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tv   Bloomberg Markets Asia  Bloomberg  April 29, 2018 9:00pm-12:00am EDT

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♪ kong,d: 9:00 a.m. in hong 11:00 a.m. in sydney. i'm rishaad salamat it. haidi: i'm highlighting noon -- i'm haidi lun. this is bloomberg markets: asia. ♪ rishaad: sprint and t-mobile agreed to merge, sending years of will they won't they talks. haidi: the new owner says he wants to shake it up and new innovation. rishaad: catherine brennan steps down after craig mello walked
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away. haidi: z de says earnings surged. -- and comeping jumping 39% in the first quarter. newsad: getting breaking from the moment. for april. higher than what we had in the survey. what does it compare with last time? just a little takedown, nothing to read into this. we should be looking at the nonmanufacturing side of things because we got that at 54.8, ahead of estimates. the economy is driven toward domestic consumption. haidi: lots of concerns, deleveraging with domestic demand. some of these trade tensions might be weighing on these numbers. particularly crucial given we are getting into talks with
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steve mnuchin heading to beijing. rishaad: let's get to our guest. haidi: china economist with us. what do you make of it? guest: i think it's pretty solid. the chinese economy will slow down and the tension in trading investment and technology. i think it suggests the second-quarter gross is fine. , the environment for china is getting worse, not only the tension between china and the u.s., but the euro area first quarter -- rishaad: going down for a couple of months -- guest: three or four months ago, china was confident that the environment was comfortable. at this stage, probably be more focus on domestic funds. that's why we start to see some policy in the march policy and other policies.
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haidi: the domestic consumption stories going low right now. the must retail sales numbers are very strong. is that enough to keep gdp where they needed? , the: the positive news economic transformation continues to happen. consumption is a stabilizing factor, particularly service upgrade happening much faster growth as other sectors. this is a stabilizing sector. when we talk about economic balancing, we talk about financial deleveraging continuing for this year. this will have a net impact on the economy. eventually the key point is whether through economic balancing we can see productivity statute take up again. rishaad: what does quantitative tightening in the u.s. have? we slipped below that. we have that della liquidity being drained away -- dollar
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liquidity being drained away at a faster rate. guest: the u.s. market rate moved up quickly. and china, it came down quickly. the spread has been narrowing a lot. china'same time, the reserve is stable. with thethe one worry hike in the u.s. market rates, whether it would flow back to the u.s. and put pressure on euro markets. and china's case, the positive news is it is very stable. it has come down because of restriction. the dispute mechanism for china's rather limited area china can focus -- rather limited. stable growths on and maintain high-quality gross. haidi: what do you think of the currency? been stable,cy has
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if you look at the basket exchange rate perspective. we are talking about iran 97 at this change. with that at the u.s. dollar, it is moving in the opposite direction. it is moving back stronger. or vice versa. the more important angle is to look at the exchange rate perspective. so far, it has appreciated modestly. with all the headwinds when it comes to the trade out of the negotiations, stephen mnuchin heading to beijing, the perceived take on innovation side in china will be a major drive area -- major drive. guest: absolutely. perspective, in the next few years you will see the relationship doesn't improve
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, it will have a net impact on the china's economic outlook. that's why we started to see the policy fine-tuning. at the beginning of this year, fiscal policy is that there is a tightening by state supporting the financial leveraging. recently, we see the march policy, the financial market rates coming down quickly. that's a more neutral operation. rishaad: true. perhaps a lens itself to look we don't know what's going on, as well. we have seen deleveraging. we keep going on about this. we have that in place and we have the supply-side reforms. what is going to happen after this? what is the long-term plan here? because these will be carried through and they have been. but the western division ahead of that? , if we madeis
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encouraging progress along this line, a lot of the big risks facing china's economy will be addressed. that will support china in the most sustainable growth pass. we are not talking about going back -- rishaad: that's the problem. guest: right. we are talking about a high gross rate but sustainable. haidi: what about the impossible trinity? when it comes to reforms and the opening, it's one step backwards and a couple of steps back. guest: the impossible trinity story here, if you are talking about the traditional one, china is seeing a slow down but they are more focused on the policy independence. that, put line is more focus on the quality. if you look at this year's steel, preventing financial risk and environmental protection,
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they are still on the top of the list. the recent policy is to prepare for the risk scenario. avoid the big slowdown in the second half of this year. that's to move ahead of the economic -- the economy has been slowing down, but from policy mix perspective, they are planning to bounce. rishaad: you don't think it has been slowing down. officialviewers -- reviewers support your view. , cutting taxes, boosting spending, and tricking the deficit. that's an impossible trinity. haidi: one of the impossible trinity's. rishaad: there are many. the policy we see on
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sector,so the corporate the government has announced our measures. the deleveraging, they announced a new rule on products. they are trying hard to contain the financial risk which i think is positive. at the worst, you see areas about the external environment change and you start to relax when you look at the financial regulation side. that's the worst scenario. so far we don't see that happening. i think the economic data recently is still very solid. in thesome slowdown investment in the first quarter, but we see consumption in other environments picking up and holding strongly. so far the economy is still on the right half. rishaad: thank you very much indeed.
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we got china manufacturing pmi just attach stronger than expected but weaker than what we had last time. 51.4 is what we have. a lot of markets are shut so far today. we've got china closed and japan for different reasons. haidi: japan is closed for a few days. golden week india, vietnam also closed. they are looking for catalysts at this point. rishaad: let's find out the woman who knows this. sophie kamaruddin. sophie: we have a mixed bag. there is a little changed but heavy emphasis will be on apps suppliers ahead of tech giant do on tuesday. we have a heavy lineup on the earnings focus this morning. we had south korea kick it off with a factory output which was a miss for the fifth time. china's pmi numbers came in better than before. we have the offshore yuan
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gaining ground but the currency is still set for its biggest loss in 17 months. in korea, heavy emphasis after the summit between kim jong-un and moon jae-in. .4%ave the kospi gaining with companies that will have exposure, sent to benefit like china engineering and soaring. it was jumping over 18%. beingout the small gauge dragged lower by health care companies. is having and i stay in the sun, hovering around the 1068 handle following the update from the korean peninsula. let's check in on dbas shares, a record high. first quarter profits the estimates thanks to hire lending and wealth income and lower bad loan provisions. the stock jumping over 1%. let's check in on aussie banks.
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westpac snapped anz climbing the industry is expecting to keep investors are riveted on bad behavior and could dampen earnings growth. anb capital could be set for an 11th day of losses. haidi: thank you so much. let's get you caught up with the first word news in sydney. trump administration says it will extend relief on steel and aluminum tariffs to some of its allies but not all. exemptions expire tuesday and wilbur ross says the announcement will be made before the deadline although declined to say who would be spared. nations have been asked to accept and -- in return for tariff free metals into the u.s. rudd resigned.
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critics have been calling for her to step down and number 10 says theresa may has accepted her resignation. she was a pro-european voice in the government and was a counterpoint to boris johnson and michael gove on environment. france and iran says they will work together to preserve the nuclear deal even if the u.s. walks away. president macron spoke with rouhani for an hour and agreed to protect the 2015 a quarter. trump administration faces a deadline to extend support for the deal and the president has indicated he may withdraw. tell ron has no interest in renegotiating. twitter sold information to the same academic who pass it on to cambridge analytica. aleksandr kogan was given one day access to random tweets following a five-month period. says it has removed
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cambridge analytica and affiliated entities as advertisers but no other details. 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. rishaad: do or die for china startups. here the interview on its way. haidi: coming up, vt earnings surge but can it keep up -- after the recent u.s. sanctions? we will have more on that story. this is bloomberg. ♪
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♪ haidi: this is bloomberg markets asia. i'm haidi lun in hong kong. rishaad: i rishaad salamat. at after kevin burnett quit as chairman, -- own grexit nation
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10 days ago. emily is in sydney. how bad are things and how bad is this for amp? emily: it's pretty bad. and shares rose a little this morning. they are still bouncing around a lot and we have seen the longest run of decline since amp floated as a public company. what they have admitted to his both charging customers for services it didn't provide and attempting to mislead the regulator over that fact. that's not good for your reputation. o, certainly not. there have an a lot of unflattering things, but what are the longer term consequences for amp and the other banks, as well? emily: definitely. one of the things in this wall of regulations -- sorry, wall of
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revelations of bad behavior -- the fact there is more regulation in the future, even wants friendly politicians are talking about whether there needs to be a breakup of the haverent products they can or whether there needs to be more regulations. i think it's going to be a long call for the situation in australia and the headwinds not tailwinds ahead. haidi: it has been interesting when you contrast the weight a -- the way amp has handled this. they dealt with their fair share of negative headlines. what do you think the fallout is likely to be for these banks? know, we'll you have to see what happens, which isn't desperately helpful. but one of the fallouts is going to be the trust stuff for the bank is not going to be -- is
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not going to have much of a positive hearing among politicians anymore. that has been the way the industry is reacting to previous allegations. a few bad apples, making deviations and it will be fine. ishink that kind of approach now over. we are looking at a more fundamental reform. on the flipside, we have to remember that these are big, very profitable institutions. whilst this is bad news for them, we are not talking about any kind of catastrophic failure or any big distraction. investors,lders, analysts are all looking closely , which will focus on how they treat small business customers. haidi: great. headlines were wildly profitable. emily, thank you so much for that. off will theyd
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won't pay talks finally produced a deal, t-mobile buying sprint for more than $26 billion. rishaad: let's have a look at all this. it has been so sort of will they won't they are good -- won't they. got to the finally altar. this has been the endgame. it's been about combining number three and number four in the u.s. to create a stronger competitor, someone who can take on at&t and verizon. when softbank got control of sprint, it was number three. since then, t-mobile has overtaken it. that has changed the dynamics of but hasn't change the arguments that the third and fourth carrier have long held together that they need to be competitive and invest in next-generation technologies and by only being together and they do that.
