Transcripts For BLOOMBERG Bloomberg Markets Asia 20170328

Bloomberg it is considering options. Rishaad another official enters the race debate. Uncertainty might mean only two hikes this year. The earnings season. The banks are in focus today. Storyg possibly at a big as more people look at the glass as being halffull when it comes to reflation trade. Haidi if the impetus is u. S. Stocks we seem to be taking that and running with it. Seeing a rebound when it comes to japanese markets. Changes, from donald trump would be nice to have rather than must haves. Something the markets are digesting right now. We are 30 minutes away from the chinese and hong kong open. At howtaking a look things are going. It looks, from donald like investorsnice to are running with that glass halffull idea. We have stocks in taiwan, and malaysia coming online in the green. Malaysia snapping a fourday drop to add 30 at the open. We do have Southeast Asian onrent sees the ringgit the retreat today. The thai baht is down 0. 2 in the korean one also down about 0. 2 as well. Taking a look at the weaker yen. That is helping japanese stocks today. Like investors 110rading close to the 111. 63. Stocks leading gains in the region. About up about 1 there. The recently discussed decoupling that analysts have been discussing japanese stocks this is a blow. Is not too far from erasing its gains for 2017. Not to be myopic, it is a far cry from last years rout in the index is still up since 2011. Topix is the third worst. Oil patch. Wti is Holding Losses below 48 while brent is treading water above 50. You can see from this chart, the spread between the two is widening. Brent is thet to widest since 2015. Rising u. S. Stockpiles. Brent, is benefiting from opecs efforts. Let us get over to singapore to have a look at what is going on when it comes to the first word news headlines. Southern it will return to trading in shanghai. Or carrier has concerns details about a deal with American Airlines including selling a stake and introducing a cochair agreement. They will issue 2,000,008 shares to americans that will pay at least 200 million. The stock continued to trade in hong kong closing 0. 7 higher on monday. To invest innvited saudi aramco in what is expected to be the worlds a guest public offering. Saudi arabia is preparing for that by forging closer relationships with its a gift buyers and walking in future demand for oil. The kingdom plans to sell 5 of saudi aramco next year. The chicago fed president Charles Evans says uncertainty over inflation and federal spending could mean two great hikes would be enough this year but he told bloomberg he would support three if he gains confidence in the forecast. Evidence did a great with his fmoc colleagues to raise rates march 15. To the extent that i gain more confidence in the forecast that i have, that would be a good indicator that i could perhaps support three. Two might be the right number if there is more uncertainty or any modest concerns about whether or not we will get that and if things really take off, growth andtrong underlying inflation picks up, we could get four. Rishaad south korean prosecutors confirm they have requested an arrest warrant for the expelled president saying it is reasonable to did hang her because there is a risk she could destroy evidence. The district will consider the request on thursday. A accused of forcing big business to pay millions of dollars. She denies the charge. Global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. I am Haslinda Amin, this is bloomberg. Rishaad let us get to the dramatic story. Oil producer is speaking for the First Time Since the shares collapsed on friday. The hong kong stock exchange. 85 plunge was unusual. In the statement to the hong kong stock exchange, in the first statement about the plunge one of thee price, things it wanted to stress was that its controlling shareholder, the chairman and was not responsible for misappropriating more than 400 million. Rumors were that she had bought real estate in china and they also said that he had categorically denied this rumor. The bank of china is saying it did not have any orders on the country. Addressing another rumor. And therefore, there was no forged invoices that were found. He owns about 73 of the shares in the company. Price the Share Price Fell off the cliff in less than 90 minutes. This chart that previously it was very stable. From october 2015, trading at. 69 hong kong dollars. It trade will remain suspended until the board has been able to ascertain an update of the companys financial position. Reportshat about the that it is running out of crash and they met with creditors a day before we had that 80 that 85 plunge. They did confirm that they did meet with 23 creditors and they discussed whether they would roll over the loans into the new period which is quite normal for them. They saw to reassurance for that. Sought reassurance for that. The Regional Government proposed uishanso deal with hy late payments. One of the executive directors she is responsible for the treasury and cash operations. She cannot be reached. They have not reached her since last tuesday. She said she did not want to be contacted. This is one of the things that has been discussed as well in rumors and reports. And also what her role has been in the company. I think isual definitely an understatement. We are still following this developing story. State of queensland is preparing for cyclone debbie. It is expected to cross the coast in the next couple of hours. How bad are we