Transcripts For BLOOMBERG Asia Edge 20160913 : vimarsana.com

BLOOMBERG Asia Edge September 13, 2016

Anna the collapse could be the industrys lehman moment. Welcome to the program. It is 5 00 in london and i am anna edwards. Anie and im angie lau. Welcome to bloomberg markets. You side, the u. S. Markets reacted to one fed governor sounding more hawkish on friday. From brainerd, who is a dove, ahead of this silent period. And she moved the markets as well. Anna the markets where primed to find out how dovish she would be. Will she stick to that script and she kind of did, didnt she . Some of that is wearing off in the Asian Session a little bit, isnt it . When we look at the u. S. Future picture, it looks a little bit less bright. So, lets listen to what brainerd had to say, talking about less urgency than others at the fed, and talking about the need for patience. The extent that the effect on inflation of further gradual tightening and labor Market Conditions is likely to be moderate and gradual, the case to tighten policy preemptively is less compelling. Anna making the case therefore patience. Making the case there for patience. It seems the fed might be on her side. Heir investors are urging t fellow investors not to make all of their decisions based on the bloomberg work function. The markets are really making up from the doldrums in recent days. Angie that is certainly true. You know what is waking up as well . Volatility. I want to show you my bloomberg right now, where we have a chart lynch,e b of a merrill the global stress financial index. I want you to note on the far right, that huge spike we circled in red. That is a oneday move as volatility awakens. Volatility, you could say back surged on. Markets, friday by the most since august of last year. A tightran out of trading range. Lets get more on the markets in this region. Said,er angie, as anna we have pulled back a little bit from the relief rally with a earlier in the session. We can see some weakness coming through in japan. It has been fluctuating between positive and negative territory, but the stronger yen is impacting the japanese market, down by. 1 in the afternoon session. Australia is only up by. 1 , despite a gain of. 7 on the open, and the fact of course, that we did have better than expected data out of china. And you can see all of this red here. Either of the markets that were closed during the holiday. So, coming back online, and you can see that catch up selling coming through, following through from the big sell off we saw in this region on monday. The hope that we would see a little bit more of the rally has faded, that we still cant the hang gains on hant seng, up by. 8 . Career,a little bit a little bit more supported by the fact that we do have samsung rebounding. I wanted to show you bonds because gilt growth came through after Lael Brainard co spoke. We saw this big rally coming through in stocks. Why arent we seeing it as well in u. S. Treasuries . We dont see much coming through in the japanese bond market either. Also, an interesting story on the bloomberg. Yield hunters are becoming the hunted. Japans debt has lost 9 during the last quarter. We still see negative yields there. And oif i could look at the dollaryen, we can still see a lot of weakness on the back of Lael Brainards comments. Up by. 1 there, angie. Angie thank you for that. Well, the other big story we are following, the chinese economy is showing increasing signs of perking up with the latest data. It shows that july could have been a hiccup. Is that the case . Final think so. The numbers did dip lower than expected. All the three numbers beat expectations. Lets run through them quickly and then get into the reasons why. Production rose thre three numbt expectations. 6. 6 in august and we were expecting 6. 2 . There has been a deceleration of factory output. The Monthly Average was 9. 6 growth and in 2014, 8. 2 . Now, we are back up to an average in the first eight months of the year of 8. 2 . Retail sales, a key barometer of consumer appetite, better than expected in august, 10. 6 . We expected 10. 2 , and that was the same number as july. The floor has been placed there, as you can see. Investment, the same as july, 10. 1 . Economistsrd hsbc talking about how the economy is bottoming out. Talk to us about the property sector because a property rebound has underpinned this recovery to some extent. What have we learned there. It absolutely has, and some of the accommodative policies have helped to see that recovery, lifting up restrictions on mortgages and one cities have seen some price gains as well. We had those Interest Rate cuts. The central bank has held off from further easing, but th onee seen some price gains as well. Weose six Interest Rate cuts have finally worked into the Property Market. There could be but those fixed Interest Rate cuts have finally worked into the Property Market. There could be some signs of this. I have a few comments here. The chief economist, raymond, saying this is a decent set of numbers that continues to reinforce the message of economic stabilization. But then we have david from brookings saying, the authorities are walking a fine line between enough stimulus to achieve that 6. 