretty strong that. i think that they are well , if growth do more or inflation turns sour. buyers will be screwed toward bigger collaboration with fiscal policy, should the boj forecast go off track. kathleen: so how do we make some
money on this? what kind of trades do you have on the this as a portfolio manager as you await the boj's decision? budgeto: we think that you be will slightly deepen on the back of the global rates environment. we think that went trade we have been over with is the breakeven inflation solution in japan. we think inflation in japan is trending up gradually, basically on the back of growth, which is pretty strong. also, labor markets have put pressure on wages growth. lastly, we are seeing more broad-based service inflation in japan. we think the boj will not taper until inflation crosses 2%. if you have breakeven inflation position on that, and you are selling nominal bonds, what increases that the
takes into positive territory. in terms of nominal long, -- [indiscernible] kathleen: no yield curve changes until 2020? masahiko: yes, until then. kathleen: thank you for that come i will call my broker right now. thank you so much for joining us. we will be covering the bank of japan's decision as soon as it crosses bloomberg. for now, back to you, rishaad. rishaad: thank you so much. that was kathleen hays in tokyo. bloomberg users can interact with us easing g tv , brass over recent charts which we feature on the show and say them for future reference as well. this is bloomberg. ♪
rishaad: i am rishaad salamat in hong kong, this is"bloomberg markets: asia." baidu is strongly on the up and up and new york, forecasting that the second quarter will be ahead of expectations, revenues of up to 3.9 to $4.2 billion. stocks almost the dollar ahead of the estimate of $260. this insurance company, first quarter profit up 10%, due to more premiums. it is china's biggest insurer by market value. they have been clamping just $4 billion. they hope to expand life insurance premiums even though we are going to an industrywide
slump in sales blamed on tighter regulations. pricing its hong kong ipo at the top of the range, the online health-care platform sold 160 million shares at 54 hong kong dollars apiece approximately. they aim to begin trading on the fourth of may. j.p. morgan joining the offering. deutsche bank as such to be planning to cut mother and 10% of jobs as they withdraw from areas where the they reckon they cannot compete. the lender is retreating from its past him of being an investment bank at a global scale. america accounts for more than 10,000 employees and about a 10th of global staff. 400 people were dismissed this week alone. coming up, the malaysian prime minister says the country is on track to balance the budget in the next five years. more from our exclusive razak.ew with najib
>> it is 10:29 in hong kong. history is being written as the leaders of north and south meet for the first time in 11 years. president moon asked kim jong-un met. his country's first leader to enter the south. the symbolic gesture of cooperation. this may pave a way to a summit with president trump. control overkeep south. out --
that usinghas hinted measures was said to be the price, we are also being told of of supplies of alumina and aluminum. negotiators want to reach an accord before the u.s. appears for talks with china. they have made some progress on more contentious issues. president mario draghi says or themay earners -- strengthening and currency. governing council spent its meeting assessing areas of weaker data.
confident inmains durability of a recovery. however, growth is expected to remain solid. measures,ry policy which have facilitated the process should continue to underpin domestic demand. 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. putting on 4/10 of 1%. amazing results coming out in the earnings. let's see how it all plays out. amazon we had intel,
providing a boost to that sector. spectrumher end of the , slumping on its forecast. rising for a second month in march well retail sales fell, confirming the economy had hit a soft patch. it is unlikely that corona will will talk -- kuroda about in exit strategy. exit strategy. there is a lot of talk about the korean peninsula. 1.3% earlier in the session. aspmakers leading the gain intel is added to the optimistic and sk hynix.sung
i want to highlight what is going on with jakarta as well as stocks in indonesia are snapping a decline. wondering if equities are cheap enough to buy after the worst drought since 2013. bonsai rallying as treasury yields fall. the indonesian bond rout continues. bank of indonesia saying it will not hesitate to hike rates to sure up markets. prices rising as paul mentioned earlier. control inretain hong kong. is halting a five day drop. rishaad: thank you, safety --
sophie. let's have a look at malaysia now. after failing to meet an earlier goal set for 2020, this was his first international media interview in three years and it was with us at bloomberg. telling us that the new target is keeping agencies happy. way that wepassing to moving in a positive term be high home come -- to become a high income, fully developed nation. but numbers, physically as well. i think malaysia is well-positioned as the center for the region. mentioned the fiscal deficit and the debt to gdp
ratio. >> realistically, i do not think we can achieve balance budget, but near enough by 2020. agencies, theyal are happy. if they see the trajectory is moving in the right direction. 2023, that is2 or probably a more realistic target for us to achieve a balanced budget. it has gone up a whole percent. what do you see for it? >> much higher than that. think it is about 360 or 370 as a fair value. believe in trying to force the issue. what we do is strengthen the fundamentals.
