tv Bloomberg Markets Asia Bloomberg March 9, 2022 10:00pm-11:00pm EST
cede any territory. franklin templeton's emerging-market equity indian managing director joins us with their strategy. haslinda: asia extending the rally. we have the nikkei 225 posting a seven day since june 2020. it is brisk on with -- risk on with most benchmarks higher. we turn attention to korea, trading after a more hawkish government is expected. in the fx space, the yen down by 2/10 of 1%, weighed down by the price of oil, also higher yields in the u.s. take a look at the bond market, yields rising right now. as russia's invasion of ukraine continues to roil, investors are waiting to see the impact all this has on the u.s. inflation and ecb's policy decision.
let's get to kathleen hays. what is expected for the u.s. cpi report? kathleen: this one is particularly backward looking when you think what has happened to oil prices. it is expected to be another outsized gain. the media forecast from our bloomberg survey, 7.9%, the highest since january of 1982. every month we say it is the highest since 1982. it just keeps getting higher -- getting earlier and 1982. it could come even higher. russia invaded ukraine on february 24. there were only four days left in the month. brent crude hit $140 a barrel on march 6. very little if any of that will be reflected in this already very high number. people are talking about the cpi year-over-year peaking at 8% to
9% in march and april. bloomberg economics thinks it could go as high as 10%. record food prices, surging energy prices, gasoline hit a record, unprecedented $4.25 already. that hurts consumers. the fed will look at this inflation number and say we will go ahead with the 25 basis point rate hike. they will keep the door open to more, but they will say amidst what is going on, russia's wa r on ukraine, what it is doing to the economy, they will move very carefully. rishaad: kathleen, we also have at the moment the house voting on a broad $1.5 trillion government spending bill. that is still ongoing. with a have voted is -- what they have voted is to pass $13.5 billion of aid for ukraine or
the ukrainian response. that is just coming through here on the bloomberg terminal. i want to get back to what else we have. inflation is not just a problem in the u.s., it is a problem globally. the ecb's path to normalization was expected to be fairly quick. of course the situation in ukraine demands a little bit more of a think about all this. kathleen: there was already a debate even before russia invaded ukraine about how quickly the ecb would move. some more say in economy is doing well, inflation is rising, it could happen as soon as june. however bloomberg economics saying at this point they will go with what was planned and the qe in this quarter. bloomberg economics looked for the first rate hike in december. there is this increasing risk they say, and i think they are right, that the ecb at this meeting may try to squash any
expectations people have of a rate hike, even though inflation -- look at this chart. it shows the german break even on the 2-year note going up to 4.89%, almost 5%. the same story for the ecb. it hurts consumers. it could slow the economy. this eu ministers meeting, they will look at defense spending. europe is in a difficult spot as well. that is what the ecb will have to acknowledge. bloomberg economics, they think the ecb will push rate hike expectations into late 2023 or beyond. rishaad: kathleen, thank you so much. just going to get now to what is going on in the u.s. house, as they are voting on suspending russian energy imports. they are also looking at passing this $13.6 billion for ukraine. this is a ukrainian response.
just at the moment you are looking to also have this ongoing vote on the $1.5 trillion government spending bill. that house vote is ongoing. that is the scene at the moment in the house. the u.s. house voting to pass that and other legislation. much of this also has been felt globally because it is all about oil, all about commodities. brent crude at the moment up by nearly 1% after a serious fall back overnight. at the moment brent crude trading $112 a barrel. it is about uae, which was noticeably silent in the days coming after this, saying opec can increase production. that sent oil down. we have a stabilization i guess.