5 growth target, but not so much that risks build up alarmingly. If there is too much of a rebound, they will take away the punch bowl. Saying, anna overheating in the Housing Market has become a serious concern. Anna thank you, stephen. Hsbc says the key question will be around how the stimulus is removed from markets. Now, lets see how markets have been reacting to what we have heard out of china. Julia sally has the analysis. Reporter were watching three markets for reaction. Australia, china, and here in hong kong. Not a lot of conviction is coming through, particularly in shanghai and australia. Beatte the fact it did expectations. We can see more weakness on the shanghai market, down by. 2 . I wanted to show you three interesting stock moves. These are three companies that have made their trading debuts today, and they have all his the daily limit. We are still seeing a lot of appetite for ipos coming into the china market. Beijing advanced digital, the tech company, and a chemical manufacturer. Three very separate industries, and all doing very well. That is one bright spot in the china market. Here in hong kong, we are up by. 8 . However, we have to remember that this market locked closed 4 during the selloff on monday. When the numbers did come through, we did see an initial spike from the aussi, and that is represented here by this move that we saw there. That was a better picture for the aussi dollar, but it hasnt started to give back again from the losses at the beginning of the session. So, we see Dollar Strength there, that we cant the dollar weakness against other currencies. Though we can see the dollar weakness against other currencies. Anna checking in on the first word headlines now from around the world. Reporter chinas savings bank is in line to be the worlds biggest ipo this year. Planning to list on september 28 and have already found cornerstone investors in china should building, age and a group, and shanghai h a group, and shanghai port. Them toe allows h conduct key laser printing technology. As part of the agreement, samsung has committed to purchase 300 million worth of hp shares on the open market after the acquisition is completed. Hp closed almost 3 up. Worth 3. 2 billion will join two companies. Bolsters theon sale of more automotive components. This includes some i conductors and hybrid and electric vehicles. Semiis includes some automatic conductors and hybrid and electric vehicles. Sites the korean regulator, saying it is not certain they will be able to raise funding from the airline at all. Million was4 approved, but only after hanjin handed over a stake in the beach terminal. It is a huge, huge nuclear markk. Nuclear mark. Reporter global news 24 hours a day, powered by 2600 journalists in more than 120 countries around the world. This is bloomberg. Angie still aheaqd on bloomberg markets, changing the rules. The international debut. More on that later on in the show, but coming up next, shopping for a good deal. We will take a look at the opportunities in the u. K. Retail market. This is bloomberg. Angie welcome back. You are watching bloomberg. Im angie lau in hong kong. Anna and im anna edwards in london. Singapores Global Logistic robert he is is expanding its portfolio into real estate with a purchase of more than 1 billion a warehouses. Dealxpects to complete a in december. The remainder of the buildings are in development. Glp is the secondlargest owner of u. S. Industrial real estate. Barclays ceo has a warning about the u. S. Election, saying both candidates have views on free trade that could hurt the global economy. He did not name Hillary Clinton or donald trump, but that rhetoric that questions globalization would have significant longterm effects. He noted the u. K. s brexit vote, which demonstrated resistance to globalization. The Property Market in the u. K. Could still be in shock from the brexit vote. The average value of a home just rose. 1 last month, the same pace as in july. Prices are about 4 higher than a year earlier, the weakest increase in some three years. The decision to leave the eu is adding pressure to a market already feeling the pressure is of a tax increase. Feeling the pressure of a tax increase. Angie was focus on the Retail Property sector in the u. K. Because our next guest says the sector is looking quite good. Lets bring in the head of u. K. Retail at the largest publicly property brokerage. It looks like investors are still feeling good about the Property Market. Havendon has a safe quality about it. We have already seen large investors focusing on London Retail and the core retail market, specifically. So, about 60 of our market is over perceseas. Angie how much of that is underpinned by retail consumers flocking to london to buy goods from those luxury areres, or how much of it is these retail leaders who want to have a stake in london . Retailers want to make money and that has been the case during the recent time. I think what we have seen most recently is a lot of retailer did nasties perhaps retailer ownsties, buying their investments. Its urse, the sterling and 10 year loans currently, is a touristsction for flocking to london. So, it is both the Domestic Tourist and the overseas tourist. Anna a lot has been written about how we are in the middle phony war post the vote. We have not actually brexited. It is difficult to talk about what the u. K. Economy will look like in the future because we dont know some of the things. Is there a sense that the u. K. Market is holding up at the moment, but could still be vulnerable . They could be vulnerable. The lowest level of unemployment the 1970s. Nce people are shopping and they are shopping in numbers. There might be a lag, but currently, it is business as usual. Weumber of the retailers represent are looking to expand their market. Toailers whoar are new areon and the u. K. Expanding. A good take it could take three to four years until we know what the brexit will look like. Anna how much is being driven opportunistically, if you like, by the weakness in the pound . We certainly have spikes and there was a spike in february before brexit, if you remember when Boris Johnson stated he was going to be supporting the brexiteers, and we saw the movement dramatically improve the Market Sentiment for this region. They have certainly seen it post brexit, although there has not been the distress in my sector, the London Retail market, that people were anticipating. Is still very much has the safe globaluality is the capital is looking for. We have had rental growth. Theon retail will be one of successful stories in the short term because of the weakening of sterling. People are buying a lot more watches, i think it is up 12 to 14 . Anna it is time to invest, pun intended. But as you say, a lot of investor sentiment, they are feeling robust about real estate. And as we know, it