in a strangehave manner. we will not deviate. hopefully, the sentiment will work out in our favor. analysts think that if there is a strong election result in favor of national, it will also impact the ringgit positively. >> what can investors expect after the elections? toi think we will continue make malaysia a globally competitive nation. be improving our infrastructure, connectivity, our participation in terms of a
global trading arrangement, making malaysia more attractive for foreign investment. continue to make malaysia attractive for investors. i would like to increase that availability and the quiddity in the market. also in terms of the mid-cap companies as well. to enhance their value. tonnounced the initiative exchanges with malaysia and singapore in a more seamless way, so that it will be much more active trading between malaysia and singapore. that is something that would certainly excite the market. >> the opposition, would you consider changing the tax regime?
how? >> i think we are moving in the right direction. moresumption-based taxes a and would yield more income for the government. with a higher income, we will personal income tax, as well as corporate tax. i would like to do more of that to reduce corporate tax progressively. >> is there a timeline for this? >> i do not have a specific the next five years, depending on prices and gst revenue. the first move has already started. the prime minister speaking exclusively with us at bloomberg.
the so-called peace house, right zone, whichitarized separates the two countries. the korean leaders beginning formal talks to perhaps denuclearize and bring peace to the korean peninsula. they arrived on the korean peninsula, sitting down with kim in the peace house. other atspeak to each the negotiating table, which had been made especially for the talks. saying that it would help to make up for lost time. he helped talks would help to move forward. he also said he wanted to have more such meetings.
cold glass noodles that he brought for a banquet to be hold -- held later on today. the leaders are sitting down together. history being made on the korean peninsula. , youon this as it happens can turn to your bloomberg terminal. there we are. let's talk about what we have coming up. china'sst casualty in tech standoff with the u.s. that is coming up next. this is bloomberg. ♪
investigating whether the company violated sanctions related to iran. makerlows the equipment cte. -- zte. donald trump has figured out an effective way to halt china's technological advance here. i think he has finally hit his jackpot. all he needs to do is look at the list of components that go into smartphones and the network equipments. they would not be able to effectively make the most advanced smartphone internet networks. rishaad: surely they do not need
it. they have many people working r&d that they have their own. it is a little late to do this. >> believe it or not, china is not there yet. also -- are talks that they might be going into bankruptcy. china is at the assembly stage, not at the core technological development stage. rishaad: what does it mean for capital market? what is going on here? >> like how investors are very jittery. $10 year, it made over billion of earnings. it is investment.
of huaweihe danger making just a few billion. rishaad: are there any precedents? ofit was considered a play china's 5g development. they hardly export any products to the u.s., so a lot of zte.ers tried they have to take a guess of what they're holding value is. this makes acquisition a terrible time. >> yes. they were down 10% and lost 4 billion of the market cap five we have seen, giving out dividends for at least a decade.
announced when they their 2017 earnings, they said they would skip dividends for 2017 because they were going to make cutbacks. that is considered core technology. rishaad: always a pleasure. foreign banks facing barriers to china's industry. let's bring in another gadfly columnist. the opening of the financial sector is one of the big business stories out there. amidst the backdrop of reductionism and gloom. you seem to be less optimistic than others. china's financial sector broadly and got what is happening there. it is not ready in terms of regulation and risk.