expecting this to be . The deadline keeps getting pushed out from when it will cross the coast. The storm has really slowed down. Is getting its path a battering for a much longer period of time. I think you are seeing some pictures there of the coast. A popular jumping off point for tourism. The Great Barrier reef. The storm is approaching there. The islands offshore such as hamilton island, have been putting up with wind dust at 233 kilometers per hour. It is not as big as cyclone nosy, a category five storm that hit the area a couple of years ago. But if i thousand residents there have evacuated. But 25,000 residents there have evacuated. Rishaad what about the miners. They have put production on hold. Aul on monday, we had bhp. Nsion by glencore has suspended work at two of its minds. And the gold miner, evolution has evacuated everyone from mount carleton. Five ned the cyclone cyclone nessie from a couple of years ago. Worth mentioning the potential damage to agriculture as well. Half of queens land sugar plant plantationssugar are believed to be in the path of the cyclone as well. The Ridesharing Service bought out chinas uber operations. 6 billion in funding. We also have some reports coming and . 10 areapple interested in investing in the company as well. Considering taking more funding. Company has been investing heavily in Autonomous Driving Research as well. Is considering an ipo but this may put that timeframe back. More details on that are coming. Looking ahead, discussing the Global Economy with a former white house economic adviser, Glenn Hubbard. Interview exclusive with the Credit Suisse ceo. This is bloomberg. Rishaad you are back with Bloomberg Markets asia. I am haidi lun in sydney. A quick check of the latest business flash headquarters headlines. Bhp billiton is said to end its strike in chile this week after a sixweek pay stoppage. Negotiations had failed and the miners will work under existing contracts and the will not have to offer a bonus but will have to reconvene pay talks next year. It was found guilty of manipulating share prices. Ordered reliance and 12 unlisted trading houses to return gains plus interest. Reliance saying it will appeal against the judgment. Haidi toshibas bonds are that the company is too big to fail. Suchovernment will not let a big company in the Nuclear Industry go under. To see but bonds toshiba bonds. Thenikkei news says westinghouse unit will file for bankruptcy today. Suisse chiefcredit executive says the banks says the bank has options on the table concerning brexit. He is saying that his london despitemain unchanged britains departure from the european union. Thiam it is a large issue on the horizon but luckily we have time to think about it. And to get ready. Operations in london are quite large. We are engaged in a significant restructuring. Coincidence, we have invested in a new center in dublin. We have transferred a lot of our activity there. We have options depending on how brexit plays out. Banks have seen the other who have started working on their contingency plans. What do you think when do think Credit Suisse will have its plans . Ago, we had about 9000 people in london and we have taken that down to 6000. Our ultimate plan is to move to under 5000. Is there Something Else you are looking for in terms of clarity . Do you want to learn more about passporting rights or do you want to see how negotiations go . Thiam we will wait to see how negotiations play out. Weevil we have many operations. We operate under Many Political and regulatory regimes. Business insing on asia. You had to revise your 2016 earnings to the downside. Can you explain what happened . Were initially, we working with global targets for asia. It has been a huge success. [indiscernible] we have separated the market activities in a Global Market division. They are very market dependent. Have now really defined our targets. Yvonne you have slashed your profit targets. The wider sector of asia . Is asia still key to your strategy . To how we viewy the world economy. We have a balanced approach it between developed markets and developing markets. We are very profitable. Is it different now . [indiscernible] we still believe there is plenty of room in the Global Market. And growth in the emerging markets. Haidi that was Credit Suisse ceo thiam. Some lines crossing the bloomberg from the chinese central bank. The pboc has weakened. The pboc has weakened the fixing for the first time in five days. Up, the shanghai listed stock resumes trading. We are watching how that stock moves and we will have all of the prearchitecture and next. Next. Market action this is bloomberg. You are back with Bloomberg Markets asia. I am rishaad in hong kong. Haidi and i am haidi lun in sydney. We are looking at a mildly positive session when it comes to asia. Aking a cue u. S. Stocks closing off their session lows. Nikkei 225 up 0. 8 . On 0. 25 be adding percent. In other markets trading, australia up by 1 despite some concerns over the falling oil prices. The aussie dollar has come under quite a bit of pressure as a result of that. And kiwi stocks remaining flat. Rishaad coming down to the flat the start of the trading day. Free market auction. Period. Arket auction we are replicating what is going on. Itock to watch out for did resume trading in hong kong yesterday. China southern. Andcarrier coming out confirming today that American Airlines has agreed to acquire a Minority Stake in the carrier. 