is about location, location, location. So, where are the hot spots . There are headwinds around retailers and there is a lot of development coming into london. The biggest and most exciting project in my Business Life is the elizabeth rail opening, which comes online shortly and which will dramatically improve some of the established areas of london. Some of the other areas of london will also benefit. Businessa lot of the districts investing heavily in the core london areas. It is important to the london economy. I think the shoppers will continue to come, even without brexit. GloballyInterest Rates are still pretty low, many people are asking questions about how long Interest Rates are going to remain so low globally. If we do see a general drift higher, how does that change the investment story within the u. K. Retail assets . I think it will change fo. The Capital Market volumesi in the u. K. Are down some 30 to are but in london, we actually about where we were last year with Interest Rates rising. Long outcomee the people crave, there is still quite a big point of difference for most investors. Interest rates where they are now, i think inflation for retailers is more dynamic and as i said, other headwins about valuations, that could impact us in the short to medium term. Moment, it ishe still quite a benign market for us. Anna thank you very much, phill cann. We look at another look at the u. K. Inflation a little bit later today. Bankg up, chinas central resumes the use of a 28 day lending period. Details of that story, next. K ofrter the peoples bannk o china injected funds for the First Time Since february. They have not done this since february, but they are doing it now. That is interesting. It is all about the timing, though. One reason is we have holidays coming up in china, which i am sure we are all looking forward to end these 28 they reverse repo contracts should help smooth the volatility. The pboc ise trying to curb shorterterm funding. Reporter we did see funding costs in hong kong surge the most in seven months yesterday. We really had a big move here. Could it be that pboc . That as a people are suspecting. Any onlooker is going to find that trend very familiar. We saw them doing the same thing in january. Now, we have another fed hike down the horizon. Pboc doesms like the want to act at this moment. Angie what is a tighter liquidity scenario do to equities . Is always bad news for equities. It seems like china is ready to sacrifice the equity market to stabilize their currency. And you know, defending their currency usually means you cannot also have aggressive easing movies, like cuts to the benchmark lending rate. So, that is definitely what people are looking at right now. Angie that is why they call it a trilemma. Thank you, the latest moves in moon ahead of the autumn festival. This is bloomberg. Angie it is 1 30 in tokyo as we watch japanese shares fall. We are entering the last nine minutes of trading there. 09 . Right now, just down the top stories on bloomberg markets. Chinas economy showed signs of rebounding after julys pickup. The factory numbers came in stronger than estimated. Retail sales were up, and also exceeded expectations. The numbers built on other data including better than expected trade figures and the factory gauge. Anna chinas Coastal Savings Bank is lining up to be the biggest ipo this year. Onis planning to list september 28 and has already found cornerstone investors in china shipbuilding and shanghai ports. Angie the chances of a september rate hikechina shipbui have slid to 22 after fed governor Lael Brainard said there is no rush to tighten. She urged patience on inflation and jobs. The jpmorgan ceo says the fed needs to maintain credibility and now is the time to raise rates. Well, the savings bank of china is seeking more than 8 million o, which could be the biggest in the world this year. This is a huge offer. Reporter we have been waiting for this over the last few haves as regulatory moves occurred. This is what we know. It is potentially up to an 8. 1 billion ipo, the biggest of the year. We are looking at shares 4. 68 to 5. 18. Portsncludes shanghai and china shipbuilding. Interesting thing is, this is not one of the big four of Big Five Banks we often speak of when it comes to china, but it is the fifthlargest bank with regards to assets. It has over 40,000 branches in its network with roughly 500 million clients. This is really a servicing of the rural population. You are talking about smaller cities. Towns, tier pricing, it is expected on september 20 and we are expecting that listing to start trading on september 28. We are looking at bank of america, jp morgan, chase, and Morgan Stanley as the joint sponsors. Anna the bank has clearly been on something of a capital binge then lately. The ipo is only part of their fundraising effort. The question is, wyhy . They have recently gotten regulatory approval. It is an endeavor to try to close the capital gap, when you compare it to its competitors. This chart shows this gap that exists between the bank of communications, a similarly sized lender. Postal savings bank has a capital ratio of 10. 6 , above the regulatory minimum. But that number gets raised to 10. 5 , and so, it will fall short. It is trying to shore up its Balance Sheet to have more of a buffer. Another reason is asset quality. Some of these chinese bankers have been trying to reign in risk weighted assets, but when it comes to a savings bank, they are going in the other direction. We know that risk weighted assets could lead to bad debt, something the bank wants to avoid. You can see the gradual rising when it comes to risk weighted a assets. It doesr risk really, have the most branches in china. With that, comes the increased risk of fraud and theft with of those 40,000 plus branches in the country. You can see why it is bolstering its defense. At the end of the day, it is pretty much a pure savings bank, one of the most conservative lenders. The idea

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