Transcripts For BLOOMBERG Bloomberg Markets Asia 20171227

Economic data. We have the Chinese Industrial province. This dovetails into what is happening with the story in the morning and what it will mean, phenomenal gdp. Matching statistics, they are profitg in november and growth is expected to edge down to 25 year on year in october from 27. 7 in september and we have continued to eke slightly in november but lets see where we come from. We were seeing profits under some pressure. At the moment, it is that at the moment. Growth in the pipeline. Some more movement. , as those numbers are out look at what is going on elsewhere. We have markets back online today following the christmas break and taking a look at what is going on with shares in singapore. Recovering from tuesdays drop. ,hey are resuming gains marginally higher this wednesday and following the text want. That is in focus and snapping a. 1 of thep gaining open. Lets check in on the supplier in taipei. In that stock under pressure and falling for a second day. That forecast being cut by certain analysts. Lets take a look at some other moves in the market. We have Energy Stocks leading gains in sydney. We see some of their coming through. The cost be though is leading major benchmarks down about. 5 . The most on record and seemed to worsen investor sentiment. That is according to shanghai and investments that cut the stock to neutral. On record and seemed to worsen investorkawasaki heavy ie most in a year, gaining 8 after number a upgraded the stock to buy. Whatever it is, it is amazing. Light trading is accelerating that. First word news, lets get over to sydney and joined paul allen. Only the thin postholiday trading, but regulation that iphone sales will fall and drag the market down. Apple itself slid more than 2. 5 . Analysts lower the iphone x to firstforecast quarter citing lackluster demand at the end of the Holiday Shopping season. The contrary in that forecast the rise this year said the climb has further to go. The bank head of market strategy, the yuan would strengthen to 6. 55 to the dollar by the end of 2017. Projections compiled by bloomberg, they expect to see 6. 45 in 12 months time. Data offers a warning for 2018. Now that president she is less motivated to prop up growth. The president says there was an incentive to ensure the economy was humming along. Fourthquarter results show a shift to slower growth. Bitcoin bounced back, surging briefly passed 16,000 as traders try to draw a line under a five day slump. The preholiday tumble comes with new warnings to financial authorities about elevated risk. Israel is banned companies from the Tel Aviv Exchange. 2700 journalists and analysts in more than 120 countries. Im paul allen. This is bloomberg. Rishaad the longest winning streak in more than a year, prices down now and seeing the highs and almost fullyear four years overnight. Surging after china stepped up its war on pollution. Tell us more about that and how it all plays out. It is all about fighting pollution. Signaled thet has willingness to fight pollution at the expense of slower Economic Growth. The Chinese Government has taken a lot of effort to cut core consumption and boost natural gas supply, reducing production. Yesterday, a newspaper report factories int 270 the neighboring province that has been ordered to cut production. The Chinese Government looks like it is getting really serious about fighting pollution. The moment, taking the news in. Over the past few months, supply concerns has become a factor behind a copper price rally. Copper prices have gone up 31 over the last year. Chinas largest copper producer, it will have to stop production for a week or two. I suppose we have to get the views of what analysts are , a very important industrial method. They are expecting the copper prices to go further next year. The u. S. Economy is improving and growing faster. The other reason is china moves to cut production at the factories. Of course, not everybody is. Ptimistic bnp paribas said that the minor correction in copper prices in the people are bullish. Lets get to chinas top economic planner, launching an antimonopoly investigation. We have 17 companies under investigation for a week now including petrochinas sales unit. Gas prices surging. What do we know about the inquiries thus far . As we mentioned, this investigation has been going on for about a week. China is a big supplier. The unit as you mentioned is under investigation. They have been fined. Chance to be early stages. Prices went up as well. The government is looking into it. This is where demand goes. This winter has caused a shortage of gas forcing the Company Country to import a lot of liquefied natural gas by boat. The winter has been tough and is expected. A lot of this has to do with the governments fight against pollution and use of coal. A lot of consumers both commercial and residential are switching their boilers from coal and petroleum fires to gasfired because it fits with the government regulation. Coupled with the higher demand for heating during the winter. We have traded a yesterday. That is exactly what china is doing. You could continue to rise. Thank you for joining us from tokyo. Industrial to clear the air on how the war on pollution is affecting business. 2018, digital currency. Are out there. This is bloomberg. Rishaad look at the headlines, raising more than 1 billion in a share sale. This is the second biggest shipbuilder, up to half a million new shares before the end of march. They will be doing it at a discount to 24 to the tuesday on the working capital and shrinking orders. 97y are being sued by Institutional Investors seeking damages in the scandal. The suit was filed at Tokyo District Court in september for requested damages with over 219 million. Miggy springs brings the number six filed a 34. 6 billion, emerging talks. Archon has been damaged by a vicious mobile price war. Here we have a free market trading and a gain of. 75 in the session. It was a last time they had it, closing at that level. It about. 7 . The premarket does not end for another four minutes. Though showing arise on that contract. All the evers to deleverage, but there are questions that there is indication to such a policy. There will be a cost to the campaign in 2018. I say we have to sacrifice more growth. , wee keep doing things publicly announced limiting our options and limiting choices for the future. Questioning the selloff in bonds. Stretching them to corporate equities as well. We have a lot of global funds, a 10 year sovereign is really quite attractive and they are coming back in. Is this route over . 3. 9 looks much better than before. About 2. 8. Ll talking historically, it may be even more. And then there are some lovely qualities. They go when they have to deleverage. It is harder to get rid of it. I would say that 3. 9 is much better. At the outlooks for 2018 in the shanghai composite for next year. It could zigzag. This year, it went exceedingly well. At 500,ally outperforms the china export. They are losing 10 to 20 this year. And so it takes a bit of time for the mentality to change. They are making really good represents that part of the chinese economy. Higher and the china example has been really shaky recently. In todays turmoil, markets are down. Risen. Ve do you stick with tech . Year, the for next Tech Innovation cycle is on. ,ut the better tech stocks china is seeing some leaders in pockets of this segment. And also, some of the guys have been a natural leader by the government. They have been telling these funds that they need to limit how many hong kong stocks that they can put in their portfolio. Allowing them to put all their exit one basket. This hang seng need that kind of money to sustain these levels . That is the reason why we get wind of regulation change and start doing so well. To us. speaking bitcoin being as much as 50 in shrugging off any holiday hangover. The rally is in tact. This is bloomberg. Rishaad one of the big stories of 2017 has been Bitcoin Trading a bit lower. Trade investors have not gotten that short breather. At the wall, keeping and i keeping an eye on three bloomberg charts. Ramy we did see a popup for bitcoin almost making it to 16,000. But it couldnt hold it and as we are seeing in asia trading, let me flip the board. It has actually flipped it back to the positive over the last couple hours. It had been negative but investors are seeing a bit of a floor. Bitcoin is also pushing back up higher. 1. 4 , and both futures up by a little bit more than 1 here. What is really amounting to volatility both up and down. This is g btv 7518. You are seeing bitcoins price at the bottom part of your screen. We see the yellow ups and downs. We see the volatility up by nearly 130 volatility points. It was back in september as well as august and july. The was not speaking to possibility of profits as well as losses there. Btv 7099. You are looking at Bitcoin Futures as well as bitcoin spot. So, it was upor about 14 . , it is volumet spike. G btv and its rivals already doing better than itself. That is a ripple up by 4 . The ups andk about downs of bitcoin, use a look at bitcoin. Remember that there are other cryptocurrency rivals out there. Pack theleading the last 10 days. Rishaad we are joined by a Senior Market analyst and with us, thanks for joining us. Crypto if you are buying it, youre not an investor or you are brave or insert adjective here. What is the adjective you want to use . Yourwill leave it up to imagination, but 99 of people involved in the bitcoin market arent investors. Theyare buying it because think the next week they can make 30 to 40 . They come out and say the correction in the space of three or four days was a healthy correction. I dont know where they get that methodology from. When it tripled in value in the space of four weeks, 30 in three days and then up 50 one day later, i dont quite maybe i am showing my age here. Rishaad theyll always say this time its different. Whenever people say this time its different, it never is. I want to discuss with him, so lets tell you about chinas in just a few minutes time. The Immediate Reaction and all that on day one. In hong kong, getting underway once more. And we do look back at slightly positive. Rishaad we are right here in the heart of hong kong. That free market, what are you watching out for today . There have been significant moves. It is also one which is currently being dictated in to a larger seat. Street. The iphone x sales are looking disappointing. Copper on an absolute breakout at the moment. The industrial profits are just coming out at the moment. It is way less. 785. 