200 million is a consideration for that partnership. It was the only chinese Major Carrier that did not have a stakeholder by a foreign body. China southern issuing some 270 million shares in the Hong Kong Listed company. Is the area the letter a American Airlines will be buying into. Nearly 2. 7 of the total issued shares. This is chinas biggest carrier for passengers. This has been seen as a big boost by some. Of one wide bodied aircraft, american could finally be securing a major mainland partner but it is a long road. Analystton is a senior at the center for aviation in hong kong. This is not an alliance of the leftovers. Prices premarket the market has been liking this news. I am watching the big bang story because earnings season for the big five chinese banks getting underway with agbank leading the way. Agbank is the one to watch. With this big nonperforming loan story, that is the lender that has been affected the most seriously. The fastest formation rate and the highest level. Looking at the margin number because there is pressure coming down for agbank regarding that metric. In terms of how the stock has been performing, up 30 for agbank and up 25 when it comes to bow,. I have both broadly outperformed. Share listing. We have more analysis regarding what is troubling the chinese banking sector. This is bloomberg. We are coming down to the start of the trading day. I am rishaad. Coming to you from inside bloombergs asia headquarters. Haidi i am haidi lun in sydney. We are looking at a decent day when it comes to asian markets. Potentially, we will be getting to perhaps three rate hikes this year from the fed. It is all data dependent. More Risk Appetite emerging from the asian segment today. , we havelooking ahead the possibility of brexit being triggered on wednesday. Proposals to design and build the border wall with mexico. Basels have to be submitted. Mexico, south africa, and thailand are setting Interest Rates. And we have the new galaxy s8 smartphone being released as well. Sophie looking at how stocks are faring in hong kong. The hang seng extending mondays gains. Up 0. 6 . Shares in shanghai are following for a second day. Yuan to weakening the six for the first time in five days. Taking a closer look at what is moving in hong kong. With a bigbanking chinese banks due to report earnings taking off with agbank. The first of the five to come after the market closed on tuesday. We do have financials up here, about 0. 7 . In real estate. A third of a percent. Hong kong property measures may come as soon as this week because the price is rising month which is not acceptable to the hong kong government. The city is maintaining its underweight hong kong property developers. Real Estate Developers on the decline. What we arek at focusing on in terms of movers. Let us look at China Southern shares. Gaining about 2 in hong kong. The shanghai listed shares aboutng trade today, up three point 3 in shanghai after the carrier agreed to sell a two americane airlines. Up 19 in the last 12 months in hong kong and it closed on monday at an eight month high. . 10 andeck in on southbank shares. Encent and southbank. Southbank up about 0. 5 . Alibaba is among them. Are said toencent be chipping into soft banks. Let us get over to singapore. Amin some of the worlds top miners have halted production as thousands of people have left their homes as a major storm bears down on queensland. Cyclone debbie is expected to be the most powerful system to hit australia since 2011. Debbie is expected to cross the coast as a category four storm with a risk of significant structural damage. Chinese ride handling app may a 6 billion dollar investment from softbank. It has to balance the interest of existing investors including apple, alibaba. May join thecent investment to protect their stakes. It is not clear if all of the money will come from tencent. The millions of overheating galaxy smartphones recalled last year. Samsung will recycle the allowals and potential he customers to use them as refurbished models. Samsung has collected 97 of the devices and has issued software that blocks any that have not been collected from charging. Uishan has spoken for the first time saying the plunge on friday was unusual. With theors were met day before the crash. Also said it has been late in making some Bank Payments and the shares will remain suspended in hong kong. President trump is being urged to bring up beef exports when he meets the chinese leader for the first time. The Cattlemen Beef Association wants him to persuade the chinese leader to resume imports from the u. S. China has not allowed american beef into the country since 2003. Beijing lifted the ban last year but the two sides have yet to a great. Have yet to agree. Global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. I am Haslinda Amin and this is bloomberg. Rishaad a busy week for chinese lenders. Results coming out from agbank today. Bloomberg intelligence says this bank will be one of the bigger winners. They are still focused on chinese banks. Rishaad i have an interesting chart. The situation was getting better. But this chart shows you that these nonperforming loans are worsening. The outlook is still cloudy amid the conflicting assessments in the market. Showed morec survey than 60 of the bankers think bad loans continue to rise before they level off at or decline. Shows someory data signs of stabilization in asset in asset quality. Diy shows some vergence. Growth. Loan what is that story . Ofs it come at the expense nonperforming loan growth . That was the story over the last few years. Now, china is taking