in terms of how to manage that risk. regulators are trying to open it and cleanupn banks the domestic financial system. it does not make for an optimal situation. then you look at some of the rules being drafted right now. for an are looking to increase their stakes. just cumbersome, they are cumbersome and expensive. but the reality of all of this -- -- when you look at the reality of all this -- it looks like this technical point, but -- rishaad: what do have that just -- whatin terms of now? do you have to have in terms of no? why is it wrong measure? >> they are asking for size, not
strength. capital measures. not necessarily the net asset value. how much cushion do they have on their balance sheets to deal with any risk? .hey have those for banks we can talk about that at length. for companies like these that are asset light, it seems like a odd measure to use. these are in a broker dealers. -- inter-broker dealers. they want more balance sheet lending. rishaad: it does not necessarily mean that will happen. that brings me to the next point. if that is the only thing they are looking for, would it end up
with other companies trying to enter china and being disappointed? >> there are many disappointed people out there. there are some foreign banks that, depending on how they are structured and what entity they are using, there are some where it is not a big deal. there are banks that are struggling with it because of asian equities. they hold their stake in the chinese joint venture through the regional entity. the problem with that is it is not a level playing field. goodwill, atof best there would be a level playing field. back to these pictures of the peace house. andtwo leaders, kim jong-un the south korean president heading out now.
-- they are headed for lunch. savedld noodles are being as a treat for dinner. urging peace at the start of that summit and talking about a new history beginning now. bloomberg and twitter have toc networktic designed for social media to update top news reports, verified by bloomberg. this is bloomberg. ♪
rishaad: investing 400 billion taiwanese dollars to expand one of its divisions. let's see if there is anything else coming through in regards to taiwanese manufacturing. looking at where we are with that share price for one thing. the hsinshu unit. let's move along. talking about some of the business flash headlines. of it, plunging the most since october 2008.
a slump in operating profit this fiscal year. this is an automation system maker. it does not really hold very well. nearly a billion shy. the quarter profits down 63% as it booked one time provisions in the u.s. a rebound in trading as volatility returns. it set aside more than 274 million. legacy transactions preceded its purchase of lehman brothers. we managed to keep the income loss at 3% level.
we believe the situation is not as bad. there are many factors we should be aware of, but basically we are cautiously optimistic going forward and help to deliver profit in the near future. rishaad: putback company doing well, forecast with a quarter sales profit. it works out as $.95 a share. tencent is better than the expectations come up 16%. -- expectations, up 2%. -- 16%. korea.1:54 in south kim jong-un calling for a new era of peace.
is also planning on holding talks over his nuclear weapons program. timemet at 9:30 a.m. local in that village. accepted kimn had jong-un pressure yes invitation. -- kim jong-un's invitation. that is currently the situation there. they are going to have a bite to eat. they are out to lunch. another donut story, david is here with an update. who do you have to discuss it and analyze? the day, ite end of is a negotiation.
they are talking right now with local reports saying they might be stepping out of the peace tower anytime now. just for kim is coming on the show. in conflictert management. he is based out of south korea, so he has a sense. it should be out anytime now. a former policy board member. we are not expecting anything from the boj at this point in time. a lot more coming up. ♪
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alisa: i am alisa parenti. here is a check of your first word news. bill cosby has been found guilty of sexual assault. the 80-year-old comedian was convicted of three counts of aggravated indecent assault. this comes less than a year after another jury deadlocked on the charges. he could get 10 years in prison on each count. he has been ordered to stay in pennsylvania. mike pompeo has been sworn in as secretary of state. the outgoing cia director heard from 57 senators yes, 42 voted no. it is one of the slimmest margin in history. pompeo left for a trip to brussels and the middle east after he was sworn in. a defiansc