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haidi: who is getting the better deal here? robert: it is the case that telecom is going to have the bigger slice. softbank is only going to end up with 27%, which is a turnaround. even as recently as 12 months ago, keeping control was vital to his vision and he can deliver all the internet things. but sprint cap losing subscribers. it hasn't had a profitable year in a decade and it has billions to spend to build fifth-generation wireless technologies. softbank ended up with a smaller share of the combined company, but the expectation is that it will be stronger third-ranked company and the company that will and a lot of losses. rishaad: quick note on regulation.
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robert: it's an unknown and the need to invest in the tech will alleviate fears by having the third or fourth combined negate that fear. under obama, it would never get approved. but under the trump administration, it could. haidi: thanks so much for that. lubrication tech editor on this deal finally coming to fruition. we will be joined with some of these answers to these questions on bloomberg at 11:00 p.m. in hong kong, 11:00 a.m. from new york. don't miss out on those conversations. rishaad: bloomberg users can interact with the charts we use it using g tv . chart toook at that catch up on key analysis and check on future reference, as well. ture reference, as well.
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♪ ♪ rishaad: we are back. this is bloomberg markets asia.
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haidi: let's get you a check of the headlines. southeast asia's lightest -- highest lenders be estimates thanks to higher lending. the income climbing 26% from a year earlier to 1.5 billion singapore dollars in a three month and in march, $3.1 billion in u.s. equity. highest in a decade. rishaad: a struggling commodity trader saying they will have a shareholder meeting to decide it's fate. atmngapore hike blocked its goldilocks. noble planning to go ahead with the sale monday. goldilocks says the quote -- the court order is misleading and is demanding immediate and clear corrections. haidi: vietnam airlines is extending its transformations by launching a cargo unit.
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they have been revamping its fleet with planes to tap into the growing economy and demands for flight. international companies such as samsung and nestle turned a vietnam into a manufacturing hub, producing southeast asia's fastest growth. for aare now accounting good share of transportation, , imports of parts and things into vietnam. then the exports of products. at most of thek cargo units as well as the method artistic system. rishaad: let's have a look at the market picture. .8%he auction period, gains. we have got investors weighing in on the early earnings season.
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we have slow economic growth but profits have been stellar. , kim jong-un promising a new start and an era of these. eace.a of peia ♪
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♪ languid little bit of a start to the trading week. banging on expectations, little bit of easing there. market open across asia this monday as we have japanese markets closed for golden week. china market closed for their labor day as well as india and vietnam. rishaad: looking at what has already been done in regards to investors, around the world at hsbcoment, apple, pfizer, in our neck of the woods. we also have the jobs report from the u.s.
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the eight managed to have a quality decision out of tuesday. year: 20th consecutive they will do nothing as expected. traded took a backseat. front and center, the steel and aluminum tariffs on tuesday and the trade talks we are expecting with stephen mnuchin heading to beijing. let's take a look at the markets in terms of the hong kong open. sophie: he you do have hong kong shares gaining with energy shares. -- in the tech space, tencent is climbing an optical and amd technology rising ahead of apple results of do on tuesday. we are keeping a close eye on financial stocks with a few
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catalyst in play. china's biggest banks posted a strongest start since 2014. icbc put a 20% increase in quarterly profit. policymakers are deferring a deadline to regulate asset management industry after banks requested easier roles and more time to comply. the financial sector added .8%. let's check in on financial brokerages. they gave the green light to buy controlling stakes in their venture companies. stocks led higher by galaxy so far. haidi: let's get you the first word news with all allen with the headlines in sydney. china'sw data from natural bureau of statistics show factories maintained momentum in april. slightly above estimates. not a manufacturing pmi beat forecast with 54.8, both
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readings the best since january. the economy remains robust despite the simmering trade spat with the u.s. north korea says it will invite international observers to witness the decommissioning of the nuclear test site. the state comes after friday's historic summit and ahead of the anticipated meeting between kim jong-un and president trump. they said it would probably collapse after the latest nuclear test last year and is not workable anymore. >> this administration has its eyes wide open. we know the history and the risks. we are going to negotiate in a different way that has been done before. we use the word irreversible with great intention. we will require those steps that demonstrate the denuclearization is going to be achieved. named newi aramco has international board members as
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it moves toward a record public offering. ceo in doubt, chairman and tosses -- tops the list of directors. cornerstone is trying to aim it away from fossil feels. -- fossil fuels. half aia suspends billion aussie dollar's. it faces challenges from climate change, agricultural runoff, and coral eating starfish. --ding will improve quality water quality and encourage see management and coastal cleanup campaigns. avengers film has kicked off the summer movie season with the biggest local debut in history. $630ity war right in million worldwide, in which $250 million came in the u.s. and canada.
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it's notable because it has yet to open in china, the second-biggest docs office in the world. it will be in theaters there may 11. global news 24 hours a day on tv and tic-toc, powered by more than 2700 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. zdv shrugged off its seven-year tech than in the u.s. and reported a surge in earnings. earnings butyed said it's too soon for an accurate and comprehensive assessment. despite those prescribing doom and gloom for cds, the result is pretty ok. >> they showed a 39% increase in net profits, one of the best for the first quarter. the interesting thing to note is that this is backwards looking. this happened before we knew there was another seven-year ban
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instituted on zdv. even though they delayed it for a week, they said we cannot assess the impact on what it will lean on business. they said they would provide insight once they know the implications are. what are they expecting? changerobably won't first quarter earnings too much because they are looking back with those results, but the key look forward to is, this could be huge for their business. we don't really know what that means but it could mean a big drop for them in the coming quarters. rishaad: they even hinted at the existence being a threat. >> that's certainly the case. we also saw mediatech ceo say taiwan has also said to us we have to be alerted if you are going to do business with zte and unique clearance. all these different chip
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companies, components companies can no longer do business with zte, that is there a zte business? that's what they have to figure out. haidi: this -- ambitions, right? >> certainly, it's one of the top two or three companies help china usher in the five g networks and high-speed wireless technologies. certainly as we see the american officials coming over this week for talks, it will certainly be something they are going to talk about. rishaad: thank you very much indeed. shelly banjo taking a look at the problems. having a pretty good quarter on these earnings. -- theup, taking on chinese electric carmaker neo is not afraid to go head-to-head with elon musk. we hear exclusively from its chairman. that's next. ♪
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♪ rishaad: this is bloomberg markets. i'm rishaad salamat. haidi: i'm haidi lun in hong kong, as well. there's about to shut down the new their test site and that will be inviting media to witness the occasion. the deputy assistant secretary of defense who was an assistant in the george w. bush administration joining us on the line is peter brooks, senior fellow at national security affairs at the heritage foundation. great to have you on with us. we have these colorful up a medic charm lights -- colorful diplomatic charm lines coming through. you said the optics are great. the visuals last week were historic. do think there is substance behind this? peter: we're going to have to
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see. that's not an answer for you but the devil is in the details. the real challenge here is taking all these promises made verbally and on paper, and communiques, and turning them into action. we still don't know how that will happen, what north korea once in return for some of these concessions they are talking about. what are the quid pro quos? the devils is in the details and the only way we will find this out is bite testing their diplomatic intentions, which is sitting down with them and hearing what they have to say. haidi: one of the questions is why they are doing this. a lot of people are scrambling to take credit and any potential deal, but we know north korea doesn't do anything not motivated by internal goings-on. what you think is actually happening there? peter: i think there's a lot of pressures, internal pressures. the economic situation is no
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good in north korea. most of that is self-imposed. there's also external pressures, those from the united states and china. more punitive economic sanctions on north korea than ever before. others are taking actions against north korea. i think there's a tremendous amount of pressure. maybe they are seeing how much they can get in return. they are talking big things here. think about the time, effort, and money. they have written this into the constitution. the question is for many of us, i'm happy to be cautiously optimistic, but i'm deeply skeptical considering the history, the agreed framework in 1994 and how that turned out in 2002 they were cheating on that agreement. many of these things were said in the past. i hope it's true but will have to see and develop a roadmap and i think there is nothing wrong since they are willing to test their diplomatic intentions and
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see if they are serious. and if we do find things the same way. does denuclearization mean the same thing to us? complete verifiable disarmament? or does north korea look at it as something different? you could also say, if you are a senate, they are up -- cynic, they are up to their old tricks and they need money. to maximum diplomatic engagement. a cynic would say he is going all out to do all he can in one fell swoop. peter: of course. there's another thing, if you are a pessimist you are never disappointed. there's a lot of reasons to be pessimistic about north korea. americans have been through this many times with north korea. we've come to the table and had some agreements and the south has been with this in north
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korea. we have to develop a roadmap for moving forward. what are they going to do? united states and others will make concessions? we need to make action on the ground. we are worried about them disclosing their nuclear test site. they say they have other test sites but this is the only place they have done tests. they think they have irreversibly destroyed the structure, the earth through seismological explosions, that it is just a throw away. they can't use it anymore anyway. maybe they are saying we will do down, but it doesn't mean anything to them. the trust level is very, very low. there will have to be a testing of that trust. rishaad: this, they wouldn't want to rock the boat, pyongyang
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, anyway until they have had the summit with donald trump, surely. that will be the proof at that point. peter: i agree with that. this is a charm offensive. you guys have got it right. the question for many of us is looking at north korea, what would cause this 180 degree change in behavior? it is fantastic, and it could be very good and hopefully it is long-lasting. but once again, we talked about the problems with that. but up until recently, they were very committed to their nuclear program and i would have said, even before this, we heard them saying things to us like, we are not going to give up our nukes. look what happened to saddam for staying. -- saddam hussein. but he is the leader of the country. my sense is that there isn't a lot of debate.
