Rishaad just about 30 minutes to go until we get going again for the hong kong session. Let us take a look at what has been happening. Has been a winning last day of trading for 2017. The highlights. Looking at 14 months, straight months of a global stock that is gaining. This is unprecedented. Let us go back to the dark days of 2008 when we had steep falls. In one month, 10 of the stocks declined. Since then, recovery taking place. 2009. D bag since the last 14 months has framed what has been going on. The hang seng up about 34 so far this year. Notwithstanding the gains we may be seeing in a little while. And that is when the session kicks off in about 29 minutes. Singapore and taiwan coming online as well. Let us go over to sophie and have another look at the markets. Grant sporre sophie let us take a look. The ringgit is heading for its best year since 2010. In 2017 following the rebound in oil prices. Is expected to test at a number three level. Singaporean stocks. The opening was flat but they are eyeing the best since 2012. 0. 5 t gaining ground at and looking at the best year ce 2009 but the towel while the taiwanese dollar is continuing to strengthen. The time when nice dollar is eyeing its best year in three decades. Even so, the Central Bank GovernorDeputy Governor says this is not too good of a year compared to other currencies. 5. 5y inflows have upped billion. With Taiwanese Companies becoming a more crucial part of the electronics value chain, it will likely attract more in 2018. Looking at the breakdown given weakness,op of dollar we are seeing asian currencies ride the wave. The aussie has picked up above the 78 title for the first monthly gain since july. And we see continued gain for other currencies like the korean wan. And indonesian rupiah is also picking up and the kiwi dollar is also gaining about 0. 2 . The equities market is a mixed session. Sliding in sydney but some gains in tokyo. Offer the new year break. Rishaad thank you very much. Turns of britains attempts to leave the European Union has been one of the big stories. This is in our first word news. The British Government is withholding the publication of secret files on the creation of the European Union. 1992 andents date from were due to be released later on friday after the 25 year role. But almost 500 files from the Prime Ministers job Prime Ministers Office, 114 are being held back. The Cabinet Office denies they are hiding sensitive material. President trump is warning china about deliveries of crude oil to north korea. Saysth korean newspaper spy satellites have seen a transfer of oil at sea. The president we did caught redhanded. There will never be a friendly solution of this continuous. Leasing. Listed china jets taking 50 wide bodied. The ceo says wide bodies offer the best returns and he is looking at planes with broad market recollects recognition. It counts air china and air asia among its customers. Bitcoin. Cryptos latest slump came after korea said it is debating options. Those options include the potential closure of some bitcoin exchanges. Ridein has endured a wild in december and has now fallen on the 18th. Record global news 24 hours a day powered by our 2700 journalists and analysts in more than 120 countries. I am paul allen and this is bloomberg. Appled taking a look at for the moment which has been under pressure. Share price moving up . 48. We have pressure this time from the performance of the latest iphones. It is aware of dissatisfaction from the public regarding battery life. Apple has apologized saying there is a misunderstanding about the use of older batteries. Our tech editor joins us from san francisco. What is apple apologizing for in this battery issue . They are apologizing for the Software Update from about a year ago that slowed down some of the chips and other components to prevent phones from crashing. The other is the way they communicated it which was that they did a Software Update but they did not tell anyone what it was going to do. Rishaad indeed, it has also been something the company has been lookingrishaad at. We had that story about the iphone x. And disappointing sales which has been spooking the market on top of that. Shares were up marginally. That was after an initial fall. They fell a couple of days ago. There were some analysts that downgraded the iphone sales predictions for the march quarter which affected which is effectively the First Quarter of 2018. Since then, others have come out and said they are not really that concerned about that issue. I think the stock has recovered a bit from a couple of days ago. Rishaad let us move to soft banks and softbanks investment in uber. What will they do with the money . They are going to use it for technology investments. I imagine that is hiring a lot more engineers and updating the app. And investments in the u. S. And abroad which is interesting considering softbank also invests in a lot of other Ridesharing Companies outside of the u. S. Rishaad the thing is that this investment is a bit of a discount, isnt it . Could there be a Lasting Impact are the fact that people seeing lower prices than previous rounds of financing . It certainly is a blow from the perspective of the discount. It is about a 30 discount which is pretty big. Normally, there is a discount when you are selling a lot of stock in the private market and 10 15 normally discount. The other reason for the a lot of theecause governance issues that uber has had this year, softbank coming in and making this investment is offering and solving a lot of those problems. I think they were demanding a discount because if the a lot ofinvestment had not hap, uber wouldve been stuck with the governance problems still. Looting tou are a the deal happening in the governance reforms are not supposed to kick in. What does that mean overall for uber in a bit more detail . Basically, it means that everyone will know who is running the company and there will be a pretty clear lined of people making those decisions. Company,ravis ran the benchmark was a big investor and they fell out. Worrying was a lot of between the two parties and not a lot of decisions got made and a lot of executives left. Now, when this deal closes in january, benchmark likely will have sold some of its stock and will be the largest shareholder in uber. And those two board seats that it will get that will make things a lot more clear than they were before. Rishaad thank you very much indeed. Still ahead, we look at the benign forthings are oil. That is on the way. And later, chinas state bank, be a dominant player by the end of the decade. Be a dominant player by the end of the decade. We will ask if that screen play is feasible or likely. This is bloomberg. Is feasible or likely. This is bloomberg. You are back with Bloomberg Markets. We have fred niemann. What sort of year will it be for asia, economically . A broad brush start. Let us Start Talking about 2017. Of wind in oury sales. Exports have rebounded. Capex is jumping backs. Most of the highfrequency data held up until year end. The big question for the 18 is what is going to happen with china construction . There are some signs of a slowdown, the engine of economic growth. If you get a stumble, that will heard a spring 2018 but for now, looks like things will be smooth sailing. Rishaad they are trying to wean themselves off of it and it is proving to be difficult. They are determined to rein in credit. They are tackling the shadow Banking System which will hurt construction at the margins of the system in terms of infrastructure spending. Under other hand, they have an Aggressive Bank lending role. Y are expanding in regular regular bank lending. It makes things more transparent but it does not wean the economy. Rishaad the trouble with doing that is that the larger state are getting a lack of return on that. Have they been successful in actually going to the small and Mediumsized Companies and getting them and getting back to lending to them . The problem is the appetite among Smaller Companies. The private sector has traditionally relied on retained earnings. But wending is available still see hesitancy among Smaller Companies to start investing. The private sector has not really kick in yet. They have the resources and the internal resources but there is some hesitancy on their behalf to ramp up and that is policy uncertainty. The other factors that are really weighing on investment. Now as how far is china far as being the motor of growth for asia as a whole compared to 10 years ago or five years ago . It seems like it is also selfcontained in what it does. Then many ways, china is largest economy in asia but to some extent, it is still punching the lowest wage when it comes to driving the asian economy. Europe still matter greatly. We think that will change because china is going to more imports in years to come but as for now, it is a really closed economy in many ways when it comes to lifting growth and profit. There is some exposure to commodities which is china driven but beyond that, the exposure to china is the supply chains that ultimately feed into the west rather than domestic demand in china. An engine ofmaking growth is by removing capital controls. That is one way and china is expanding investment by Chinese Companies in neighboring countries bringing these economies together. They would like to have an increased capex in china. The 25 the china to agenda meaning china will have to import more capex, more machinery, more equipment that goes into the Machine Tools etc. And all of that has to come from overseas. Apan, korea, taiwan they will benefit in the coming years. Rishaad what about the risk to inflation . The economies have been able to thrive in this below inflation environment. The risk that many people say might come from and oil price that ramps up. Shale is a swing producer. Oil rallyime we see by a couple of dollars a barrel, it all comes back again. It seems there is enough supply capacity in the oil sector to spikes. Massive price if you go beyond energy, there is not much in terms of price pressure. This is narrative where in china growing. Ice pressures there has been a pickup in cpi. Inflation is running 2. 5 percent. 6. 8 conomy is growing at and 2. 5 inflation is not something to be overly concerned about. Is not aprice pressure concern and that means Monetary Policy will stay accommodative. Rishaad and japan would love more inflation. Yes, and every time it takes everyone isks up excited. That will be important to watch not only in japan itself but also globally. With such a tight labor market, when will it spillover . Sean. Ad what about aussie you dont have a breakout in terms of growth. Five points stuck at 1 growth and they are not really accelerating out of that. Indonesia may go for a rate cut. Fed hikinging about Interest Rates in 2018 but indonesia might cut Interest Rates showing how emerging markets are experiencing aflation disinflationary process. Sweat the fed next year. More after the break. This is Bloomberg Markets. Let us get back to our guest, frederic neumann. Thank you for sticking around with us. Let us look at that dont sweat the fed. Who knows what will happen when janet yellen steps down. There is a wide or broad way of there will be another bad year for the dollar in 2018 and the emerging markets will outperform. What are the implications of that and do you buy into that . Frederic it really is why the fed would be increasing rates. The might be negative for emerging markets because it would imply that the fed will need to continue tightening into 2019. In some ways, it is all about the curve. If it hikes the longterm if it hikes the rate, longterm rates fall off as well. It will put