8 billion. It is wayand the profits or 6. 9 trillion. Up to 27 . October showed 25 and how does that play out . Shanghai markets just opening. I suggest we do have a weakness coming 25 through. About. 2 . 1 how you sliding about and smallcap is also under pressure. And that market comes back online. It will be 8 right there. Chinese miners today, the antipollution and halting production to check on those stocks. Chinasmind it is largest copper producer. We are seeing a copper rally continue. The stars are aligning for the red metal. Rally momentum to 31 this year at the golden globe. And other stocks to watch this morning, we are keeping at the aluminum for the share sales with approved tact. Stock is 77 owned. Taiwan is a good day and continuing the clock new highs to hong kong. We go full providers for a custom rate. About. 8 . Ns of we have oil producers. We are hired by galaxy entertainment, and that tech in the optical is leading there. For u. S. Tech stocks overnight. Rishaad and talking with apple as well, the fallback there and overall talk of a very dissuading sales number. Copper. Back afteras pulled china stepped up the war on pollution by closing processing plants. And the day in new york longest winning streak in more than a year. Chinas leading producer was ofd on monday on the threat assessment was carried out. Based on green related indicators. Index of thees the utilization of resources and the cleanup effort. The finest airquality being near the bottom. China is stepping up to scrutiny of overseas deals and planning a tougher punishment for Companies Engaged in unsafe competition and illegal financing. China says it will only approve overseas investment project in line with the Nations Development plan. Announced 145 billion. Chinas soccer stock regulator will return home by the end of the year. Has wanted them to provide interestfree loans since september. The company borrowed heavily and the stock has been there since april. , andatest star wars movie being disappointed. It took 100 million for the second week in a row. Ticket sales are down 54 . The decline is the second worst seen by any star wars movie. Drop is due to Christmas Eve falling on a sunday. Global news 24 hours a day, more than 120 countries. Rishaad as opposed to 25 plus percent in october. News,d is this ultimately. It is what we were expecting. Graphic actually, its where we were today. There were outliers. We see that flow through. Enter conditions in china and it may account for part of it. Thing it might do is the war against pollution as well on top of that. I do believe that they seem very serious about reducing pollution. They certainly mean business. The greater plan for china. Labor and pollution, further up the value chain. Lets move from china to japan. Thought. Tually been the labor market reform seems to be permanently stock. And also at the same time, this huge drawback in unemployment as well. Traditional economics has gone out the window. Story was not creating those things going up. This is part of the frustration of this quantitative easing. It is going how dangerous deflation is. It bear in mind that the toanese population, starting where therunch population is aging but the birth rate is plunging. Thes playing its part on inflation because older people tend to spend less money. There are stricter labor laws there. They were supposed reform the labor market but cant control it, basically. Effectit hasnt had an on the nikkei this year, has it . I think a lot of people are buying into the japan recovery. We do expected to weaken. We expected it to continue, to be honest. The second is outside. On top of that, equities. I do think we will see some sort of equity in this quarter of 2018. There is a Federal Reserve governor, there is a stock Market Correction to the downside. A stock market is correct. I think personally, it would be a healthy correction. Will reduce as well. I expect to see a bit of a pullback. There are some exuberant height. Market in asia pacific. You get economic data. What is the painting and where will it fit into all that . We have been discussing that and more. This is bloomberg. Is the longdelayed resort in the obama bahamas. They claim fake bills. Than 2 billion. It is a massive resort that has been built from the bahamas. The company suing here is the baja bml. That is the original developer. Unit of china state constructions. Construction engineering has previously defended itself against some of these complaints. China state Construction Engineering has it previously it was mismanaging things. Around 2005 when the idea came up. And when the crisis struck, these guys are the chinese that step forward. It was a chinese construction giant. They kind of got along with those problems. It was up and running, im assuming . Properly . The localread media reports, the tourism minister says that the occupancy rate was so low. They were talking about 25 in the resort itself was saying that the numbers are higher than that and the outlook for 2018 is very good. I was just reading reviews in the daily telegraph. What is this resort . It is an unbelievable thing wasuse in the bahamas, it shadow. It was a reason for the downgrade. Crucial for the bahamas to get this right. And in the background, you have this seemingly endless dickering. Rishaad can we get back to the chinese economy because it is showing signs of slowing down . 3000 businesses in the is ony, the china beijing this. Is it me the security chief asia economist. This year, it is just too strong. In october was 25 . The exports in general consumption, it was a strong investment. Aremain drivers of gdp doing very well this year. Of course, going for what the government is going to tighten. A very clear signal from the Chinese Party congress. And also the latest workshop on economic policy. The keyword now is to present financial crisis prevent financial crisis is to reduce poverty. Growth. Slow down this was the conference that concluded on december 20 . And ultimately, what are they likely to do . Gdp, and an elusive regime . Thats right. Even though they will review the details in march, already, there are lots of indications showing that they are going to move away from the targeting models. Repeat it was in 2022. It is a lot of burden. Conference, folks on the speed of growth, they are focusing on the quality of growth. Issue, andmental they solved those problems. Sacrificing the speed of growth. The indication of monetary policy, it would still be prudent which means they are not relying anymore on monetary stimulus. For fiscal policy, they continue to rely. The move away from this investment. There is a new way of fiscal policy. Rishaad just over 25 in october. Its all about growth. Gdp and ito nominal is a good one. Seeing growth of about 6. 8 . Growth and how much to the industrial profit numbers today really do that looking ahead. I think the chinese growth number is very interesting. Because i actually question the chinese growth number back in 2015. The 7 , i think it might be exaggerated. The index that time is very low. It is overstated. But this year, i think is a lot of indication that it is underestimated. The profit number is double digits. Look at the income growth. The tax Revenue Growth is also around 10 . It is growing around 10 . They questioned the number. They are a little bit in that technicality. They are out of time. Think you for joining us today and have a fantastic 2018. Device razraming took off on the stock exchange. Rishaad gaming device maker razr sort of hong kong in its first day of trading, as much as 40 . Why the city was the number one choice for coming to the market. With a hong kong was a perfect location to be in the u. S. And china for both sides of the market. R and above theym sure in the u. S. , chose not to list in the u. S. Mentioned, it in the u. S. , and not many people know day stilldouble 11 recentone, it was a shopping day. It is a great opportunity to be in hong kong. Im also curious about the accessories the for desktop and laptop, but youre coming out with smartphone. Apple or samsung and others cant. We focus on the 2. 2 billion gamers out there and we have built a massive ecosystem of hardware, software, and services around the gamer. Moving to mobile allows us to extend that ecosystem. Known in the consul sector and the pc sector and it is extending to the mobile sector to address the gamer. The 2. 2 billion gamers out there on multiple platforms. The first reviews have been incredibly stellar. We hope to continue doing that. The edge you will be able to break, is it more for the gamers and not looking at rivals like apple or samsung . Its a complete different ball for you here. The biggest segment of gaming , it is a 100 billion industry. Our focus has always been on entertainment, on the gamer. And we built the razer phone for all of that. It is the gamer phone. The stellar rise there. Investment, fixed income. The top three conviction trades. This is bloomberg. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. Thin trading across the asiapacific, little direction from wall street. Worries giving apple suppliers a hard time. One of the vick losers after announcing a share sale. Capacity and low orders being blamed for all of that. Lee, backy y. Appealing his prison term, prosecutors one of longer sentence. I am Rishaad Salamat in hong kong. This is Bloomberg Markets asia. Rishaad not much for Equity Investors to get 13th and two. One thing they have been looking at our profits from china. Just sigh of the 50 growth level. How is that being interpreted by investors out there . Lets get it to sophie. Broadlythe mood is positive when it comes to equities markets, but chinese stocks under pressure. Elsewhere, we do have the kospi sk hynixmsung and lower. Japanese benchmarks fluctuating aztec and oil shares pulling an office at in opposite directions. Movers inook at other the region, kawasaki heavy rising the most in the year after being upgraded at anymore. Ront climbing after a surgeon profit. Country garden of for a third day, trading at a september high. I want to show you an Industrial Equipment maker surging in hong kong. Acquire morees to shares of legend holdings. Amongg kong, tech shares the worst performers. Aac losing 5 this morning. , theai heavy in focus biggest drag in seoul, korea, sinking after its share sale plan. Nine dragons also sinking in hong kong. ,n the commodities space aluminum leading the rally among base metals and shanghai, and copper extending gains. Highr topping a threeyear in london, so base metals given of booze given chinas plans to halt production in some metals. Thisad whole part of story trying to reduce pollution in the country. Thank you for that. Lets join paul allen for the first word news. Thanks. Profit growth for chinas industrial slowed in november as factory inflation eased. Rough its rose 14. 