>> yes, so the market is watching to see what opec-plus will do to add more barrels. you have seen this huge run-up in prices. for some reason opec has been really silent about this. uae making public comments, saying there is more they can do, did add a lot of bearish sentiment and did bring yesterday, close to $100. the uae has since then walked back some of that statement and prices are back again in the $110 level for brent. but this will probably be the next event for the market. we will see what opec is going to do. opec was already talking when oil was $70 that that was their sweet spot. now we are in the range of demand destruction. that is what saudi arabia does not want. they don't want countries to be reducing demand and consumption because prices are too high.
you might see action from them. but it is early days. it is what the market will be focusing on for the rest of this week into next week. haslinda: the question is whether opec-plus 10 ramp up further -- can ramp up further. they are already failing to meet the 400,000 barrels a day target. stephen: there are only a handful of countries within opec-plus that can hit that 400,000 barrels a day target. you have seen in the past, as they have increased, libya, other folks, just because of technical reasons or internal strife, they are unable to hit that target. even opec-plus does come to some agreement, there may be a limited amount they can do. this is a nuanced issue. it could be one of these situations where saudi arabia pulls the slack for the other countries. they are one of those producers
that might be able to boost output. whether they want to take that role again is unclear, but there is a lot of talk about in these future opec-plus meetings. haslinda: stephen, thank you. let's get the first word news with vonnie quinn in new york. vonnie: south korean opposition's leader has been elected president. his win will return the conservatives to power after five years and signals a hawkish turn in relations with china and north korea. he will succeed moon jae-in as president on may 10 and will face a parliament where his party maintains democratic majority. ukraine says it won't surrender any territory to moscow. a top foreign-policy eight to president zelensky laid out ukraine's preconditions, with an
immediate cease-fire and withdrawal of russian troops as top priorities. >> if you ask me whether there is a diplomatic solution, sure, we are ready for the diplomatic solution. there were three rounds of negotiations already. tomorrow our minister of foreign affairs will meet with the minister of foreign affairs of turkey and with foreign minister the. vonnie: amazon plans to split its stock. the move will end and era of four that your prices for u.s. tech giant. -- digit prices for u.s. tech giants. the company has also authorized up to $10 billion in shares. amazon surged in late trading on the report. president biden is directing government agencies to focus more on the fast-growing crypto market, including the pros and cons of a u.s. digital currency, and combating illicit finance.
in an executive order, the white house called for coordination on what biden says has been a scattergun approach thus far. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. rishaad: still to come this hour, a look at india's markets as the threat of surging oil and higher inflation looms over the economy. franklin templeton choose its investment strategy with us. -- shares its investment strategy with us. ubs saying the u.s. dollar is saving currency and being short of the yen. more on that coming up. this is bloomberg. ♪
rishaad: that is the scene in congress as of the u.s. house of representatives passes a $13.6 billion deal for ukraine in broad spending. this is the first step as part of a broader bill as well. we've gotten this coming to support the country, which is under attack by russia. this is the u.s. house passing that $13.6 billion for ukraine. haslinda: let's get back to markets. it is a risk on day, bring back our guest, a macro strategist from ubs wealth management. even as we talk about a risk on sentiment in the equities market, we are seeing traders are gravitating towards the dollar. it is still a long dollar story.