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if he decided to make a sweeping change in the course of north korean international policy, it could actually be the case. haidi: it's jarring the rhetoric we heard up until the last few weeks. is it a confidence in their nuclear capability that has led them to this and other yard shopping around to see what kind of engagement or deal -- what does the deal look like? is it a recognition of north korea as a nuclear state? peter: they have actually said that. they said we have done everything we need to do. they are a de facto nuclear weapons estate. maybe they want to be considered a dejour energy nuclear state. maybe they want to be grandfathered in. say, you are the knife nuclear weapons state and we are going to allow you to keep a minimal credible deterrent. i don't think the united states is up for that that that might be what they are thinking, that
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the chinese during the cold war until its recent modernization, had limited nuclear arsenals compared to the united states and russia. in other words, they could strike back if there was a strike against china. they had enough capability to do that. maybe that's what north korea says. we don't know and that's why everything hinges on the definition of denuclearization. there will probably be a lot of conversations going on at a diplomatic level. pao of terri of state, before he was secretary of state. s talking out of south korea about these issues. we really have to get down to the brass tacks to see what they mean by that and what they want in return. in the past, they have been offered economic development and they have turned it down. the chinese have turned that down to a chinese economic
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system to alleviate the challenge that they face in north korea and they have turned it down. i don't know but it's possible that the leopard has changed its spots. possibly and they have a youthful leader i suppose. a foreignportant is policy win here for donald trump? peter: let me just coming quickly on what you said previously. a lot of people thought one kim jong-un came into power that he would be different because he had been educated abroad. it didn't go that way. they had these horrible purges. it interesting from a psychological standpoint what epiphany and perhaps ending the korean war and a lot of other things. i think the president is pragmatic about it. i think on both sides of the aisle they know the challenges
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of dealing with north korea. they remember the agreed framework. watching this policy fluctuate back-and-forth over the years. i wouldn't expect necessarily, and this is in such short order that we will have a major deal in the next couple of weeks. i wish the united states and north korea well on being able to do that, the denuclearization and ending the korean war and all the things we talked about, but this may be a series of meetings. war, we met with .oviet leaders sometimes deals came out, sometimes they didn't. and that afterwards, there was a major arms control treaty that came between the two. here.s possibilities this is historic for an american president and a north korean leader to meet.
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it has never happened before. there are some i possibilities and predicting the future is risky business. thank you, peter. you can catch up on a lot of interviews it using our tv function. and any ofch us live the boomer and functions we talk about. and joining us by sending us instant messages during our show. this is for subscribers only. check out tv . be right back. ♪
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♪ haidi: this is bloomberg markets asia. i'm haidi lun in hong kong. rishaad: i rishaad salamat. a bit of the says it is reaping the rewards of the merger international petroleum. to combine the
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portfolio to boost investments in existing companies. -- selma surets assets. -- sell mature assets. walmart's decision to give up control of the u.k. gross are underlined as emphasizing growing new markets over more mature ones. they are merging the uk's number two and three market change. it will retain more than 40% of the combined company. walmart turned its focus to up-and-coming markets like china and india. -- this isports say a hong kong owned company said to be offering 1.2 billion aussie dollar's for the megawatt plant in hundred valley. they said it is in australia and new zealand and $900 million upgrading. haidi: china's high and electric
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carmaker is playing down the effect of beijing's lacks auto policies. the questions of tesla making a success on the mainland. not afraid of the competition. >> i think people have overestimated the benefits of foreign carmakers. audi made huge profits in china. it also has good links to government. such an arrangement helps audi understand consumers. the new policy will bring benefits to form companies -- foreign companies. ownership changes, automakers will have more options, that in such a huge market, they will need local harness. i don't think it will have a change on the chinese auto industry. >> there will be removed on tariffs on exporting cars.
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it can be reduced to 10%. is that primarily a challenge to the higher end domestic makers or is it a broader challenge? >> there is no doubt the cut in -- however itl will not have to much impact on neo. we never consider neo on the same level. we are very confident in their service and user experience. the import tax will impose challenges but chinese companies are not scared of competition. if you don't run fast, you will fall behind. >> in theory, by the end of this year, we could see tesla setting up its own fully owned company and factory in china. are you ready to take on tesla in your own market? >> if you look at nio house and the tesla showroom, there are ideas from two different eras. we were founded 10 years after
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tesla. the difference between the two companies is like mobile versus internet or smartphones versus ordinary phones. amazon enter china in 2004 with 30% of the market. today the market share is only 0.6%. alibaba and j.d. on the game. china never restricted iphone sales. unlike what the u.s. does. but chinese domestic brands account for 86% of the market. all must hundred million devices were sold in 2017. when you are burning through so much cash? >> it has a very good business model. we did really well before this crazy competition started. in china, there is alibaba versus tencent and the business model was challenged as some players don't charge fees in
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order to win customers. shareholders decided to sell to match one. i don't think that was about the amount of cash. the two companies have a certain overlap in operations and it is a good deal. carmaking is a different story. you can't fight a price war in the auto industry. that's why i enjoy building this startup. lease pickingam exclusively to tom mackenzie in beijing. haidi: chinese companies don't have fear, he says. good to hear that bravado. coming up, we will be talking lunt securities france's joins us. adrian's or is it looking at the volatility in the bond market, of course yields crossing the rubicon. it will come down quite onstantially from the 2.59%
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the 10 year u.s. treasury's as we speak. rates and interest some fears also creeping in now of late about growth. this is bloomberg. ♪
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haidi: it is almost 10:00 a.m. in hong kong. "bloombergis is markets." ♪ haidi: maintaining momentum. china's economy remains robust. the best since january. rishaad: southeast asian markets rising to a record. returned to profit topping expectations. the chairman stepped down
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just 10 days after the ceo craig miller walked away. rishaad: expecting to raise 10 billion u.s. dollars, but there is a catch. haidi: as we get the introduction of the dual class shift structural reform for all -- hong kong markets, looking at the implications it comes to liquidity. it pretty lackluster start. -- a pretty lackluster start. rishaad: it actually would set up a lot of liquidity. perhaps the rest of the stock market is prepared to switch assets. it also has implications, where rates go here. jakarta,t open in there was one. we do have stocks in jakarta
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coming online. the upturn that we have so far today, it is a muted start. we do have a heavy lineup of earnings, as well as eco-data. aussie dollar is losing ground. trials -- trails the fed. factory output missed forecasts. stocks are climbing after the moon came meeting. over in taiwan and hong kong, chip related stuff. the you take a look at movers across the region, you have tencent among the best, among the biggest boost to the regional index. tencent extending friday's gains.