9 from the year earlier, compared to 25 in october, robust demand and factories have lifted profitability, helping Companies Invest more. And however, Profit Growth may slow. Pulling back after china stepped up a war on pollution by closing processing plants on copper. Futures gain for a 14th day in new york, the longest winning streak in the year. Leading supplier was told to halt output. China has announced a new barometer of the health of provincial economies based on greenrelated indicators. The green index gauges the quality of the environment, use of resources come and clean up. Despitetops the list its air quality being near the body them. Bull whoarian forecasted the yuans says its climb has further to go. Rise has further to go. See 6. 45st expects to in 12 months time. Wall street saw only thin postholiday trading, but speculation new iphone sales would fall short drag the market down. Apple slid 2. 5 to its lowest since august, mirroring falls of suppliers in asia. Analysts lowered iphone x shipping come a citing lackluster demand at the end of the Holiday Shopping season. Shipping shipments, citing lackluster demand at the end of Holiday Shopping. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Rishaad lets get to our asia transport reporter in singapore. What do we know about this plan question mark plan . Trying topany is raise their capital doing this Fund Raising Plan that i think caught this market off guard. It is a huge, massive share sale. They are planning to raise funds ,nough to bring down their debt as well as have cash on hand next year when they expect orders to recover. So this is taking a preemptive thatfor them to ensure they have enough cash on hand when they go into the new year. Is why ishe question this company trying to raise capital let this moment as well . Yes, there are a lot of companies trying to raise funds. Samsung heavy is one of them. You have to look at it in a different way. Samsung heavy is expecting losses and have a lot of provisions that have not set aside for that, and it will hurt them next year. Is a different story from for hyundai heavy because they have been winning orders towards the second half of the year, so they do need cash. There is a bit of a mismatch in t ah because there were no lot of orders in 2015, 2016 come up so that means they will have fallen short on their cash. What if they see orders coming back . They should be able to overcome this temporary cash shortage they are going through right now. Rishaad staying with shipping, hop con hong kong was the worlds busiest port. It went down to fifth, and it is about to lose that place as well. What is going wrong . For hong kong, it has served as the gateway to china are many years because the ports and china were not that developed, so over the years with china joining wto and becoming the factory of the world, china has invested heavily on improving capacity and productivity at its ports, and it is paying off with shanghai number one Commission Jim taking over hong kong. We see a lot of other courts in china gearing up as well. The problem with hong kong is , it as a gateway to china is becoming less, and they have not made major investment in improving capacity over the years, so they have fallen a bit behind in that sense, so i dont see that changing anytime soon for hong kong unless they see the need to increase capacity, which i dont think they need because as i said china is increasing their capacity at the same time. Rishaad thank you for that. Our asia transport reporter there. Oil reversing gains in london the highest int two years. Lets get over to our strategist in sydney. Garfield reynolds. Were looking at that coin, but lets have a look at copper. With crude, i think you meant. Crude oil jumped overnight. There was a pipeline blown up in libya. So that is looking to take 70,000 to 100,000 barrels a day of production out of the market, so there is a kneejerk reaction to that. Also, saudi arabias budget was signaling it is bullish on oil going forward, which you would expect it today, but it sees revenues rising 80 in the next five years, so these were taken as reasons to beat crude up, however, both of those are not factors that really shift the goal posts all that much. There was a report out overnight that the increase in Shale Oil Production out of the u. S. Will probably add 500,000 barrels a 2018, so when of you take that into consideration , you see it is unwise to bid crude up too much, hence the pullback today. Rishaad that is just it. We have talked about it before. Is really the production swing production element now, shale. Theres almost a lid on wti between 60 and 65 a barrel . It would take something Game Changing on the demand side or , andy side to shift that you probably say it has to come from the demand side, because once oil pushes above 60 to 65, that just encourages a rampup in production in the u. S. , and over the last few years one of the things has been how rapidly the u. S. Shale Oil Production pipeline can react to changes in prices. Theyand the saudis engineer a reduction, so held off, but as the price came back up, shale started to ramp up here it rampup. Rishaad thank you for joining us. Garfield reynolds. You can follow more on the days trading on the markets live blog if you are a bloomberg terminal subscriber. Taking a look at one of the huge moves to the upside, a bank up 14 point 5 , rising as much as 17 in intraday trading. Mitsubishi usg taking a new 74 stake in this bank. Be 89 of year to date. The surge 14. 5 rise now as the stock helps to propel that jakarta index to an intraday record high. We will be looking at where you should be parking your money and how you should make it work. This is bloomberg. It work. This is bloomberg. Rishaad a look at the bond market. Our next guest favoring china and india despite a selloff earlier this year. Rajeev de melllo at schroder investment. Tell us what to expect from those bond markets. They are diverse and different. Exactly. Big difference between markets like india and china and the u. S. And europe is what makes them attractive. They are on a slightly different cycle. Their Central Banks have different objectives. China, general leak the central bank has been tightening policy already most of this year, so that is behind us, and bond yields are up, so it makes them more attractive. We are seeing inflation plateau in china. Ppi is supposed to come down. We dont see too much upside for cpi inflation either, so that makes chinese bonds attractive. The currency has generally been on the stronger side, but these yields are attractive compared to u. S. Come europe, and japan. Is a very interesting case now. At 7. 3 after a selloff in the last couple of months youd the yields have moved up. Months. The yields have moved up. The central bank is focused on inflation targeting. It has gone up now im a 4. 9, but they seem to be credible, and that would be a Real Advantage for bondholders of longer maturities to have a central bank focused on bringing inflation lower, so that makes me very interested in indian bonds with the guilds where they are. , which isis staple important for Global Investors investing in these bonds. If anything, it has a tendency to appreciate in this generally weaker, sideways dollar movement. It is good for higher yields in currencies and bonds. Bondsd you are favoring in local currency terms rather than the ones that are dollardenominated . Yes, absolutely. I like local currency bond yields because they are higher. Space,ars denominated you have had a significant compression of spreads. We have that risk that u. S. Yields gradually rise as the fed ates, and the fed might hike a faster pace than the market is , and that right now puts some uncertainty around the dollar bonds, which does not exist for the local currency bonds because we dont expect the reserve bank of india to hike rates, and dont expect Bank Indonesia either to hike rates this year. Or the coming year. Rishaad stick around with us. We have a lot more to talk about, not least of which are the conviction trades you have. Rajeev de melllo with schroder. Toshiba being sued by 97 Institutional Investors seeking damage for inappropriate accounting. In september,iled requested damages at more than 291 million. That brings the number of suits filed against toshiba in japan to 34, combined value 1. 5 billion. Reliance communication selling by 6 to cut borrowing billion. The sale comes after the collapse in october of merger talks and the failure of a planned tower sale. Has been damaged by a vicious price war that hit right across indias mobile industry. Than 5el raising more billion to refinance its debt. It would be the first return to the market and 18 months. This after selling unprofitable and access assets focusing on india. About 1. 5 up in mumbai in the last session. Surging to thenk highest this century. It is all about Mitsubishi Ufj. We will look at that and more, next. Rishaad Bank Indonesia jumping on news that Mitsubishi Ufj will acquire 20 . Our chief international Haslinda Amin is following this story. Danamon investors love this news. They love it. Shares the highest since 2000. Not so much for Mitsubishi Ufj investors. That 39 premium it paid may have been too much. Mitsubishi ufj shares are down on a day when the nikkei is trading higher. Mitsubishi ufj needs to expand outside japan for future growth. Billion. For 1. 