a more conservative stance towards credit growth in the country. I think loan growth has slowed a little for chinese lenders for two reasons. The first, the recent Property Market collapse which may hold back the mortgage growth. The second reason is the low monetary target set in the National Peoples Congress Earlier in march. Those factors may weaken the lending process. Haidi before we leave the issue of bad loans, how is the problem of how they categorize them . It has long been a debate that the actual number is a lot higher. Because of the way they design bad loans. I would argue that the bad loans in the Financial Systems look a lot higher than what you see in the banking system. The commercial banks themselves, especially for the bigger ones listed in the hong kong market, they have that loan recognition standards. Loan they have that loan recognition standards. Citibank has further tightened the bad recognition. Most of those bad loans in the past have been disposed of or moved to some other part of the financial system. That would be my short answer to your question. Great to have those insights, francis from bloomberg intelligence. Weighing in on the pace of rate hikes. Hikesainty means just two might be right. Coming from Charles Evans, he has been one of the most consistent if not the most consistent dove on the fed. No surprise. He is not a jeffrey lacquer or a john bullard. He is saying he should be cautious in terms of the great hikes. Right now, keep may be the only person saying two hikes might be a net for 2017. Might be a not for 2017 can he is looking at unemployment and inflation. Of theill think that one larger uncertainties is whether or not inflation will get up to 2 sustainably in the u. S. So i do not want to get out ahead of these great increases but i thought it was perfectly acceptable to get one in in march. Rishaad hop into the bloomberg reporter hop into blender. Bloomberg. This is the fed dual mandate. Thinking mr. Evans that unemployment might not be such an issue. 4. 7 may be as low as we can go. But inflation is not hitting that 2 target just yet. Food and energy is 1. 7 . R 1. 7 . It is not so much hitting 2 but holding onto it. That, let us head over to another bloomberg terminal. This is the world Interest Rate probability. When mr. Evans was speaking, we june probability fell below 50 . Right now it is hovering around there but for all of the meetings coming up, they all dropped in terms of percentages by a couple of percentage points. Weighing on the likelihood of a third increase based on mr. Evans speaking today. We are also looking at evidence that there may be some weight to this. The Dow Jones Industrial is down eight days in other row. Down eight days in a row. Rishaad over to brexit. The United Kingdom is two days away from triggering the process. Banks are saying that now is the time to redo european banking laws. He said that in advance of any potential chaos, they do not want to give any opening that banks might take advantage of what is going to happen in this divorce process between the u. K. And the european union. She wants to close the loopholes for Bank Branches and dealers. She wants to avoid supervisory caps generally speaking. To doing specifically has with foreign lenders and overseeing their branches as they try to go from london to the eu she wants to avoid regulatory arbitrage. Some countries trying to give some sweeter deals to london banks. She wants to make sure that it is fair. One thing she is talking about is optimism. She says she hopes the european project will not be damaged and london will always be an important partner. And there will still be backandforth between europe and the u. K. One interesting bloomberg terminal chart i want to leave you with is something we are debuting today. This is a bloomberg grexit barometer. If it is green, it is good. If it is red, it is bad. Back to the july area. Right now, we are at 30. We will be looking at that over the next several sessions. Rishaad talking more about the fed and global Monetary Policy as we head back into the credit session. Glenn hubbard joins us next. Rishaad you are back with Bloomberg Markets. I am rishaad in hong kong. Haidi and i am haidi lun in sydney. Back to the Credit Suisse Asian Investment congress. The pace and size of rate hikes has been the discussion. Yvonne man, your next guest. The need for more fiscal policy. That is front and center here at the investment conference. Lease welcome Glenn Hubbard former chair of the economic advisers council. Thank you for joining us here in hong kong. Tell us what the big surprise has been at the conference and what youre learning from this part of asia. Is it this goal policy . Donald trump is front and center. Glenn how fast can the us economy grow. Big debate. And will the Trump Administrations policies help that . My own view is that we can grow policiesd the trump are a big plus. Yvonne can you have successful tax reform now that the Health Care Bill has been shelved . Policies are aglenn if you mean by bring down business taxes, encouraging productivity and doing some basic running, i think you absolutely doing some base broadening, i think you absolutely can. Yvonne what does this set back mean . Could this speed up reforms when it comes to tax reforms . Glenn i think there were big disagreements on health care but i do not think they will happen on the tax code. Secretary minutia and is working is working mnuchin on this. I think the president will play a big role in this and that is constructive. I