dollar trajectory is up. >> yeah, good morning. for the fx market, unlike the equity market, the fact that the u.s. dollar is still on strong footing is because at the current standpoint the u.s. is a slight net energy exporter. if you draw the line across the fx space, you have to focus on the winners and losers from the higher oil commodity index increase. you have the dollar on this side being a safe haven and you have, for example, commodity exporters like the australian dollar, new zealand dollar, all holding steady against the greenback. you need to differentiate who is winning and losing. haslinda: speaking of who is losing, em assets in particular are seeing an outflow in the last nine, 10 days, equivalent
to all the inflows we saw in 2021. are em currencies expected to continue to weaken? teck: in particular for em asia, the reason is it is importing energy with the exception of a handful of countries like australia, indonesia, malaysia. the rest are by and large energy importers. the application of higher commodity prices is it is a negative growth shock. economically we are in a very tough spot. central bank hiking inflation is not helping because this is a bit of stagflation fears. em asia is more vulnerable to higher energy and commodity prices. rishaad: does this mean you stay
away particularly from the dollar-denominated debt in emerging markets and they find themselves in the crosshairs not only of higher commodity prices, but commodity prices which are more elevated in local currencies relative to the strength of the dollar? teck: interestingly, if you want to stay in the debt market in the asia region, i would favor keeping to dollar-denominated debt as opposed to local currency denominated debt. by the simplification that if the currency will be negatively affected, i would rather be holding u.s. dollar-denominated debt. i don't think we are in the situation of extreme stress. for example, we go into a global recession and the market prices in a higher distressed level for the sovereign in terms of debt
servicing, then you will get a broad-based selloff. just between local currency debt and u.s. dollar, you are better off on u.s. dollar debt. rishaad: we. looked at emerging markets let's have a look at developed ones. we have been ecb decision coming up. we also have the all-important consumer price report out of the u.s. earlier. how would those events move the dial for you as an investor strategist? teck: i guess the market is extremely focusing on the central bank. you could argue it might be very expected. given what is happening on the european side, i don't think anyone is expecting a hawkish ecb by any chance. if anything, it would be predictably cautious on growth. it is still a relative winner
and loser argument, where the u.s., because they are not impacted as much from a growth perspective, they are primarily focused on inflation, you would not get a hawkish inflammation -- hawkish inclination from the fed. this bounceback overnight bringing the euro-dollar above 110 could be an opportunity if you want to technically hedge against escalation down the road. it could will drive the euro-dollar down to 110. i don't think the ecb would deliver a hawkish surprised. it is always looking to short the euro-dollar as a hedge. haslinda: which crosses are you liking the most of 2022? teck: generally, stay long commodity related currencies. we have to expect commodity prices to be higher for longer. even past the cease-fire potentially. you want to be long on the
dollar. you want to be short obviously on the sensitive ones affected, like the indian rupee. these are our top calls. haslinda: teck leng tan, ubs wealth management. you can follow one all the day's trading on our markets live blog on bloomberg. you can get a rundown. one click commentary analysis from bloomberg's expert editors. keep it here. this is bloomberg. ♪
to bloomberg on the next stage in negotiations. >> we have to be careful with the russian statements. we have many propaganda statements from these two weeks of the war. what has taken place on the ground is a continuation of fighting, a continuation of trying to encircle towns in ukraine, a continuation of trying to encircle the capital of ukraine, kyiv, a continuation of trying to encircle kharkiv, a continuation of bombarding and shelling civilians in ukraine. that is why we resist this war. that is why we will be doing this. surely we are ready for the diplomatic solution. there were three rounds of negotiations already on the
level of delegation. tomorrow our minister of foreign affairs will meet together with the minister of foreign affairs of turkey, with lavrov. it is important for my president to have direct negotiations with putin. we are ready to talk over a large spectrum of topics. for the time being we don't see that kind of thing from putin himself. we ask the world to sit down with putin at the negotiating table. >> you make it clear that for this to be a solution or for there to be a solution, president zelensky will have to sit down with vladimir putin. you believe that meeting needs to happen. >> it needs to happen in order to bring peace. it will under no circumstances be under the putin rules or ultimatums. our first and foremost precondition for having
negotiations is an immediate cease-fire and the withdrawal of russian troops from the territory of ukraine. rishaad: a foreign policy aide to ukraine speaking with bloomberg. let's check in with some of those business headlines and have a look first of all at the chinese ev maker neo debuting in hong kong. the shanghai-based company joins the hang seng by way of introduction, which provides investors a way to hedge against the risk of being delisted from u.s. exchanges. the move following a homecoming of sorts for other chinese ev firms. one company plans to cut ties to russia. a company spokesperson says it is in the process of terminating all commercial relationships with any business from the company. it operates and aluminum -- an
aluminum refinery in australia. the operator did not confirm if the joint venture would be impacted. sony's playstation business has halted all software and hardware shipments to russia, joining the wave of corporate exits over its invasion of ukraine. the company's online playstation store as well as the latest launch of grantor reason -- gra nd turismo has been suspended. citigroup's efforts to sell a consumer banking muted and russia have stalled due to the war in ukraine. that does raise the prospect that business may be wound down instead of past to a competitor -- passed to a competitor. sources telling us citi is helping move its employees out of the country. haslinda: in the markets, aged extending games. the mse eight asia p -- msde
asia pac index. nikkei 225 up by a must for percent. taiex up by 2.6%. we have the korean won getting a li ft at this time, up 6/10 of 1%. the yen down 3/10 of 1%. this is the story about oil prices, about rising yields in the u.s.. investors taking the money and putting it in the u.s. markets. take a look at where we are in terms of korean stocks. they are surging on the back of that election that we saw. it was a close election, but the president-elect seen as the more hawkish president. gains pretty much across the board for the nuclear plays. across the markets we are keeping an eye on the cpi data out of the u.s.