2 singapore stateowned Investment Company is one of the owners. The deal set to be completed next year. This is just the first phase. Mitsubishi ufj is looking to expand its stake in danamon even more, and targeting 74 . Can it do it . We are not sure. Remember that indonesia has a 40 cap on Foreign Ownership of local banks. Dbs tried to buy a stake, it failed, but indonesia is trying to consolidate the sector, about 100 lenders. It may work in Mitsubishi Ufjs favor this time around. Has beenMitsubishi Ufj busy in that part of the world. Why all these acquisitions . Japan is a shrinking market, a graying population, slowing growth. It makes sense for Mitsubishi Ufj to look beyond its shores, and some of a showed looks promising. 600 million population, gdp, so not surprising it has been trying. It has in on a buying spree, and among its purchases in the philippines and thailand, and this stake in danamon is important. It is a crucial milestone for our Strategic Plan in asia. Mitsubishi ufj may merge its local unit with danamon, and danamon has been doing well, reflected in the share price, up 15 today. More than 80 year to date, outperforming the benchmark, outperforming Mitsubishi Ufj in the same period. Rishaad thank you. Joining us from singapore. Lets get back to our guest still with us. You heard what she had to say. Indonesia and say indeed Southeast Asia really fit into your portfolio, or one you would recommend or otherwise . Indonesia, the story has been a good one for bond investors. Most recently, fitch upgraded the sovereign debt to triple be b minus. E Mitsubishi Ufj is a good example as well. Foreign direct investment interest into indonesia continuing. The currency has been extremely stable. The yields in indonesia are significantly higher than many other countries of comparable rating. The 10 year yield is at 6. 3 , attractive considering inflation is not going up, and the total debt to gdp continues to decline. With a disciplined fiscal position, the government, both the Central Government and the provinces, are dedicated to keeping the deficit below 3 , much lower than other countries, so rating improvements, disciplined fiscal policy, and global interest in foreign interest into the country, that is something very positive for the country, and we have seen an enormous rally this year in indonesian bonds. We do expect that to continue as we start the year. Rishaad tell me something, how is the strategy involving as we move to 2018 . How are you looking at the First Quarter and beyond . I think that for the first usually whentory one looks back at past First Quarters is a bit of a disappointment in terms of growth. It has workedear out and we have seen a slowdown in the u. S. , which might take out some of the pressure people are worried about, the fed hiking, the dollar going up. We have not seen the dollar going out. Reason. N the u. S. Have it is important to asia because capital does flow back when the yields go up. Moderationa bit of growth in the First Quarter in the u. S. , that will be good for emerging markets and very good for asia as well. Dollarry remains one of trajectory, which is important for emergingmarket currencies. Dollar investors will look outside their country to look for higher yields, and countries like indonesia, india, and china will offered those yields, and as long as volatility remains subdued as we expect, especially the first and Second Quarter of the coming year and that that will be very good for these types of investments. Donald trump will say he has delivered on tax reform. That was one of his major electoral pledges. Another was trade. Is the big danger in 2018 a trade spat with keith this time between china and the u. S. Something with teeth this time between the china china and the u. S. Something you are looking at . That is something i am concerned about. There were a number of policies trump mentioned as they were campaigning and then got into power 12 months ago. Reform, butwas tax trade figured high on that list, so one concerned we could have is that once tax reforms have been achieved, the u. S. Attention moves towards trade. So that is a concern. Rishaad thank you so much. Have a great 2018. We have to tell you about our interactive tv function. Do use it. It is tv. Watch it live. Rishaad i am paul allen with the first word headlines. China beige book says recent data offers a warning for 2018 now that president xi jinping is less motivated to prop up growth. President says there was an incentive to ensure the economy it was humming along in the runup to the party congress, that there is already as shift to slower growth. China is stepping up scrutiny of overseas deals. A Reform Commission is planning tougher punishment for Companies Engaged in unfair competition and illegal financing. Approveys it will only projects in line with the Nations Development plan overseas. 100ese Companies Announce 45 billion in offshore purchases this year. Chinas stock regulator has ordered the founder of a Video Streaming Service to return home by the end of the year to deal with the companys financial problems. Once the ceo to provide interestfree loans, but without success. Made his fortune with the netflixlike company, but failed to expand. Ledlatest star wars movie the north American Box Office over the weekend, although demand disappointed. It took 100 million for the second week in a row, and ticket sales were down 54 . The decline is the second worst seen by any star wars movie. Box office guru says part of the drop is due to Christmas Eve falling on a sunday. Bitcoin bounced back, surging briefly past 16,000 as traders try to draw a line under the slide. The slide renewed warnings about elevated risk and digital coins. Israel has banned Companies Trading bitcoin from the Tel Aviv Exchange come and the nikkei news says Mitsubishi Ufj is bracing for a Bitcoin Exchange to fail. Chinas imports of liquefied natural gas from the u. S. And in november. 407 thousandged to from nothing in the same month a year earlier. China is using more lng as part of its campaign against pollution. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. I am paul allen. To that heading in lunch break, we look at the sentiment overall. A slight move a slight move for the nikkei. When it comes to big movers, kawasaki heavy in pole position, leading the pack after an upgrade from nomura. Jumped after a surge in profit. Underhave tech shares pressure, led lower by the likes of china micro, tracking that drop on u. S. Tech shares overnight. Japanese oil players have been climbing him and that helped the topix trade wider this morning. You can see that on the chart 879. That is set for the highest close since 2007, helping the topix gain ground, tracking the rising oil overnight. In seoul, korea, the kospi losing ground, but the smallcap index jumping. Stock leading gains, up almost 6 , for the health care sector. At quick check on the currency around the 50o mark, reaching it for the First Time Since june after that long christmas break. The Singapore Dollar edging higher. Softer after a weaker daily fixing, the currency falling with chinese stocks as investors digest slowing industrial profits. The rupiah in a tight range as trading resumes in jakarta. Pulling up the board to show you the stocksn, surging, rising to a september 2000 high as Mitsubishi Ufj moves to take majority control, making the stock the best performer on the benchmark today. In the home owners american states with the highest property taxes are looking to prepay 2018 bills ahead of a 10,000 cap on deductions. The question is what are people in these high tax states worried about . They are worried that next year that the deduction will be lower than this year in the tax bill just passed. It is only a 10,000 reduction, including property taxes, for all taxes. Washington, los angeles, new york, that is less than what you could pay in these states with these particularly high property taxes. Everyone is trying to prepay them now. There is a russian long lines in places like fairfax, virginia. The governor of new jersey has been asked to do something quickly. Thesehows how complicated changes can be for individual taxpayers. Rishaad state and local officials, how are they responding . They are doing what they can to get people to prepay. Theof the governments and washington, d. C. Suburbs had a special session to allow prepayment. The broader question is what will happen once this takes effect the next year. Pain,is going to be some and you wonder if there will be unintended consequences as there often are with tax bills about whether people move other places or have other kinds of issues. High taxpayers, wealthy taxpayers come up will be benefiting in other ways from the tax code, but middle income taxpayers who live in the space states in these big houses may be hurting next year. We will see. We will presume there would have to be some tax bill corrections, some legislation passed to take care of things unintended is what we are hearing from tax experts. Rishaad is this all part of the tax reform plan put in by donald trump . Yes, it is. Initially they were concerned about the fx on the deficit, so they limited emanated some deductions, and then made some changes based on the concerns of some republicans they wanted on board. This beingat about red versus blue states . How does politics figure in . A lot. They knew they would not get any democratic votes for the tax bill, which they didnt come so they had to win over these republicans. There had been plans to get rid of this deduction entirely, but because there were republicans in these high tax states said we want to vote for the bill, but we cant do this with our constituents with concerns come so they made it 10,000 in a which is still not enough for some of them, but they went ahead and voted for the bill, most of those republicans. There were a lot of redblue state concerns, and a lot of times people debate this before hand and figure out what is going on with legislation. With taxes, sometimes you dont know what the fx will be an told the legislation is passed be once the it will legislation is passed. Rishaad good news for the accountants. Yes. Rishaad thank you very much indeed. Lets have a look at the latest business flash headlines. Slipping after announcing a 1 billion share sale. This is the worlds secondbiggest shipbuilder. It plans to issue 12. 