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that new tech and old construction are living together. together. chinese banks also rising after the country's five biggest -- dbs in singapore jumping to a record high. let's switch it out to check in on one laggard in particular. i want to highlight sk hynix. a class-action lawsuit was filed in the u.s. across -- against the three top chipmakers. that they 2.2%.ix off by i just much for that.
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it's good to first word news with paul allen. the trump administration says it will extend relief on steel and aluminum tariffs. on tuesday.xpire an announcement will be made right before the deadline. he declined to say who would be spared. the u.k. secretary has resigned amidst claims that she misled parliament for removing illegal immigrants. they have been calling for her to step down. theresa may has accepted her resignation. she was a pro-european voice in the government. france and iran say they will work together to preserve the
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nuclear deal, even if the u.s. walks away. an hourke for more than . the trump administration faces a may 12 deadline. the president has indicated that he might withdraw. iran has said they have no interest in renegotiating the accord. information and then later passed it on to cambridge analytica. they were given a one day access to random tweets. twitter says it has removed cambridge analytica as advertisers that offered no other details. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. china.: new data from
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factories did maintain momentum in april. coming in at 51.4 this month. haidi: pretty robust. beating forecast. to be fair, this is the time of get -- re we >> this is a better number than anticipated. it is worth noting that the pmi figure has been holding up quite well. it is probably an indication that it is reasonably on track. -- the got me and get obvious headwind. then we have trade tensions.
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fairly mixed reaction in the metals market. perhaps not much faster than where we are right now. haidi: he touched on the main to stories for trade. what is going to be more impactful? we know what is happening with deleveraging. >> quite right. credit will impact the economy. at the very least, it will have a modest impact. is trade side of things unquantifiable. there is a feeling that expectations should be quite low. if they do not make any meaningful progress, that would and itnt to sentiment
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would start to impact china and the u.s. is a big surprise and slowdown in europe. it came out of left field. that signifies that we had another one of those. a lot of liquidity being sucked out of the u.s. this is an economic clout on the horizon. >> it is quite fitting. we are still moderating. interest-only, when you look to the u.s., they are going their own path now. tighten even more than anticipated. we have the u.s. treasury threatening to go even higher. that are all key issues
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have been driven out. jobs report at the end of the week. what else is the market looking for? pointing that we will have more rate hikes than anticipated. that is so important for emerging asia. currency in this part of the world also treasury. it will be critical for all. haidi: still ahead, hong kong bringing inits -- its rules. rishaad: emerging risks and opportunities. what could drive since -- market sentiment in this part of the world. this is bloomberg. ♪
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rishaad: you are back with bloombergmarkets -- " markets." haidi: traders will be more beholden the normal to the movement in u.s. bonds. the dollar has been buffeting that. asiae joined by our chief correspondent enda curran. we are not expecting anything from the fed this time around. you had better than expected gdp. that missing component is really what happens with trade. enda: absolutely. if we do get hawkish going forward, that would be a potential game changer for the treasury.
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the bigger picture is how does the trade story play out? can they reach some kind of agreement? there is a feeling we are headed towards a more protracted dispute. it will not be solved overnight. it is definitely one of the big question marks on the board. how do you look at what is happening in the u.s.? how do you look at this #down, surprisingly quick in europe -- sharp throwdown from surprisingly quick in europe. this economic expansion come we see the u.s. producing most of the pmi's. today, solid numbers. in europe, it has fallen down a bit.
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markets remain strong. brought up a little bit of volatility for the emerging markets. theu.s. dollar is traded by 10 year treasury. we actually think it is not sustainable. around 2.8 or 2.9. you look at two-year treasuries and this is where the story should really be. the yield have doubled in a year. it is something extreme. 2.4% now. >> it will continue. we expect three more interest rate hikes this year. we expect them to move higher and we expect a flattening out of the curve. you do not expect the 10 year to move higher. is --y message it measurement is wage growth. we get worried when it goes up.
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that is when we will start seeing treasury moving higher. that would be the end of the u.s. dollar weakness. in the next 12 months, we think the u.s. dollar will begin -- weaken. we see the external balance sheet of most emerging markets are still very strong. we do think the assets for emerging markets are solid. many currencies. for the next 12 months, that is a good place to be. reprisal,ther particularly u.s. goldman sachs saying the peak will be higher than expecting right now. enda: it is a big question. more pat -- more important factors, they are in good order.
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fiscal balance sheets are in fairly good order. that asia is in better shape this time. if we want to see a pronounced move, we have already had warning signs. has proved they can respond if they have to to protect their currency. india is one of those as well on the external side. it appears there is some cushion, but it is not certain that they could sustain. haidi: it has been a bad season for earnings so far. on average about 8% and earnings report. rishaad: high expectations. expectations going in. does that make you think that the caution we will be talking about in terms of growth to
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value might be a little overstated? >> we think equities are still on the upside. we will look at the value. value is doing well. it is strong in the u.s. because of the tax cuts. numbers,lected in the around the percent earnings growth in the u.s., fantastic numbers. this will slow down over the next few quarters. i think that is where we are in this cycle. from a lotush back of investors is valuation. risk, itok at equity is still attractive. is look atrted to do different sectors. our location and
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financials, delivering strong numbers. it will be we think a positive year. it is so volatile because of the hike. volatility should pay out higher returns at the end. when you look at this part of the world, how are these earnings being reflected in what is going on here? away has been this move into em. is wet we have changed have looked at the technology sector, not because the earnings are not coming through, but it is a richly valued sector. violation has gone up. we have other sectors, financial, which is very cheap. they are delivering more for earnings. taiwan, which is a tech heavy country.
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we operate in singapore, which is a very heavy financial sector market. that is where we think the ending numbers are coming through. we should not forget that we get the new cap index. we see this shift coming through. veryector looks interesting. it is producing earnings numbers that look very attractive. enda: giving -- given what is happening with u.s. data, do you think the synchronized upswing is over? is it still on track? , but is still on track shifting. the inflation story is largely behind us. you see investment coming through. we continue to see earnings.
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it is around 7.5%. the other regions are producing double-digit earnings. in asia, it is strong and in the u.s., it is strong. we think it is a little bit of a lack of affect. we also have downgraded to equities to neutral in some of the profits we have achieved because we can see that there is a temporary slowdown going on. rishaad: rigid early in the interview that there was possibility of getting dollar strength. when yields good to a certain point, how important is it for that part -- for this part of the world? >> it is very important. or two, three one years. we expect weakness. it is important because we can see the u.s. dollar
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strengthening. a sort ofcally gaining competitiveness. that is what we have seen last year and we also see the reflection in terms of difference in the earnings growth between asia and europe. it is a matter of funding cost because a lot of asian countries are finding themselves off the u.s. dollar. based off a strong revenue approach, that helps. if the u.s. dollar starts to weaken. that thecial for us u.s. dollar continues to weaken. matters is where the current account is going. started its new cycle, we think the u.s. dollar is weakening.
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it will not be narrowing, despite what mr. trump tries to achieve. rishaad: thank you very much. there we go. a bit of breaking news coming through. petroleum oil refiners coming together, according to the wall street journal. a $20 million deal. haidi: one of the things we have been looking at is petroleum leverage levels. of the independent refiners will not be will to reduce its leverage. an interesting deal, given that they are buying for over $20 billion, according to the journal. we will be getting more on that story as the details become available. interact with the charts on tv . you can catch up on analysis and say those charts for future reference. -- save those charts for future
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reference. this is bloomberg. ♪
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rishaad: you are back. this is "bloomberg markets." haidi: the results show the company surged to a record last year come higher than all other nonfinancial companies in asia, -- asia. becomeg headlines have the custom. what was the most shocking thing to come out of this report? highest among the nonfinancial companies last year and even higher than softbank or some chinese giants like petrochina. earnings. why 13 billion
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assets in such a short time. to'sad: cash level enough best to cover's -- cover short-term debt? >> no. the cash level down around more than 10%. this level will not be able to cover the short-term debt. it will not be a huge problem if the creditor trust you. --n the creditors doubt you that is a problem. it is -- we do not know what they want to do with deutsche bank going forward. now, i thinkning they want to get rid of their property first.