moves across this region to the upside. chinese companies linked to the nickel company in the heart of this week's big short squeeze over the london metal exchange, those companies have been reaffirming their position. we are seeing a big we are seeing a big rebound take place as the companies provide their hedging position. we are off for the lunch break. in fact, they have just closed for their 90-minute-long eating frenzy. haslinda: i'm not sure about "eating frenzy," but we do have the chinese after lunch. japan back from lunch, and what a rise the nikkei is seeing. asia is having its best day since november 2020.
perhaps it is optimism. prices already reflecting the economic impact from ukraine. ukraine did talk about neutrality, but we are far far away from a solution. vonnie: china is accusing the united states of operating dangerous by a lapse in ukraine which are allegedly being used to conduct research on viruses. the conspiracy theory the u.s. warns could be an effort to support vladimir putin. >> the u.s. should take seriously china's concerns when dealing with the ukraine issue and relations with russia. it must not harm china's rights and interests in any way.
vonnie: the u.s. may sanction russia's state-owned atomic energy company. sources say the biden administration is consulting with the nuclear power industry about the possible impacts. no final decision has been made. russia is heading for one of the biggest inflation spikes this century as waves of sanctions over its invasion of ukraine have come to the collapse of the ruble and contracted trade. bloomberg economics sees inflation peaking at an annual 19% around july. germany is stalling efforts to broadening new sanctions against russia targeting the biggest bank. multiple sources say berlin is resisting a push to at the bank
to the list of russian financial institutions cut off from bank managing system swift. olaf scholz also opposed cutting off energy supplies from russia earlier this week. global news 24 hours a day on air and on bloomberg quicktake powered by more than 2700 analysts and journalists more than 120 countries. haslinda: south koreans have elected their new president, returning the conservative opposition party to power after five years. let's look at market reaction with our asian stocks reporter. looks like korea and stocks are getting a lift, in particular nuclear stocks. >> yes, it is a good day for korean investors. not only is there this global risk on sentiment, but there is also the end of uncertainty coming from who is going to lead
south korea for the next five years. he has said he will be more business and market friendly than his predecessor and will be seen as easing regulations on the nuclear sector, and that is why we are seeing huge gains in the nuclear sector as well as construction. i want to in particular highlight the surge that we are seeing. it has, like, a 50 trillion yuan market cap, but the company gained more than 10% this morning on expectations that he will be easing regulations on some of the internet platform companies. rishaad: he is seen as a hawk. how does this view play into what is going on right now with investors?