5 million new shares, and will do so at a discount of 24 to the tuesday close. The government saying it will use the cash for working capital and comes against this backdrop having too much overcapacity and shrinking orders. Beinga confirming it is sued by 97 Institutional Investors seeking damages for its inappropriate accounting scandal. The suit was filed in Tokyo District Court in september and the requested damages our more than 290 million. This brings the number of suits filed against toshiba and japan combined 1. 5 billion. Hong kong set to lose its ranking as the fifth busiest container port in the world next year. It felt by a second straight month in november. That makes hong kong the only one of the top five to report weaker traffic. Expectsg intelligence china to pass hong kong on an annualized basis in 2018. In a moment, about told bring on electric avenue. It sounds like something out of , avel, tesla versus thor littleknown rival that may give elon musk road rage. This is bloomberg. Tesla recently unveiled an electric truck that elon musk says will hit the road next year. They may be beaten off the line by thor. Lets have a look at the littleknown truck maker taking on the big boys. This young man has it alllea flamingopattern car, an office, a bunch of surplus military gear, then this incredible machine, and all of electric a salute that is both and giant middle finger to elon musk. Dakota is the ceo of a twoyearold Company Called thor trucks based in north hollywood. Trying one of a handful to bring electric drive trains to really big vehicles. We set out to solve the issue fleets are having right now. A lot of that is compliance, maintenance, cost of fuel. So we are trying to solve a lot of those problems. Elon musk unveiled this in at an event in l. A. Must set it will cost 180,000. It will go 500 miles on a single charge, and recharge and 30 minutes. Of 2019. S at the end i came to visit thor to see what a real life electric semi can do today. Thor got started in a warehouse when dakota bought a diesel truck and hired a team to convert it. They replace the engine with an electric motor, built some battery packs, then slapped a giant screen in the cab. Logo looks like tesla meets transformers. We are trying to exude the power that evs can provide, particularly marshall vehicles. It is tough. It is a brand people come to know as the tough ev brand. The prototype truck is called and he agrees to take me for a spin. Truck first looked at the , i thought well, i dont know that will quite work. Electric trucks will cost more than diesel rigs, shorter ranges, and require infrastructure to be built. They are confident they have a chance. The way this thing pulls is really unbelievable. You were supplies surprise the first time. I was shocked. If nothing else, the truck is good at getting attention. This is a thor truck. It is electric. Im serious. I will show it to you. Motor. The electric thor expects this truck to cost 150,000 for 300 miles of range when it goes on sale in 2019. It will run clean and have amazing pickup. The power in this thing is unbelievable, the way it takes off in the way it handles. It speaks for itself. Thor has 18 employees, including a handful with deep electric vehicle expertise. Itself as a bills lab that will make all kinds of custom vehicles, including delivery and garbage trucks. Thor will have a hard time going up against other giants like tesla since they have actual factories and experience. Los angeles has long been home to high risk custom auto projects. Teslas early operations did not look much different than these. We set up prototyping tools early on because we rely that was of vital part of being able to build quickly and produce something we can start demonstrating and show to customers. This warehouse has been in dakotas family for three generations, first as a depot for making and selling military great electronics, then as a storage spot from the familys vineyard. Dakota started working here when he was seven years old, and eventually ran the family wine business and so far did safari elite can get drunk and hang out with giraffes. There is a ton of inspiration. Tucked in this corner is this beauty. It is a panel van. It was fully electric, battery electric vehicle, from the turnofthecentury. What did they use it for . Deliveries. It was like a milk delivery vehicle. This would be a range of 1215 miles. Everybody here is incredibly committed. Things to make these exist. We are actually driven to make this a viable business. If things dont pan out, in his rv,always hop hit the road come and go searching for his next venture. I am sure this beast runs great on electricity too. Rishaad that was Bloomberg Businessweek with tesla rival thor trucks. Coming up, jay y. Lee back in court for an appeal. We will have the latest on that. This is bloomberg. Rg. Biggest opportunity globally is to invest in the structural improvement in technology. The biggest tech investment, i would say anything related to bitcoin,ystems, blockchain, and all the rest. There will be a continuing revolution in payment. I would say that is the big investment going forward. Not only isolated Tech Companies, but by banks and by other companies in the financial sector. Sorry to disappoint you with answer,onsensus not justtechnology, the tech sector, but as it ,preads throughout the economy it still has to top the list of the biggest opportunities in 2018. Voices weome of the heard on bloomberg about the opportunities and risks for the tech industry. Lets look at what is going on market wise. , the firstack trading day after the holiday. Moving toe hang seng the upside by 37 points. Anything could happen. Volumes are pretty light at the moment. Any moves may be exacerbated by that. That is the position in singapore. Taipei also up by. 4 . Onuick look at what is going with samsung. Jay y. Lee back in court, appealing his sentence for corruption, while prosecutors are there to make the case for a longer jail term. They will be making a ruling in the new year. Lets find out more from peter elstrom. What are we looking at here . Always a pleasure to be here. Jay y. Lee was sentenced to five years in prison as part of this probe into alleged corruption between samsung, his activities, and the government. Prosecutors are appealing this because they won a longer sentence. They originally asked for 12 years. Is also appealing because he thinks the sentence is too harsh. He says he has done nothing wrong and the company has done nothing wrong in this case, so they are both appealing. Today we will get the prosecutors request. Rishaad the question is samsung has been doing pretty well without him. They have been doing well. They came back from this problem with the note phone bursting in flames, a big pr fiasco for the company. Since then, the stock has recovered and is up 35 this year. It is not just smart phones. The chips business has been strong and profitable. Their Panel Business has been strong because they are selling these oled screens to apple for the iphone x. Rishaad it seems the conglomerates are making headlines for all the wrong reasons. We had the chairman of lotte given a suspended sentence at the end of last week. The president of south korea step down earlier this year. Has beendministration much tougher on the conglomerates. The new president appointed a long time conglomerate critic to head up the federal trade commission, and they have been investigating the activities that had gone on in the past, including donations to charities. It is not just samsung. They are casting a broader net on conglomerates, their activities, how they have done business in the past and whether that should continue into the future. Rishaad that is a tough one because these are the companies that brought south korea to where they are now, and should they remain in place. Tension is theal government supported these conglomerates as korea was accelerating and had strong growth coming out of their war, and now they are trying to change practices and unwind the relationships between these very big compass and the government. Rishaad thank you very much indeed. Here in hong kong today. We have locked chain earning a boost for china, using it to buy oil from the middle east. Those smart contracts helping sinochem optimize by 30 . The technology is touted as potentially saving the commodities sector hundreds of millions of dollars each year. Speaking of blockchain, lets have a look at bitcoin, bouncing act. It did surge briefly beyond 16,000 after a fiveday slum. The slump coinciding with renewed warnings about elevated risks in digital coins. Has banned Companies Trading bitcoin from the Tel Aviv Exchange, and nikkei news says Mitsubishi Ufj is bracing for a Bitcoin Exchange to fail. Chinas sprawling fosun exploring options for its stake in studio eight, and they include a sale. The conglomerate has discussed this posing of the stake. Andio eight is producing fosun values the studio at 1 billion. Southeast asian markets at the moment. There we go. Manila in the green. Jakarta. 4 up. The big story there, danamon plans to take an 80 stake. Shares surging 18 at one stage. Weretime i checked, they 14 to the upside. We can have a look at those in the second, and indeed 11. 5 to the upside there. , gold trading here at the moment with a gain of. 3 . Silver moving to the upside as well by. 5 . Barrel. Ping below 60 a brent 66 a barrel. Wise,d bag commodities but equities higher. This is bloomberg. This is bloomberg. Sydney. 