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the property investment is not really encouraged are the government. is, they want to sell 3rd avenue tower. enter into high price. when not easy to sell you're price level is that high. no buyers want to come in and say i want to talk price. sentiment kind of it -- turned a bit. wanted to solve the ate look the push to go public. ♪
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>> single and 29 in hong kong, i'm paul allen with the first word headlines. north korea says it will invite international observers to witness the decommissioning of its nuclear test site. the statement comes after friday's historic summit and ahead of an anticipated meeting between kim jong-un and president trump. the siteea says probably collapsed after the latest test and isn't workable anymore. >> this administration has its eyes wide open. we know the history and the risks. we will negotiate in a different way than has been done before. we will require the steps. wiki was the word irreversible with great intention. we will require those steps and demonstrate the denuclearization will be achieved. has named newo international board members for
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what could be a record ipo. the outgoing dow chemical's chairman and ceo tops the list of five new directors. guess ipo is the cornerstone of saudi arabia's land transformation away from reliance on fossil fuels. australia will spend half a billion aussie dollars to save the great barrier reef. the government set the world's largest living entity faces challenges from climate change, industrial runoff, and a new species of starfish. they will improve water quality to encourage coastal cleanup campaigns. film has kicked off the summer movie season with the biggest global debut in history. "avengers: infinity war" raked in $350 million worldwide. it's more notable because it has
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yet to open in china, the second biggest box office in the world. it will be in theaters there on may 11. global news, 24 hours a day, powered by over 2700 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. ♪ >> thanks for that. central-bank decisions from the fed and rba, potential trade talks with steve mnuchin headed to beijing, but it is a truncated start of the trading week, with a number of closed markets. let's get the latest. >> china and japan are off-line for holidays. tech in financials are leading sectoral games, and in hong kong they are set for a monthly gains. the hang seng is stabilizing above the 30,000 level. it is the start of a pivotal week for bond markets. also the fed. asian bonds are catching up
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after the first back-to-back again in over three weeks. as a gauge of this risk appetite, the yen is holding steady after capping assist weekly decline. checking in on other currency movers, i want to highlight the peso, up. i want to check in on the currency movers. we can take a look at the peso, trading at 51.70 against the u.s. dollar. short on the peso is being unwound on expectations the central bank will hike rates. the forecastuan, manufacturing pmi for china, the currency is still set for its biggest monthly loss in 17 months. and the aussie dollar is down .2%, and goldman's saying watch out . and the korean won is jumping with korean stocks, despite
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lackluster factory output. that's sparking valleys and companies on the peninsula. hyundai is story nearly 30%, and they jumped to an october, 2015 tensions ease along one of the most heavily fortified borders. >> thank you very much. ipo expected to raise 10 billion u.s. dollars. >> it will be the biggest share offering in the world this year on hong kong's largest listing ever. it could also trigger -- >> that's the problem. we're here with a look at the potential downside implications. >> right. when we talk about the downside, it's very important to think
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that this is a temporary downside. obviously it will bring up hibor, and one-month hibor has already jumped the most in about a decade. that will also limit the money that chases other stocks, putting pressure in the hong kong stock market. but like i said, it's important to think that this is temporary. it will be erased once the ipo is done, and should last about two weeks. side, we areright bringing into hong kong a very attractive stock that will potentially bring foreign money. bad.ay it's good and >> looking at the application being submitted this week, they leave the listing by the end of june. >> right. so all along we have been
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talking about xiaomi looking to become the first to be listed in hong kong. we're expecting it to be filed in many. that would be wednesday, after labor day. othere are expecting some class shares to come to hong kong. -- we havensultation been seeing very active private fundraising, which includes grail. they are planning the ipo, and to raise $1 billion. bgi is also talking about fundraising. consultation is really bringing in a lot of pretty good quality companies. >> a good doctor, as well. >> yes. it will start trading in may. we will watch for the first day debut. >> good to say.
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more about these changes on the hong kong exchange. they should reinvigorate the market. we will be joined by francis rish, part of the languishing nature we have seen for hong kong markets, maybe it will be better with these performers. >> and frances is with us -- what do you make of these changes? is hong kong selling it soul? >> it is for the money. >> but not the soul? [laughter] >> three years ago when alibaba ame to hong kong -- [indiscernible]
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alibaba went to list in new york. ten years ago, [indiscernible] three years, four years ago -- [indiscernible] all the investment banks one money, and after listing, up by $60 billion hong kong today. at times, it is half of the exchange's turnover. years, people have lobbied the government to rhange as they gave way fo alibaba and companies like that to list.
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>> are there actually implications of market integrity? all the countries in the world, all the exchanges in in world, it is order to get business. world,ntries in the everybody just wants money. google, they want business. now, these companies are doing well. when these companies start to go back, the ceos start to steal money from the company's, they are all saying we will break loose. we will see an influx of these
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financials. >> definitely. they are already in the pipeline, big ones. saudi will be the first one to risk. competitive in a business that is very saturated. and of course the biggest one will be while way, which is still a private company. its problems don't deepen. >> many ifs. but in order for hong kong to compete with nasa, i think they have to do this. whichre is one aspect, does this elevate the hong kong market? does it bring it up to the big
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boys? >> yes, it does, in terms of turnover. hong kong is still way behind, $100 billion a day. t's -- we need it 10 times increase the total in order to compete with the big boys. when the hong kong exchange tried to pitch to saudi aramco -- the turnover was so slow, too low. how can you suggest such a big listing? >> what are the implications for funding costs? >> well, i told them it would be a big problem. ofg kong has an influx mainland players at times.
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dollars -- hong kong there will be a short-term crunch but not long-term. could recite the problems of hong kong -- you might have some implications in hibor, which might alleviate pressure on the peg. the last thingy, they want to temper with is something that has been stable for the last 40 years. they will not do it, i would bet my life on it. >> so where do we go from here? come, it won't come from hong kong, so are there implications for people rotating stocks? definitely that will be the
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d there will be more industries. in the you say you don't like xiaomi. what else do you like? what about the health care? >> i like good doctor. but of course with any internet venture, the problem is that the threshold of injury is so slow. anyone can start one. there -- youo be have to kick everybody out of the business to make money. is challenge for good doctor how can they become the dominant online medical service in china? that is the challenge.
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>> there's more than enough room for two or three players. >> there is, but surprisingly, in the internet business, you only have two operators. the second will be eliminated. it would be like various travel companies. facebook is a unique proposition, as is twitter. you can compete. it's too early for me to say what will happen, but i think given the barrier of entry is so low, anybody can get in. there is real pressure in the near future.
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there is more progress in the story about china securities, allowing foreign firms to take this majority stake in local securities. do you think this is a game changer? >> definitely. was the onlyubs one with a controlling interest. now this really opens the floodgates. a lot of this midsize security firm will be taken over by foreign companies like morgan stanley. concession,jor because there are only about 100 securities in china, there is not really that many compared to 600 and hong kong. >> the increase in quality of the market, is that one way of improving the development and the sophistication -- add morek we certainly
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depth to the industry, more business. one of our gadfly columnists was on the other day talking to us about how they are opening up to foreign companies, going on the wrong metrics, as it were. -- how big they were in terms of their net asset value. >> they are quite big, but don't all of these are operating under strict government rules. they have terrible business for the past three years, and if they come in, it will increase
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their business, so they will welcome it. >> and think we have a few caveats on that one. ceo of lun, the securities. vietnam airlines. foreign investment sparks of boom in growth. >> more domestic demand. we hear from the ceo. this is bloomberg. ♪
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♪ this is "bloomberg markets" in hong kong. >> the amount airlines has been transforming its fleet with new planes and expanding into new services. >> the chief executive is looking to further boost growth by launching a dedicated cargo unit.