>> that is a good point. he is seen as having a more hawkish turn in terms of relations with china or north korea, and that has not been good news for the so-called peace talks that usually benefit from improved diplomatic ties between south and north korea. those companies have been the guest losers, and these peace talks may have -- may not have a good outlook under this new president's tenure, which starts in may. rishaad: thank you so much for that. we are going to keep the south korean theme going. we talked earlier to south
korea's trade minister. we were discussing just some of the most pressing issues facing the incoming administration, including seoul's relations with neighbors, looking also to supply chain and inflation shots resulting from the russian invasion of ukraine. >> the korean people saw the change, and i hope the change could bring a positive outcome to the korean economy and this trade agenda. korean trade is -- we have a strong advocate, and very active trade promotion. we hope that this could bring the stability and prosperity to
this economic environment. rishaad: we do have, of course, a world in flux now. not only do we have the situation in eastern europe, currently, we also have poor relations between south korea and japan right now. do you think this heralds any changes to the way the new administration will be looking at global trade? >> yes indeed. we are closely monitoring what is happening in ukraine and russia. in fact, recently, the korean government joined the international community in putting economic sanctions against russia. we also are monitoring closely how the global supply chain is being affected by this crisis. in terms of bilateral trade between korea and russia or
ukraine, our exposure is minimal. of course, we are importing some of the raw materials, and also, korea is highly dependent on foreign sources. this recent spike in energy prices and also this supply chain disruption in shipping and these logistics, that could cause some disruptions in the global supply chain that korean companies are facing, so we have closely monitored -- we are closely monitoring all these policy measures to stabilize these disruptions. rishaad: what specific measures can seoul deploy in order to
stabilize its supply chain looking ahead? >> we have to develop a delicate and coordinated global supply chain in this high tech industry because no one country can monopolize the supply chain, but also secondly, for this trade in raw materials, it is important for us to form a cooperation network because it is to risky to depend for some of these raw materials on one or two countries. we need to explore new ways in which we could establish some sort of early warning system if there is any disruption along the supply chain.
rishaad: just getting another japanese company, hitachi this time, suspending russian operations. we're talking the likes of sony, nintendo announcing they would be exiting russia today. this as a bandwagon increases of those shunning moscow in light of its invasion of ukraine. haslinda: still to come, we discussed the outlook for indian stocks at franklin templeton. keep it with us. this is bloomberg. ♪
rishaad: we will be focusing on india in a second or two, but as it was announced on wednesday, the carolyn will be giving a news conference. -- carrie lam will be giving a news conference. they have instituted flight fans for nine countries, and she has also been talking about setting up isolation facilities.
this against a backdrop saying that mass testing is not a top priority for the country. this is carrie lam. she also says they will be opening up interest in international travel. the covid situation is stable, there you go. haslinda: let's get back to markets, india in particular. indian stocks advance for the second day wednesday after a 4-day losing streak. that marks the second-best session for the benchmark since russia's invasion of ukraine. let's get perspective from the emerging markets india cio at franklin templeton. we know investors are pretty worried about oil prices in particular. how are you positioning yourself for the potential increase in oil prices from here? >> to be fair, we are already position for high oil prices.