2 00 p. M. In in the middle of the asian trading day, this is Bloomberg Markets. Rishaad trading across the asiapacific with little direction from wall street. Ample supply getting a hard time. Commodity supply in the dust after crypto surged this year. Bitcoin being the crypto headline this year. No sign of a holiday hangover. A fiveday losing streak. Onto markets. Looking pretty green for equity. Biting at commodities, a more mixed. Lets find out what is going on. Sophie we have a couple seems playing out. Energy shares leading the rise in asian stocks. Oil trading near mid 2015 highs. Stocks finding support from the continued we are seeing in copper and aluminum. That has resumed to gains in shanghai. Stocks are among the one bright spot in shanghai. Gauge is sliding of 1 . The yuan is coming under more pressure this wednesday after a week of fixing. Of 1 . Chinese investors digesting the latest industrial profits. Dollar trading near a november high, despite liquidation. The smallcap index is jumping chinese investors are buying in. Thiser you talked about potential pressure for apple suppliers in asia. We are seeing a mixed picture. Rising. Apple suppliers cicc says that checks with the companies and supply chain failed to via fire reports failed to verify reports about a cut in the iphone. Seekingkong, we are amplifiers leaving losses in this space. Youre seeing pressure from casino operators. Property stocks leading gains in hong kong along with energy players. Logan property has jumped to an october 27 high, rising with asother Hong Kong Listed developers. Among the biggest moves in hong kong, an Industrial Equipment maker involved in logistics and factory automation. This stock is jumping. Almost 29 in hong kong. It is also on the rise in shen zhen. Rishaad oil trading at a high of more than two years. Talk about that explosion taking place, a pipeline carrying crude to libya. What is going on here exactly . As you say, there was that inpeline explosion, brent particular has jumped up. That is much closer to the brent contract in north africa. Tot is taking 70,000 barrels 100,000 barrels a day out of the market. There is news that saudi arabia is bullish going forward. An 80 jump in oil revenuet o revenue to 2023. We have to take that with some grain of salt. Anytime the oil price rises, the shale oil people in the u. S. Will raise supply. There is an expectation another half a Million Barrels a day could be online in america by the end of next year. That is likely to go on putting a cap on oil prices, rish. Rishaad that is indeed exactly what we have in discussing, shale. Blog. Move on to the live it has been interesting to hear your musings on the aussie dollar and where it will go next. At the moment the aussie dollar is in an uptrend which is pretty clearly linked to the asent shift in expectations far as the reserve bank of australia is concerned. The reserve bank has been on hold for Something Like 15, 16 months. There is a shift back and forwards. Is it going to cut next, hike next . A hike has been driving up the aussie dollar. Last week we had speculators reversed what had been strong bets on aussie dollar gains to bet on an aussie dollar decline. The market doing some interesting resettings of their position in, of their positioning. Going forward through the First Quarter, we will see a strong consensus that the Australian Dollar has put forced behind it for now. Put the worst behind it for now. Rishaad apples iphone x is not garnering as many customers as expected. World, wert of the have been dealing with those apple suppliers. What have you been noticing . Noticing ive been there is a lot of confusion today. Yesterday was a very clear move out of asia, in a very strong pickup on that move in apple. Apple had its worst day in four months. Epple chair price is shar not doing all that badly. What it emphasized was the rotation away from tech and more towards material stocks, which to some extent makes sense when you consider there is plenty of Global Growth momentum. There are expectations as we noted earlier on the blog, next year since donald has been successful in getting tax cuts not doing all that badly. Passed, it is time to spend on infrastructure. That could drive command for commodities. It could drive inflation. If we do get a revival in inflation, that will also list Commodity Prices and materials producers. That is what we are seeing in terms of the Market Action recently. The nasdaq was down overnight. The dow was up. We are seeing strong moves in copper, aluminum. That is all sitting into that picture, rish. Reynoldsgarfield joining us from sydney. Lets move to whats going on in terms of first word news. Lets get back to sydney and join paul allen. Al raison datre offers data offersrecent a warning for president xi. Fourthquarter results already show a shift to slower growth, with reduced hiring and manufacturing orders taking the brakes. Chinas industrial firms slowed in november as victory inflation eased. 25 risegprofits compared to a in october. Robust demand and consistent factory inflation have lifted profitability this year, helping Companies Pay off debt and invest more. Profit growth may also slow. China has announced a new barometer for the health of its provincial economy based on the green related indicators. It engages the quality of the environment, utilization of resources, and local officials cleanup efforts. Beijing tops the list with governments in growth, despite its air quality being at the bottom. Vietnam escaped a powerful storm that battered the philippines after it was downgraded to a tropical depression in failed to make 25 rise in october. Landfall. Hundreds of thousands were evacuated from the delta. Evacuated from the delta. Forecasters expect it to dissipate in the gulf of thailand. In 1997, Tropical Storm wind hit the delta, leaving more than 2000 others missing. Prime minister shinzo abe and boj governor Haruhiko Kuroda delivered end of your messages, saying japan is improving, but has a long way to go. Five years of socalled abenomics have beaten back deflation, but prices are sluggish, wages running weak. Of the promises abe planned to deliver on in 2012. The labor market has picked up all over japan. Wages are also on an upward course, and we must continue this positive trend going into the new year. I am asking Business Leaders to raise wages by 3 at the next pay talks in the spring. Inflation in japan has remained relatively sluggish compared to Economic Growth and the tightening labor market. Excluding inflation, fresh food and energy, has only remained slightly positive. There is still a long way to go to achieve the target of 2 . The bank of japan will pursue powerful monetary easing under the current qqe with yield curve control. Paul global news 24 hours a day a 700 journalists and analysts in 120 countries. 2700 journalists and analysts in 120 countries. This is bloomberg. Rishaad new york universitys stern school Scott Galloway says there is nothing amazon cant do. A monetization of nearly 1 trillion. We get the rationalization behind that. The socalled goldilocks environment. We will be finding out what exactly that means. This is bloomberg. Rishaad this is Bloomberg Markets. Is in aonomic growth goldilocks moment and likely to stay there and do next year. The biggest risk is inflation. The question is, where is inflation . Lets get over to singapore and find out. That is the perplexing question, is it not . If you could answer it, you would probably be in a more elevated position. That hast be been the hardest question to answer for all of 2017. I doubt we will stop trying to answer it into the early part of 2018. That is why for us it is really a risk. Point, from an investment point of view, there is an easier call to make. From an equity market perspective, as long as we dont get a massive spike in inflation, we should be alright. In terms of forecasting inflation itself, all of the indicators are telling you that inflation should be coming through, it is just that the current indicators dont seem to be reflecting that just yet. Rishaad the forward indicators were telling that six months ago, werent they . Manpreet they were. That is why our focus has been much more on the investment call than forecast inflation itself. That is a much easier call to get right. Isities do well when there equities tend to do all right in moderate inflation. Ost toplinecie bo growth and policy is not quite as restrictive. That is why we think a positive view on equities is the right way to play this uncertainty. The only scenario we have to worry about is where inflation unexpectedly skyrockets. That looks a bit difficult at this point in time. Rishaad if we do get inflation, because people are getting far too complacent about there being none where would it arrive first . Would it be in the u. S. , which seems to be slightly ahead in the Economic Cycle . Manpreet arguably yes. I think that stems to some degree from the forwardlooking indicators themselves. One example of why we see the u. S. For the along the business cycle. Regions like europe or parts of asia are arguably at the earlier stage in the cycle reducing it, we will see it the cycle. If we do see it, we will see it in the u. S. Unemployment has falled. Regardless of how you look at the charts, looks like a large amount of time before we see regions creep higher. That is where you can have the most policy risk should inflation begin to rebound higher. Rishaad no one is suggesting the u. S. Dollar will significantly we can next year. Significantly weaken next year. A real bout of dollar weakness is something that inflation could arise from, could it not . Manpreet indeed it could. That could be a significant driver, how much inflation you policymakersuick are able to respond to that. One of the biggest drivers of and currency markets even if policy rates are climbing steadily higher, if inflation creeps at a faster pace, there is no reason the dollar cant move lower. That is compounded by the fact that in the u. S. We have less room for surprised. The feds make it clear. When you think in relative terms of currencies, we think there is greater room for surprised elsewhere. Still in europe, for example, select parts of e. M. That surprised element surprise element does not help the dollar. We think there is room for the dollar to grind lower. Rishaad while on the subject of currencies, i will bring up wecoin, the wild gyrations have seen with this cryptocurrency. What heou to listen said when i asked about his view about people saying that this time it is different. 