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startedronics companies their production line in vietnam, and we are now accounting for quite a good share of the transportation for samsung. the imports of parts and things .nto vietnam, then the exports we now look at both the cargo unit as well as the better logistics system. >> obviously a growth area in cargo. >> yes.2017 in the first quarter this year proved to be a very good cargo business. >> what are your plans in the u.s.? as as much business travel out of hong kong or singapore or taiwan, that terrorism is definitely -- but tourism is definitely growing. of travel between
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the vietnam in the u.s. is huge. we have a very big sizes vietnamese population in the there is more visiting friends and relatives which would normally be due to the very low price. preparations, we tried to work with our partners as well. >> we know that the u.s. dollar recently has started an upward trajectory, that it has been fairly weak over the past year or so. how is that helping out your business? stream isur revenue quite evenly positioned with the number of currencies in the basket. -- we can debate,
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but it is better than expected results of currency exchange. >> how hedged argue for this spike in oil prices? >> we don't hedge. we are trying more on the improvement of our operation and operating procedures in order to reduce fuel consumption. >> there will be an auction for rights on may 22, the government owning about 86 shares currently. do you think there are plans to sell more shares, and essentially open up to foreign ownership? goes to 5% off shares, and it is the first step. the next will be vietnam airlines seeing new shares, and havefore we would hope to
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more investors. >> shares of vietnam airlines are currently on the public market. when do you expect or do you expect to list on the ho chi minh exchange? >> we plan to list on the ho chi minh stock exchange in quarter to of 2018. all of this could be early in quarter three. the ceo of vietnam airlines, speaking to juliette saly. >> coming up next, sprinting to the finish line. t-mobile finally seals the deal to buy sprint. we will have the details of this long-awaited agreement, next. this is bloomberg. ♪
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♪ "bloomberg markets: asia." >> abu dhabi investment funds are reading the rewards of its merging with international petroleum. they rose 14% last year, using its combined portfolio in existing companies to sell mature assets. they manage about $250 billion of assets. is betting that they
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can team up to build the next generation wireless network and jump ahead of verizon and at&t. the all stock deal follows weeks of talks. t-mobile will share the new operation, and the ceo says he aims to shake up the sector through innovation. ody's getting an upgrade. bid in neweived a south wales. they are offering $1.2 billion for the 1800 megawatt plant, which is in the hunter valley. includes $900 million for upgrading. >> up next, we will be speaking more about the markets in terms of what the fed has in store.
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all implications for emerging markets, to be joined by stuttering turner bankhead -- by standard chartered bankhead. and there are a few things going on in the geopolitical arena. we are jointed to talk about these broad statements coming through from the north, the latest being that they are putting themselves on the same time zone, and south korea is removing the speakers. ♪
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♪ >> 11:00 in hong kong. 1:00 p.m. in sydney. >> this is "bloomberg markets: asia." ♪ >> asia-pacific stocks on the up. rallying onon prospects of peace on the korean peninsula. >> southeast asia's largest lender delivering a decade high return, beating expectations last quarter. >> north korea on a charm amidsive potentially historic talks with president trump. >> and xiaomi raising $10 billion usd, making it the
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biggest ever in hong kong. but there's a catch. >> a start of a global week in japan, china has a couple of days labor holidays. >> it is a big week when it comes to investment. no expectations. it is the 20th consecutive meeting but we are seeing broadly some positivity. >> and because of that, i want to show you this, illustrating that asian stocks could before we get base against this risk appetite. msci falling through, the in white is testing as a 200 day moving average and in terms of earnings along with me go data and goodbyes from the inter-korea summit, the korean won has jumped despite the
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missing korean factory output. we are seeing pressure coming in the aussie dollar ahead of the rba meeting on tuesday. to 72 by theop year end. elsewhere, shares in hong kong are on course for a monthly gain in volatility. 35,ing is stabilizing above and tech stocks are gaining in hong kong, finding support for their latest pmi readings, indicating that the new and old economies are booming together. i want to put some stocks on your radar. surging afteron the koreas agreed to seek rail and road connection. climbing with other chinese brokers after regulators gave foreign investors the green coal is take stake, but
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dropping the most after they disappointed giving the rising cost of coal. and banking shares are going to fresh records after a profit beat. him checking in on aussie banks in sydney, they are mostly inquirymid an ongoing that could put pressure on earnings stocks. bank to report it is set for its worst streak of decline on record after the chairman quit. >> sophie, thank you. let's get the first word news with paul allen in sydney. >> thanks. new data from china's national bureau of statistics shows factories maintain the momentum in april. manufacturing pmi came in 51.4%, above estimates.
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manufacturing pmi also beat forecasts at 54.8, the best since january. the results indicate the economy remains robust despite attempts to create unrest in simmering trade spats. north korea's as it will invite international observers the decommissioning of its nuclear test site. the statement comes after friday's historic summit and ahead of an anticipated meeting between kim jong-un and president trump. watchers say this site probably collapsed after the latest nuclear test and isn't workable anymore. >> this administration has its eyes wide open. we know history, we know the risks. we are going to be different. we will negotiate in a different way than has been done before. we will require those steps. we use the word era reversible with great intention. we will require those steps to demonstrate the denuclearization. administration says
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it will extend relief on steel and aluminum terrorist to some of its allies, but not all. temporary exemptions expire on saturday, and wilbur said an announcement will be made before the deadline, but he declined to say who would be spared. nations have been asked to accept import quotas. has bought sprint for $26.5 billion, saying they can team up to build the next generation wireless network and jump ahead of verizon and at&t. the stock deal follows years of talks between deutsche telekom and softbank. the t-mobile boss will be the ceo of the new operation. he says he aims to shake up the wireless sector through innovation. global news, 24 hours a day, powered by over 2700 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. ♪ >> as ever, it is a pivotal
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market for not just emerging markets, but that rate decision from the fed in the treasuries refunding announcements. therade is more beholden normal to the u.s. bonds. clive mcdonnell is the head of em equity strategies from standard chartered, joining us in singapore. great to have you. looking at this research from goldman sachs, the peak of this growth could be higher, and they are almost underpricing how aggressive the fed is likely to be. i think that emerging markets are experiencing some indigestion at the moment, given primarily by the stronger dollar we've seen over the past couple months. not in terms of the function of shifting expectations of the outlooks for u.s. versus euro area growth.
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there seems to be greater optimism toward u.s. growth at the moment. you get the sense that in some regards this is quite different from bygone days when we were so coupled in emerging markets with the u.s. and federal reserve that there has been decoupling and it matters less? >> there has been some decoupling from an economic standpoint, i would agree. the share of exports going to the u.s. has weakened over the past decade or so across countries such as china, korea, and taiwan. that at the same time, emerging markets depend on some foreign funds slows, it has continued to increase. much like the dollar is so important. when the dollar is weak it benefits emerging markets. conversely, when the dollar is relatively strong, such as in the year to date peer group emerging markets, tend to
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experience indigestion. >> it has been unusual, hasn't it, the way emerging-market assets have already performed as a haven. this -- dog that is you think that a sustainable or a blip? >> i think it very much depends where you focus. i we look here in asia, wouldn't describe asian markets as a hedge against u.s. certainly see you some differences. performseen some areas better, whereas the north asian markets have struggled. that reflects the defense of -- the defensive quality. >> where do we go from here? what is the focus right now?
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dollar weakness has been something people looked at, there is some dollar strength. higher, wes up even get the point where we see some sustained dollar strength. i think it already is concerning policymakers, specifically the combination of the tightness in liquidity that we are beginning to see due in part to the rate rises, particularly in hong kong, and now there is some anxiety with the upcoming take ipos with the hibor interbank rate relative to where we were weeks ago, the combination of even more demand for liquidity will push hibor up further and put pressure on markets. >> clive, i want to bring up this chart -- we went into this earnings season expecting it to
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be pretty exceptional. it has been those expectations. 82% of the index members outperform by an average of almost 8%. suggest all these trade tensions and trade wars looking overstated? well, you are right that the earnings numbers have been very solid. 22% at the moment compared to about 18% at the beginning of april. 82% of companies beating those numbers compared to the long-term average of 64%. the numbers look good. but bottom line, markets and investors are greedy. they want to know what next. 22% has brought the market where it is today, but what happens next quarter? do we see 23%, 24%?
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in that regard, investors are spooked. they are concerned about the risks of the inversion in the yield curve, the risk of higher yield rate. at standard we don't expect it , and a little benefit uptick in inflation. we are quite comfortable with the outlook but we are going through a period is indigestion with the piercing of 10 year in combination with the geopolitical tensions we have seen over the past two months. what is the place where you would put your money? well, the u.s. is the market that was recently upgraded.