think we will see a good debate here. Yvonne the question is what kind of Sustainable Growth could we see out of these policies . The optimists are thinking 3 or 4 . Will that be possible or achievable . Glenn i think you could imagine the u. S. Economy growing at 3 or a little less. Difference between 2 and 3 is huge and what it would take to do that is not just tax reform,ut regulatory stable Monetary Policy. Many things the president is talking about. Yvonne talking more about regulation. The Trump Administration has towards a Better Business environment for corporate and banks in particular. In large part, this is reminiscent of what partly led to the Global Financial crisis. How do we avoid the problems we saw nine years ago . Glenn i dont think we have done a lot to help. If doddfrank was the answer, i think we need to do a pause on regulation before we do further costbenefit analysis and weed to and we need to streamline. That is what the Trump Administration has talked about. Steve mnuchin will deliver a reform package. And that is where the rubber will meet the road. Yvonne with health care, we learned that reality can bite. Number on these regulations . Glenn i think it is more a real look at what the benefits and costs are regarding regulation. Us step back and see which it regulations help. What problem are we trying to solve what problems are we trying to solve. Perhaps this has run past its shelf life. Early but saying gradual is that the right approach . Think it should have normalized earlier. I do not know why we had the Monetary Policy that we did for as long as we did. Having said that, the fed is normalizing and it is looking at the right very bulls. Monetary policy is getting back on track. Other Central Banks, particularly the ecb, is shifting. Yvonne does that mean three hikes or four hikes . Three but it is not so much the number of being on the right path and i think we are. Yvonne we spoke with a guest last week that said there is no reason this should be gradual. Why not wait longer and be more aggressive . Glenn i do not see any theory behind what he said. The fed cannot fix structural problems. We have been depending around the world on central ranks to do that but that is not their job nor are they good at that. We need better tax and regulatory policies. Not holding down Interest Rates. Yvonne when will asia start feeling the bite from the fed . Glenn it depends on what other Central Banks will do. A bigger risk might be the border adjustment and the tax l which could be a very which could mean a very big change in the value of the dollar. Yvonne great to have you. Next, we will hear from tim clark on the impact of the recent electronics dan Electronics Ban on aircraft. Details are on the way. Rishaad china is up by as much as 8. 7 . Trading at one point was the highest level we have seen. Sales have increased quite rapidly but they have not been reflected on the operating level. 71 biggesthe worlds longhaul carrier says it will adjust its strategy in accordance with the laptop ban. Monitor theirto affect. Cumulative set of issues that have affected demand for travel. We are dealing with those. The executive order with regard to the trouble bans and lowered recently the laptop then laptop ban. The situation is that we will be watching the demand for the cities that we fly to from the u. S. Are carefully. We have an upgrade in the visa requirements where the passengers traveling to the u. S. Outside the visa waiver areas. Taken together, a number of things we are looking at almost twice a day to make sure there is no diminishing in demand in the premium or a economy cabins. There is a degree of adjustment going on. I cannot tell you really whether that is of any great significance. Probably not until the middle of next month when people are making plans to visit the u. S. During the summer months. All of this does not help i have to say but we will have to see. Guy do you sense this is more than just a security issue . The reason i ask the question is that the u. S. Carriers have been lobbying aggressively to the Trump Administration against the gulf carriers. The uae off offt its list. Think in the first for a state to cross over into the commercial world and start taking sides on these particular issues makes no sense to me and i do hope that has not been the case. I believe the United States had a clear and present threat presented to them and they acted accordingly. On that particular issue, i would say that if there is, that is of concern but it should be applied to the Airline Industry universally. In other words, if there is concerned about activities of terrorist groups using laptops as devices, these devices can be carried on any aircraft anywhere. That really needs to be looked at very carefully. Haidi in the next hour, we are following the dollar story on the cusp of even back all of its postelection gains. Where does it go next . This is bloomberg. Announcer from our studios in new york city, this is charlie rose. Charlie president trumps vision to remake American Health care was dealt a blow today. The president and House Republican leaders decided to pull legislation to repeal the Affordable Care act after facing resistance from conservative and moderate factions within the party. Paul ryan rushed to the white house to alert the president he lacked the votes. He addressed reporters later this afternoon to its plain why it did not take place. Mr. Ryan we came really close today but we came up short. I spoke to the president a while ago