99 of people involved in the bitcoin market arent investors, they are buying it because next week they think they can make 30 or 40 . Whatever people say this time is different, it never is. Rishaad thoughts manpreet . Manpreet i dont like those words, either. Too dangerous for me. On bitcoin, we dont even have an attempt to come up with a direction. Just look at the volatility. Yes, you can hold the view that maybe it is different this time. You can hold the view that it is not. In the end of the day, if you are looking at investing in bitcoin or other related cryptocurrencies, we just keep the basics of portfolio construction in mind. When something is this volatile, it will add volatility regardless if you get the call right or wrong. That is the template we always use deciding whether to add more exposure to Something Like that coin or not. Rishaad what will be the theme for you in 2018 . You talked about the goldilocks scenario, not too hot, not too cold. What does that mean for investors . Change . R strategy manpreet of rus for us, we think 2018 will be defined by the business cycle. Trends that we see in inflation, for example. We think 2018 will be partly keeping an eye on how the cycle is evolving. Is strong butn has not quite come through is great for risky assets. In terms of these reports, these kinds of goldilocks environments dont always stay in place forever. At the end of the day, we will see emergence on the growth signed, or inflation will creep higher. Into the first couple months of 2018, we have to keep our eye on where those two drivers are going, whether to maintain equities or look at rotation. Bond ate Corporate Bond markets, whether sovereign ship would be justified at some level. We think of those are the points where investors will have to be have to be nimble, focusing on the business cycle. Rishaad if you are a bloomberg subscriber, you can catch up with all of ou have to be ni, focusing on the business cycle. Nd instant messages to our team and interviews by using our interactive function. Guests during programming. Guests during programming. Have a look at it. Tv. Ok at it. Tv. Rishaad this is Bloomberg Markets. The bank of indonesia jumping on ofs of acquiring almost 20 1. 2 billion. Our chief International Correspondent for Southeast Asia has been following this. N investorske danamo what is not to love if you hold danamon shares . It will pay the remaining shareholders in cash. That explains why danamon shares are surging 15 or so, boosting the jci to a record. Whether they can convince the indonesian authorities. Right now there is a 40 cap on Foreign Ownership. They attempted to buy a convince the indonesian authorities. Controlled stake in 2014. It was blocked. This time could be different. Indonesia is seeking to consolidate its financial industry of 100 lenders. It could work in fgs favor. Rishaad it is amazing when you go around jakarta, the amount of thanks that you see. Banks that you see. Ufg, it has been busy not just in indonesia, but across that part of the world. You are right. When your domestic market is shrinking, you have to look elsewhere. We are talking about japan. Circumstances have changed. You have a growing population, slowing growth. ,ompare that to Southeast Asia 600 million people, growing middle class. That is the envy of many of the country. Is lookinging mumg here. Stake bought a security stake in the philippines, and this the kirilenko and this particular stake in danamoncontrolled stak. It plans to merge its local units with danamon. It plans to merge its local units with danamon. Danamon was up as much as 17 earlier today. A surge of 80 . Quite the outperform or. Not surprising there is no some much not surprising there is so much interest in danamon right now. Rishaad lets have a look at the business flash headlines. A rough time in seoul, dropping the most on records, after announcing plans of 1 billion in a share sale. It is intending to sell 12. 5 million new shares, and do so by the end of march. We will see a discount of 24 to the tuesday close in seoul. That would explain why we are seeing the falls in its price. Foreign capital all amid shrinking orders. Hong kong set to lose its ranking as the fifth busiest container port in the year next year. Progress made hong kong the only one of the top five to report weaker traffic. Our people at Bloomberg Intelligence expected to pass hong kong on an annual basis next year. A look at toshiba confirms it is being sued by 97 foreign Institutional Investors seeking damages for its inappropriate accounting scandal. The suit was filed at Tokyo District Court with request of damages of more than 290 million. The case brings the number of suits filed against toshiba to 34, fourth a combined 1. 5 billion. Getting you back to the afternoon business in tokyo, opening up lunch break. Yen against the dollar, fourth 5 billion. Getting an equities story too. Oo. Rishaad you are back with Bloomberg Markets. We get over to Sophie Kamaruddin and look at what is going on market was. Marketwise. Rio rioa topic in focus, being led higher by energy players. Blix let us look at what is happening with the reopened, climbing 2 10th of 1 . Offsetting the drag we are seeing in the tech space. The topix index of oil and Coal Companies is set for the highest close in a decade. We are seeing this theme across the region. Energy shares headed for a threeyear high with crude prices hovering near december 2015 levels. Brent trading at 66. Spot shares looking mixed in asia. The kospi is under pressure. The small cap cost index is performing as Retail Investors buy in. Mining stocks also a bright spot thanks to firmer metal prices. Aluminum is a favorite for ubs dominic schneider, who sees another 10 upside. Copper has rallied to the threeyear high in london. Throwing some stocks to show you what is going on in the mining space. Copper trading at a july high after halting all output this week. Coal jumped to enable 2013 high. An aluminum china player hongqiao slipping for a third day. Yuan sliding after the pboc advisor signals consolidation ahead of gravity games in december. Of rapid gains in december. Hibor risen by the most in a month. Some of the moves given what has happened today. That is a liquidity problem. On a day like this, not expecting quite the demand they had gotten. That could be one of the reasons. Reasons. Lets move to the chinese currency. Lets get back on to some it in our first word news with paul allen. Paul a contrarian bull who it in our firstan who word the yuans rise says it has more to go. Peter rosen forecasted strike said a years ago that the yuan would rise in 2016. That is a call that looks to be the most accurate among the strike said a years projections compiled by bloomberg. Stepping up scrutiny of overseas deals. The Reform Commission planning tougher punishments for Companies Engaged in unfair competition and illegal financing. China will only approve overseas investment projects in line with plan. Tions development as of november, chinese announced 45 billion in offshore purchases this year. China is to keep the population of shanghai at the 5 million for the next decades to limit the population. Plan offers little room to move, with the announced 45 billion in offshore purchases this year. Population at a little over 24 million. Urbanization has been key to chinas rapid growth, but also spurred pollution and a widening wealth gap. Reports of liquefied natural gas from the United States jumped in november as beijing shipments surged 4007000 tons from nothing, making the u. S. Chinas thirdlargest supplier between australia and qatar. Energy as itsre campaign against pollution. Chinas stock regulator ordered a Video Service to come home to deal with the companys financial problem, wanting them to provide interestfree loans to leshi internet in september, but without success. The stock has been suspended since april. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Moving to south korea, speaking to his father and meetings with cocoon hang ahead of his final meeting in seoul. Moving to south korea,he wantss fiveyear sentence he received, and the prosecution is saying he should have a longerterm. They are going at loggerheads here. We had the long trial earlier this year that culminated in the sentencing for jay lee. Prosecutors are going to ask for a longer sentence. They think he deserves a harsher penalty. They originally asked for a 12 year sentence. We could see something in that range. Lee is arguing that he is not guilty of any wrongdoing. The company has not done anything wrong, so his sentence should not only be reduced, but he should go free. The hearing will proceed today. We will get some of these guideposts for how it will play out. Rishaad it was interesting he said in court that he was viewed by his father as the companys last chairman. Peter his father had such stature at the company,we will e and had grown it into the juggernaut it became. Lee himself was moving into the position of helping to steer the company, but did not have the same kind of authority. Rishaad did he say in the trials he did not have much in about idea what was going on with the company in the first place . Peter we should point out samsung itself has done very well rishaad how has it done well he has been behind bars . Sophie peter business has been very strong. Samsung electronics has been doing very well. The stock has risen to an alltime high this year, up 36 . It is not just smartphones. Making back from this note 7 fiasco. Beyond that, the chips business is very strong. Their panels are doing well, mainly because they are selling the oled screens for the iphone x. Rishaad it is about tables in south korea. The former chairman of latte group a multinational. He got a suspended sentence last week, didnt he . Peter this is part of a broader southhe korean administration. Park had to step down under pressure. The new president has made a point of going after the tables after the chables. The new president has made a point of going afterhe is lookis that in the past would have been unquestioned. They are looking at the rest of ble too. E rishaad this is after park gun the former president was convicted. Is a the former this threejudge court that will hear these appeals. We expect some decision at the endble of january. Rishaad our managing editor for technology. Bitcoin has had a year that would scarcely be accepted in a hollywood script. To 19,000. Om 750 it is trading around 16,000 at the moment. Mere twoa decline of a thirds of 1 . With a currency like this, which can make 15 and 60 in a day. 16 percent in a day. Can this meteoric rise continue . Scott galloway says it can. We know it is going to be famous in 2018, just not what it will be famous for. Will it be the mother of all bubbles or will it hit 20,000 . Both . It is hard to imagine it not going up it is hard to imagine t going up from here when you see it being legitimized. The biggest case of fomo in the investment market industry. I have thought about it, yes. We are all thinking about it. At the same time, when you see something where there is not a real basic understanding, it will be subject to wild