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we have upgraded the u.s. to preferred status which reflects fromullback in valuations the 19 handle we had an early january to a 16 handle of the s&p 500. that's a reflection in the drop of the index and the head of earnings which is bringing back valuations. you also look at shared buybacks with profit repatriation, we will see a big improvement this year. we think it is pretty positive. ultimately we think trump is all about the art of the deal, that we welcome back from the , weipice and see a rebound will see nafta signed and trump will be able to declare some victories as the rhetoric eases and that gives us more optimism for the u.s. which we just upgraded to preferred status. >> clive, please hang out with
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us. >> looking ahead to the rest of the hour, can north and south korea walk the walk after all the talk? we will have more analysis on that. >> next, hong kong exchange kicking off a new ipo. we will discuss what it all means for market liquidity. this is bloomberg. ♪
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♪ >> this is "bloomberg markets: asia." >> just getting word from the indonesian president, about the fundamentals of his country being good, that they wouldn't be interviewing. >> let's get on to this highly anticipated ipo, expected to raise at least $10 billion usd, making it the biggest share offering in the world this year,
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and hong kong's largest ever, but there's a catch. >> it could trigger a bit of a cash crisis. we will get more on this. tell us about this, the potential downsides of something like this coming into the market here. >> right. theyipo investors invest, usually take out a margin loan. having that amount of money locked out for a 10 billion ipo will push up the hibor. seeing that hibor has jumped the most in almost a decade. fromll also stop money putting pressure in the rest of andhong kong stock market it's important to note that these downsides will be temporary. was the ipo process is over everything will be back to normal. there will be more upsides and downsides week as are bringing in an attractive stock with
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investors that will be interested in these. >> that could be one of many when it comes to these tech companies, hopefully taking advantage of the dual sure system. >> we are hoping that there will be more dual class listings. they have already opened the door dual class listings, in hongs you can have kong, and we are seeing active private fundraising for biotech. we have seen companies raising billions of dollars, preparing for an upcoming hong kong ipo. we are definitely anticipating a lot of interest in this new listing. let's get more on this.
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let's talk about the xiaomi listing, and put it into context with these new rules and whether they should be welcome. well, the new rules for ipo think it is a i defensive move. hong kong is worried about losing these make a technology ipos to nasdaq. this is one way for them to grab that market share. one has to be pragmatic about it. ideal, but is good for its long-term market development. specifically on xiaomi, as you reporter highlighted, there will be a short-term cash crunch in hong kong -- i wouldn't be
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surprised to see them inject short-term liquidity. but this is against a broader backdrop, where there is a clear tightening partially by that rising interest rates and because i don't think we can totally discount some of the pressure that's on the very large indebted companies in china and they are looking to extract some of their liquidity from hong kong to address the cash crunch these chinese companies are experiencing. ofre is a convergence different factors which will put continued pressure on hibor in the short-term. the spread between hibor and libor will come down to where they are more in line with long-term averages. hibor is we speak, rising. thisere saying that
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alongside any impact will have on liquidity is a short-term phenomenon? >> yes, clearly it is. there no structural issue at work here. ultimately the weakness in the , you will seear bank rates rise and the purpose of that is to encourage capital inflow back to hong kong which will bring equilibrium back into the system. the system is working well but is creating short-term pressure, but over the next of four to six some of the indebted companies in china start to get more clarity about their i think theg, demand for liquidity should see the use and we will spread come down more in line with long-term averages. bank,,n't know what you
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-- all theus to warnings we have had from the semiconductor companies, the further commoditization of smartphones. how will that be reflected numbers,, because of the supply chain in this neck of the woods? >> we don't cover xiaomi directly, but as you point out, apple will be quite interested. just from an industry perspective they do target different segments, apple the high-end of the market, xiaomi at the middle and. what investors will be focusing on for apple is their 12th generation of phones due out in september, what kind of plans have they got? that therebe clear
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has been some disappointment about the high-end apple phone with wit the $1000 sticker pric. thated to separate weakness from the broader iphone lineup. ultimately there would be a lot of focus and any guidance they can give in terms of the lineup releasing later in the year. >> clive, what do you make of this fleet, or flurry, of biotech and medical services type companies? icarbon.ood doctor, saying they guest are great companies but it depends on who goes to market first. is this really a demographic and in need of that can support many different companies in the
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ecosystem? >> i'm not sure the market can thisrt all of them but drive toward tech is a phenomenon we see globally, putting individuals more in control of their health requirements. we have seen it previously with the likes of other literature. it is part of appealing a way of these more specialized companies , the feeling that they can operate more nimbly on their own as a stand-alone company. i think it is a trend we are likely to see. we will seemately some emergent acquisition activity come to the fore. >> all right. clive, thank you. clive mcdonnell, from standard chartered, joining us in singapore. remember, bloomberg users can
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use the bloomberg, catching up on key analysis. delivered to ♪
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♪ back.are >> a quick check of the latest business flash headlines. southeast asia's largest lender revised first-quarter profits to beat estimates thanks to higher lending and wealth revenue. 26% from aclimbed billion,ier to $1.5 just over $1.1 billion usd. return on equity surged to the highest in a decade. >> noble group says it will go ahead with its plans despite being blocked by the singapore high court.
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they will be opened but immediately adjourned. ordersponse to the court they say is materially misleading. confirms the hong kong owned company is said to $1.2 billion a about $900ncludes million for upgrading the plant. history -- kima jong-un became the first north korean leader to cross into the south. moon jae-in did briefly cross over to the north. this is all part of a charm offensive, setting he will shut down his nuclear test site. that is next.
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♪ >> 11:29 a.m. in hong kong. i'm paul allen. the data from china's national bureau of statistics shows factors maintained momentum in april. manufacturing pmi came in at 51.4%, slightly above estimates. 54.8,so be forecasts that the best since january. the results indicate the economy remains robust, despite official attempts to rein in undead. home secretary has resigned amid claims she misled parliament over moving illegal immigrants. critics have been calling for her to step down and prime minister theresa may has accepted her resignation. it was a counterpoint to foreign secretary boris johnson.
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we'll work together to preserve the nuclear deal even if the u.s. walks away. spoke withrump spo hassan rouhani and agree to protect the accord. the trump administration faces a deadline, and he may withdraw. tehran has said it has no interest in renegotiating the accord. has named new international board members as it moves towards what could be a record initial public offering. the outgoing dow chemical's chairman and ceo top the list of five new directors. the aramco ipo is the cornerstone of saudi arabia's plan to transformation away from fossil fuels. it aims to list the company at home and on at least one international exchange. global news, 24 hours a day, powered by over 2700 journalists and analysts in more than 120 countries.
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i'm paul allen. this is bloomberg. ♪ this is "bloomberg markets." >> let's get straight to a look at the markets. you can see this piece trade playing out nicely. ,> korean assets get a boost the rise in the korean won trading against the dollar, despite the miss we got in output last month. we can trade in inflation data, it remains to be seen if these moves are sustainable and can translate into economic growth. in the equity side of the going downhey are rising for a third straight day.
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we are seeing companies in a benefit from the think proved hyundairea ties, searching after the koreas agreed to seek road connections. i want to highlight defense jong-unafter kim promised to shut down his main nuclear test site. a media report says a class-action lawsuit was filed in the u.s. against the top three chipmakers. limitedm here is a supply of various products. samsung electronics shares are off-line through thursday. jong-un charm offensive
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continues, fresh from the handholding summit with president moon. they are vowing to shut down the nuclear test site and invite the foreign media to witness. >> stephen engle is back in hong kong. he joins us in the studio. it feel like things are happening very quickly. >> and what was it like, a charm offensive? it.were there covering >> it was quite emotional. there were a lot of elderly people, young people. at the time, they were hugging and holding hands as they walked across each other's border, there was crying, lots of crying. a reason poll indicated that 90% of south koreans approve of how this summit transpired on friday. that tells me of the south koreans feel. i'm not sure it's the same messaging and north korea. we will have to find out.
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they will have to reach a peace deal by the end of the year, complete denuclearization, and we don't know what that means. there are baby steps being taken. north korea will invite international inspectors in the media to the weapons testing site in the northeast. we don't know that timeframe, but we are hearing the south koreans will start dismantling and removing the loudspeakers they have at the dmz to broadcast propaganda into the north, and also kapok. -- also kpop. north korea is moving its clocks forward half hour as a goodwill gesture. the question is, is this a lasting peace, or is it just a play? we have heard promises from the north before and they have broken them. >> what's the u.s. response? >> we heard it was the end of
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the war. and also there is cautious optimism from the united states. denuclearization and they want hard and fast results. i'm not sure there will be a lot of bear hugging, he's an awkward handshake are already, it will be interesting to see if this does happen, likely within three or four weeks, this is what the new secretary of state had to say, basically echoing from the 1980's, trust but verify. >> this administration has its eyes wide open. we know the history, we know the risks. we will be very different. we will negotiate in a different way than has been done before. steps. require those we use the word irreversible with great intention. we will require those steps to demonstrate the denuclearization will be achieved. >> and donald trump's latest comments about north korea, he
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said "i don't think he's playing." >> that was the word that he used, denuclearization.nobody quite knows what this actually means. people have their own versions of what they think it means. >> he has halted testing, he has halted missile flight, he will halt and the commission the testing sites -- >> which was meant to the already quic -- >> stop adding to the arsenal. >> that is what he's doing, not adding to the arsenal. in his definition, that might be denuclearization. he tells his own people, we are a nuclear state. will he get rid of those and say we are not a nuclear state anymore? that's debatable. >> thanks a lot. steve engle, back from the dmz. >> let's go for more analysis.