pressure on the yen. If it hikes and the curve remain flats because no one trusts that net inflation will come back, the emerging markets will do quite well. It is really about the narrative about why the fed is raising Interest Rates. So far, there is no inflation so the market is doubting whether the fed can sustain this pace of Interest Rate hike. Rishaad is that sense of doubt responsible for the flattening of the yield curve of late . Frederic there is not a belief in markets that we have a sustainably higher inflation coming through and in some ways, the market is telling us that the fed is hiking Interest Rates for the wrong reason. That the economy will slow down over time and as a result of these rate hikes and therefore the yield curve does not steepen. Ishaad but the other side that we see the manipulation of it with qa. We are not painting the right picture, currently. Areeric the ecb and boj still distorting a lot of the fixed income markets and holding back the back end of the curve. If you look at inflation linkers. They often do not show that the market is really concerned about inflation coming through. It is partly the lack of inflation driving fixed income markets and the ecb and the boj. Themeam for 2018 one for 2018 is willow bay signal a faster stepping away from their accommodation . Is will they signal a faster stepping away from their accommodation . Well it may mean kuroda will be reappointed as governor. He is bordering on being irresponsible. Any pullback by the boj would undo a lot of the work that he has done. It went to to make a bold india, cap 12 months. Frederic a lot of distortion with demonetization. Looks like the economy is recovering gradually. They are doing some reforms. We see some progress on the Banking Sector reform but it will be a long slog. Dont sport dont sweat inflation, india. Rishaad thank you so much for joining us. Have a great 2018. Let us take a look at some business flash headlines. Another of its underdog stages in the u. S. Says uberutive remains nomura remains weak. And he warns the european staff that it is well below that of americas and jobs are on the line. 12 million in claims. The regulators at Citigroup Global markets showed incorrect ratings suggesting by instead of sell. This is from february 2011 until december 2015. Hong kong listed splendid technology. And equipment maker. Losing shares at 20 this year. The stock has soared in the past two days though. The most shocks stocks that have changed hands. Of the last trading day of the year for the hang seng. It seems to be dictating sentiment. Cannot live without it. So if you cant live without it. Why arent you using this guy . It makes your wifi awesomely fast. No. Still nope. Now were talking it gets you wifi here, here, and here. It even lets you take a time out. No no yes yes, indeed. Amazing speed, coverage and control. All with an xfi gateway. Find your awesome, and change the way you wifi. Here is Victoria Harbour here in hong kong. Counting you down to the last trading day of the year. Counting you down to the last trading day of the year. We did have the regional benchmark, the msci pacific index marking a record high on thursday cap a fabulous year. The most since the Global Financial crisis of 2008. The best year since the rebound of 2009 as well. We are sitting at the moment on the asiapacific index with a gain of 28 . Hong kong, 35 gains. Since january the first. On top of that, we have the worst year in a decade for the dollar. In all of this. We are watching the hang seng today because we have more of this class half full feeling. 85 point from that psychological level. The open is upon us. Sophie final trading day of 2017 for Chinese Markets and we are seeing good things coming through for the shanghai composite. The hang seng is plotting i had. Fifth straight day of gains. Offshore yuan is trading at the strongest level since september as the pboc raises the daily fixing once more. The dollar has seen its weakest year since 2012 and dollar we and dollar weakness will likely continue to play. The performance for the onshore you on. , and bondntrols yields. Setting up the yuan for its steepest yearly rise since 2008 and its best yearly performance since 2013. Let us look at the breakdown for the hang seng which is up 0. 1 . The discretionary segment. China mobile. Helping that segment. The Consumer Staples segment is being led by. The i. T. Segment. Keep an eye on tencent in particular. Stock may fall with chinas crackdown on screening online games. Btv 432. E that on g that may check that out. Ron wyden. We the point i want to make is that the hang seng is doing fairly well this year. Some stocks are lagging behind the global benchmarks. You can see that happening here. The shanghai composite is in yellow. Investors have been rushing in through chinese large caps. We are seeing this in shanghai stocks resulting in a record performance gap between the bid 100 index compared to the shanghai index. Keep an eye on this space as we head into 2018. Rishaad thank you so much. Let us get you up to speed with the first word news headlines. Paul allen starts us off. The fixed income markets are responding. Itindian bond yields aims to bother an additional 7. 8 billion dollars to lessen the impact of slower revenue. The 10 year yield jumped the most since february as the r. B. I. Says the government will borrow almost 15 billion dollars through march, more than base the amount for the same period announced since september. The italian president has dissolved the Parliament Opening the door for elections in march and the possibility of an inconclusive result in further political instability. The eurozones thirdbiggest economy but its recovery is trailing most of its peers. Opinion polls put the antiestablishment Movement Ahead of the Democratic Party and a potential centerright coal