fluctuation. The underlying technology, blockchain will be disruptive to a lot of industries. Bitcoin and cryptocurrencies, they are turning into a mistrust index. The less we trust our institutions, the more bitcoin goes up. It is a proxy for a less trust in our institutions. Some have said that is how it started. Steam afteraining the financial crisis. Every fiat currency ends the same way, it collapses. The idea of a currency that does not depend on a Federal Reserve or central bank is appealing. Ifif its going bursts bitcoin bursts, will it have any impact on the bigger market economy . It doesnt present what you call real systemic risk, but it could be the spark that scares people around a lot of things. There are a lot of young people that have spent a lot of money on it. The bubble is what sends the market into a downward spiral. The consistent thing is that we dont see it coming. Called the dotcom bubble popping perfectly, but they called it in 1997. Everyone was saying 2017 would be the year the market corrected. The only thing we know is that we dont know. That is so. That is absolutely true. Lets focus on what we do know on the regulatory front. That is so. Tdo you think there will be a bigger clampdown on Tech Companies . I think it will bring down on tech, where an attorney general sees a road between a populist argument against big tech. A lot of us are coming to the realization there are downsides to big tech. It is a fall from grace. We all fell in love with these companies and personified in the. We are angry, almost like they scorned lover. They let us down. We fell into the trap thinking that technology is about the betterment of humanity. We came to the realization that they are here to share are there to serve shareholders. Intelligence, the russian government i think we are starting to get angry. Caer will manifest itself in lls to break them up. Who do you think would be most vulnerable to that . In terms of sheer market share, google has 90 plus share of the surge. Bigger than any advertising the country, besides the u. S. It would be hard to defend googles market share not been a the country, besides the u. S. Monopolylike power. I think the momentum when be around breaking up. What is a healthier ecosystem, breaking up facebook they have been tone deaf in terms of criticisms. They launch a gateway drug, a product for 10yearolds. So you would give Mark Zuckerberg an f . The damage done in the crisis is how you respond to that. I think facebook will go down as a case the damage done in the cs is how you respond to that. I think facebook will go down as a case study of how not to handle a crisis. First they said only a few million people. Then they said the idea that allegations of russian meddling in facebook was crazy and only heels of that, they launch a product for 10yearolds. I think they are incredibly tone deaf. Lets talk about amazon. Seems like you can get through any Earnings Call without some industry talking about amazon. What is the outlook in 2018 . Is just basis only going to get bigger . Is jeff bezos only going to get bigger . Google is almost there. Google and apple are closer, but i think amazon will get there first. We are headed to an amazon singularity, where stocks will trade on the underlying value of the company, macro environment, and what amazon is or not doing every day. Amazon acquires whole foods. Amazon or whole foods goes up by more than the Acquisition Price and competitors go down by more than the Acquisition Price. Kroger declined by one third in between the time amazon announced the acquisition and when it closed. Cbs walgreens went down cvs walgreens went down 5 . Amazon is capable of jedi mind tricks where it can look at any andany and wish ill on it take the value down 20 or 30 just with press releases. It seems to be amazon and whole foods dominated the headlines this year. One industry do you think they could really disrupt . Looks as if it is a mos, what industry wont they disrupt . Disrupt . Amazon versus walmart the battle shaping up to be the celebrity death match is amazon and netflix. Amazon was number seven in terms of the market share of streaming video in primetime hours. Within a year, it is now 3. They are second only to netflix, who increased their budget by 2 billion when they heard amazons footsteps behind. When you have access to infinitely near cheap capital, you have access to any sector. You can overwhelm them with cheap capital. Out the hiddenck dna of amazon, apple, facebook, and google. Coming up, indias biggest dealmaker looking to raise 5 billion. More on its steel returned to the International Debt market. That is next. This is bloomberg. Rishaad you are back with Bloomberg Markets. Sources telling us the company is seeking more than 5 billion. Lets get to our asia Credit Report. Tata meaning to do with the money that it raises . Is planning to raise 2. 15 billion syndicated loan. This money will be used to finance debt that is on the books of these two entities. Separately it is also seeking to end a halfbillion euro loan. Tata bt remaining after steel engagements into a joint plan to venture with a group from germany. Rishaad the question is why is tata seeking to refinance . You would think i refinance would be in order after the sale of some of its u. K. Assets. That is exactly the aim. The aim is to sharpen the focus. They want to focus more on the indian joint plan to venture with a group from germany. Rishaad the question is market. They decided to sellthey decidef unprofitable assets in the u. K. They are planning a 2 billion right off writeoff in the industry. That will help them expand in india and repay debt. Rishaad thank you for that, our asia Credit Report hurt joining us. We were talking about stocking. Another asian giant looking to keep lenders at bay. This is bloomberg. Rishaad lets check in with what is going on market wise. A lot of equity markets are open, but there are not many people taking part in what is going on. 430 points off of that psychologically important 40,000 level. Looking at what is happening in shanghai, industrial profits numbers in a bit later. They show a fall from october to november. The figure in october was 25 up. Up for november. Not speaking anybody. Not spooking anybody. Nikkei 225 approaching nearly the 3000 level. Gains at a bit of a fall for the kospi. Part of that is due to the worlds second largest shipbuilder announcing a share sale, a tumble of as much as 28 at one point before recovering to a full of 11 . Kuala lumpur and manila looking like this. 7 1 of 1 . 701 a retreat in tech up for novemb. Not speaking anybody. Thanks to a downgraded apple iphone sales estimate. This is what it looks like for indian market coming online a short while ago. Worth the dollar was 64 rupees. Watching Reliance Communications shares surge tuesday after the company says it was in the final stages of selling assets. Our reporter in mumbai. Tell us what is the deal here . Reliance communications has struck a deal with the company chairman. It has discussed its assets across the country. This includes the key resource for the mumbai company. Apart from that, it is also towers and wireless some real estate. Towers and some real estate. This money saved will help the company reduced its debt by almost 35 , to less than 1 billion, from more than 7 billion now. Rishaad what does this actually mean for Reliance Communications lenders . Lenders will not have to take a haircut. Right now none of the Indian Companies which have gone into bankruptcy has been able to achieve this. He promised he will repay that entire debt. The lenders will get all of their money back without having to take any kind of haircut on loans given to the company. What will be left of is the other question. Shaket not much will be left. He is chipping out all of the key resources. It wont be a major player after this. What will be left are some international operations. It will be allocated to enterprises and large businesses, providing Communications Solutions to data centers. The spectrum lab in india, including its mobile customers on the network will be gone. Rishaad thank you so much for that. Having a look at what is going on with Reliance Communications. A quick look at business headlines. With holidays trading speculation that new sales will fall shy. Apple sliding more than 2. 5 , its lowest since august. It mirrors the fault of supplies in asia, and its lowering iphone x sales will fall shy. Apple shipment forecast, pointio lackluster demand at the end of the Christmas Shopping season. Chinas sprawling explosion of its stake in Hollywood Studio house 8. We are told it includes a sale. Its ssed disposing of take. Fosun bachus studio three years ago and values it at 3 billion bought the studio three years ago and values it at 1 billion. Bloomberg markets middle east coming about the top of the half hour. What do you have for us today . Yousef we will pick up on the story of saudi arabia, estimating an increase in oil revenues. Here is the tagline they basically build this forecast on price. Llar barrel oil has major implications for the saudi budget, but where oil prices will go from here. None of the major forecasters bloomberg has been speaking to will tell you that will happen over the next couple years. The head of microstrategy will join us macro strategy will join us. He is bullish on the egypts story. He has interesting calls across the gulf. We will get to the interesting story on bitcoin. We will speak with the founder and ceo of ht research. It is also about china data, and where he sees the broader emerging market space going from here. Here. Rish . Rishaad that is it for Bloomberg Markets. Join for Bloomberg Markets middle east next. Lets start with a check of your first word news. The attorney general in eight eastern seaboard states are suing the epa for pollution. General in attorney said it was filed today in the federal appeals court, forcing the Trump Administration to take said it d today in the federal appeals court, forcing the Trump Administration to take action to ensure upwind states control pollution. Three u. S. Cities file a federal lawsuit against the defense department, saying Service Members disqualified from gun ownership were not reported to the fbi. New york, san francisco, and philadelphia argued the doj failed to report significant numbers of disqualifying