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joining us from our soul studio, he is the author of the book "the north korean ballistic missile program." well-placed to talk. he has gone through all the effort to get to this, he is not going to dismantle and get rid of it all now, is he? >> well, we don't know for sure. we can't predict the future. there is no indication of that. intends to kim truly disarm him denuclearize, he already said over the weekend they would close down their nuclear testing site and invite journalists in to observe, but if he's really willing to do that,, there is a great opportunity to sign the comprehensive nuclear test ban treaty. that prohibits all underground nuclear tests and explosions. for the treaty to go into effect, there are 44 countries that have to sign and ratify.
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36 have. that havethree neither sand nor ratified. as north korea would like to contribute to international peace and security and reveal they have no intention of testing nuclear weapons, they can sign that. >> there is a body of thought he stopped then because he didn't need any more information. this book you wrote about the ballistic missile program, once the efficacy of his weaponry and and doesns systems >, he have a decent delivery mechanism? past couple of years, north korea has made but theye progress serve multiple purposes in this type of regime.
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they would like to use them for and onceof purposes you fire them they cannot be returned. they can deliver weapons of mass destruction, particularly nuclear weapons that can kill large numbers of innocent people. with that threat hanging over the region, we will not have peace and stability. the type of peace regime they are talking about during the summit, i don't think they can have that unless they get into this process of denuclearization. that will be a long process. we will see soon about north korea's intentions and their preferences.they can't conceal that forever . some people are saying things are different, but we will find out soon enough. >> if you were to because
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domestic, and we don't get a deal, what happens? as north korea retreat back to the status quo? i think that's the case. the good news is that the international community, south korea, the united states, and its allies are quite good at deterrence and containment. we've been doing that for decades. we did that very successfully against the much more menacing adversary, the soviet union. north korea pays a high price for their nuclear armament, and they will continue to do so. we have to continue to work to persuade them that there's an alternative pathway to their security and prosperity, and that nuclear weapons are not the only way. hopefully over time they will make the correct strategic choice for their country and for their people. >> this may sound glib and cynical, but is this an elaborate ploy for him to get some cash? he has gone broke. >> well, that very well could
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be. even if i had a direct phone line to him and asked him directly, you might misrepresent. i don't know if what he would tell me would be true or not. we will find that with the archives are opens later. we have to see based on actions, not upon words. that is why they suggested the possibility of signing this ctbt. another thing they can do us on the chemical weapons convention. they can sign a confidentiality agreement with the organization for the prohibition of chemical weapons, abandon their stocks. they deny they have them, but they could do that in a confidential way and not suffer the embarrassment and humiliation. so there things they could do. take action to signal that they are serious about disarmament, they are ready to join the international community, and then we can talk about lifting sanctions and integrating their economy with the rest of the world. you can get the relief they desperately seek. gibson that north
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korea hasn't had to give up anything or do anything to get this level of international engagement, are you confident that when the deal does get done, it will be something that -- details,vil is in the right? is his unorthodox. usually summits are held after the bureaucrats meet, negotiate, the agreements, that it blows up through the bureaucracy, and once there are finals agreement, that has a stable get together + whatever agreements they have reached. this is top-down, it's the other way. the two leaders met on friday from north and south korea, and also working levels have to go, work on all the details. there's an argument to be had at in north korea, that is more
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efficient because of the strict hierarchy in north korea. everyone has to follow the party guidance. when bureaucrats meet foreign ministry officials, meet someone from outside, they always have to report back to pyongyang and get guidance. so whiskey and gives his blessing, then they can work from the top down, and it might be more efficient. we had this with jimmy carter's visit with kim il-sung. >>what t professional arms-control people will have to diplomats. this is the beginning of a long process that will take years. we just have to work through that and see. this is not the end of the process. >> great talking to daniel kingston. up, a spring to the finishing line, as the t-mobile family takes shape. this is bloomberg. ♪
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♪ look at howe a markets are faring today. let's get over to sophie. >> stocks in mumbai are kicking off on a positive note. health care reading a sense of in the statee are of earnings season in mumbai. sentiment might be driven by what we've seen so far. this stock off is about 6/10 of 8%, the highest ever quarterly profit thanks to the tech business. help reduced to that after investing billions of dollars in telecom and retail. bear in mind, ports and bond markets are closed for a bank holiday.
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it was tumbled by a macro headwind for its third straight week of losses. let's check in on what's moving as trading is warming up. utilitiesake a look, and energies are under pressure. i want to zoom in on potential movers, idea cellular among them. 10% drop in net income. steel,uick check on libby house made a big for power after the abrupt resignation of the president and director at a time when the airline is changing some of its most successful policies. the billionaire founder is taking over as interim ceo.
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interclub has said it would consider gregory taylor as president and ceo. >> thanks. it has been years of this will they won't they. t-mobile finally bought sprint. are we done here? >> finally. >> there are so many other moving parts. >> regulators have to sign off, obviously, that's a big issue, whether or not they will, we don't know what the trump administration's views might be. the key point is that t-mobile and sprint and softbank have come to an agreement. it is not a cash deal, it's a stock deal, which means there is no cash changing hands. unloadtbank does get to the debt of spring quantity, and as a result, softbank will own
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27%. essentially, exit the u.s. telco business because t-mobile will be running the new entity. i think we might be there, i think we might finally be done. >> hurdles notwithstanding. under obama, it was like don't even bother. but we know that trumps doj is different. >> and i think the environment has changed a lot. this is not the telco market of five years ago. sprint has been unprofitable. if it were to majorly profitable countries trying to merge, you can imagine n antitru would say no. sprint hasn't made any money for years now. what the softbank you get out of this?
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and how much do they have to spend on friday >> -- on 5g? >> sprint has not been spending for the last few years compared to the others. they have been running it like a telco that is ready for a merger. what they get is to exit. ambitious, isn't it? they don't get cash. but was interesting is that the key thing that is happening is not only are they getting rid of sprint, they are also listing japanese telco's which is actually quite profitable. but as part of the process of losing some of tokyo's stock exchange they have to prove that softbank telco is independent of softbank group. debt toe to buybacks of make sure they have the correct ratings and that will be run separately. they will still own around 70%
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but it will be publicly listed in what's left over will be the softbank group core that doesn't have telco. they will be left with alibaba, which is not the 80 -- the chinese alibaba, difficult to sell those shares. 's on arm went to softbank. >> they will become a bank. they can be softbank legitimately. [laughter] >> because they won't be able to make the loans. >> always a pleasure. we will get more answers on the t-mobile and sprint ceo at 11:00 this evening. stay with us. >> coming up, we are looking at taking on tesla. a chinese electric carmaker
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isn't afraid to go head-to-head with elon musk. the exclusive interview with the chairman. this is bloomberg. ♪
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♪ >> let's have a look at premarket, holiday and golden week in japan, china shut today. we have a bit of growth, hong kong to the upside. labor markets driven up. >> we are waiting a fed decision, not expecting a move, but looking for commentary on trade and treasury yields. rba is staying on hold. let's get you a quick check of the latest business flash headlines. abu dhabi investment funds, the dollar is reaping the rewards of its petroleum revenue, the
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company uses its combined portfolio to boost investment. dollar will eventually manage about $250 billion in assets. airlines extending its transformation by preparing to launch a dedicated cargo unit. it will tap into the growing economy. havenational economies turned vietnam into a major manufacturing help. it is producing southeast asia. fore are now accounting ,ood shares of transportation the imports and things into yes, we looked at the cargo unit.
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hashe latest avengers fell kicked off with the biggest global debut in history. "infinity ward" raked in a record $300 billion worldwide. notablerd is even more because the film has yet to open in china, the second-biggest market in the world. >> there are previous ones of this franchise. looking at what's happening market wise, hong kong is doing well. we are moving to the upside, techhigher, and we do have stocks and bank shares rebounding. it is hsbc's turn to come out with earnings. we are watching for apple.
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and taiwan will be interested. look at thee a region. given that we don't have a lot of direction coming through, we are just seeing gains across the region. indonesia, thailand vietnam,. we are seeing some gains coming from the jakarta composite. that's about it for now. >> "bloomberg daybreak middle east" is up next. ♪ welcome to the xfinity store.
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