we think oil will skew towards commodity consumers rather than commodity producers. if the market price stays higher for longer, the earning profile of the market itself will change in favor of commodity producers than users, and we will have to see some meaningful changes in the allocation of the portfolio, but as things stand today, we still think that the shorter-term spikes in many commodities should cool off if there is a resolution to the ongoing political conflict. haslinda: what are you doing with your own portfolio? are you reallocating? are you holding more cash? >> not really. we are looking from a bottom up perspective if they are directly
or indirectly affected, and wherever we are seeing businesses that are not impacted significantly or have the ability to pass on cost increases, we are developing more conviction because the valuations have become more reasonable, and we are looking to add on to these positions. however, there are companies which are using commodities as imports. we are -- where we are yet to see the pricing power of these companies. we think in the shorter-term, the earnings of these companies can be impacted, and that may keep share prices down for some time, and that is where we need to take a more measured approach towards bottom fishing in these
troubled sectors. rishaad: we happy open there in mumbai at the moment for equities and we are seeing big gains across the board right now. an fte -- nfte of 1%. with what is happening to politically, with the specter of higher inflation not be a big head scratcher for the bank of india? have they got it all to court? >> until now, the monetary policy committee over the bank of india have taken the view that the bulk of the supply-side disruption and inflation will be transient in nature and therefore, the shorter-term medium-term monetary policy may not have to be altered significantly to address the transient nature of inflation, but, however, if the commodity
supply is disrupted, if it is permanently shifted ports, i think prices will settle at a higher level rather than the previous level, in which case, inflation will continue to remain sticky, so there is probably a need to look at inflation control in a more active manner in the coming quarters, but i think going by the last commentary and the disposition we have, we think that will be a very measured approach to moderating inflation using interest rates and liquidity as a primary tool because the bulk of this is more like supply-side driven rather than demand-side driven. rishaad: well, that is it. you cannot do a lot with supply-side inflation here, but
given how the markets have been roiled over the last two weeks, do you see any pockets of value which is screaming because it has been so oversold out there? >> yes, we have a healthy -- there has been a healthy correction in the services sector because foreigners have been heavily selling in india over the past couple of months, and financials are a large percentage of the market. we saw some meaningful correction in the banks and insurance companies. we don't think that the current global risk off or geopolitical situation has meaningfully altered the long-term earnings power or earnings growth of these companies, which are retail banks or retail insurance companies. with valuations down 20% to 25%, we think that is a good buying opportunity in that space, and
we also think some of the areas right for correction include health care, tech, and some consumer staples. they have been going up and are slightly lagging in their effort to pass on stock increases. the stocks have gone through some healthy correction and we are looking at interesting opportunities in that space. where we are slightly more defensive -- i think one more aspect which may come up in a more structural way is with the ongoing dependence on external energy and the imports, that will probably be a more indigenous effort in consumer durables and electronics. i think the sensitivity -- we
would like to build on the sensitivity of the imports in these spaces, and we have a emergence of dynamic opportunities, but that is more a structural emerging theme. rishaad: great of you to join us. thank you. let's tell you what we've got coming up later on bloomberg markets. reports about goldman exploring bilateral crypto options. what does that actually mean? we get to the bottom of this. this is bloomberg. ♪
haslinda: this is how it is looking for bitcoin, trading down 2.5% after rising. how much it has fallen. goldman sachs exploring offering over-the-counter bilateral crypto after cryptocurrencies rallied and after an overhaul of the assets which janet yellen called historic. our cross assets editor joins us now. what with these new crypto options from goldman mean?
>> it is a big deal that somebody like goldman is looking to get into this space, and the bilateral options would allow trades to be customized, so crypto holders like hedge funds can hedge risks. they can do deals, so this would be a bigger name player getting into it. the market has really been dominated by kind of crypto native firms mostly, so bigger banks feeling confident to do this, we know there is some client demand, but anyone feeling confident given the current regulatory environment, that is a signal that we could get a lot more of these things coming down the line. rishaad: the biden administration coming out with some groundwork -- laying some groundwork, anyway, for new rules on crypto.
markets took that well. what do we know about all this? >> well, it was a pretty broad brush instruction, so far, right? but it is a directive for these agencies to try to work together. talking about looking into a u.s. digital dollar, directing agencies to focus more on the crypto market overall, but what it did not do was have some of the more strict is that some people had worried about, and it shows the u.s. is paying attention to it. they talk about working with and listening to the industry, so a lot of people did take heart from that, that there will possibly be a combined approach instead of scattershot like it has been, and two, that it might not be as harsh as some had feared when these regulations actually come out. of course, it will be months or
years before anything actually comes out, but the industry is somewhat taking this to heart. rishaad: i suppose it shows they are now on the radar at least and are in the context of institutional acceptance. thanks for that, our cross assets editor. let's have a look at some of those business flash headlines. we have a chinese tv maker debuting in hong kong. the stock listing does not involve selling new shares or raising new funds, but joining the hang seng by way of introduction, as a way to avoid risk by being delisted from u.s. companies.
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