tv Bloomberg Markets Asia Bloomberg September 4, 2017 9:00pm-10:00pm EDT
rishaad: 9:00 a.m. in hong kong and singapore. 9:00 monday evening on the eastern seaboard of the u.s. i am rishaad salamat. stability returning. but president trump agreeing billions in new weapon sales to south korean. the u.s. accuses kim jong-un of begging for war. sydney.'m haidi lun in also coming up, a giant in the skies. $23 billionology, in one of the biggest deals in aviation history. this is "bloomberg markets: asia." ♪
rishaad: we want to bring up a chart here, showing what has been happening after the force we have seen of late, and a look at the tensions. have broughtns other stocks into favor, while inside and the mainline in china, we have seen this a share against h shares in hong kong. the premium of those a-shares expanding to kong the widest since july of last year. this is down to north korean inspired risk aversion weighing on the equity market. the hang seng retreating in line with. stocks. -- therehai composite we go, some investors suggesting
a-shares could outperform by the year's end. that is just a flavor of what is going on here at the moment. haidi: absolutely. on top of that, you always have , at least until the 19th party congress. stability is the name of the day when it comes to china. we are about 30 minutes away from the open in china and hong kong. singapore, taiwan, and markets in malaysia coming online at the moment. risk is starting to pare back a little bit with some of these trades, given that it will be a little quieter when it comes to the north korean front, still waiting for the international reaction and strategy. sophie, how are we looking today? sophie: a mixed picture so far in the asian session. stocks gaining in singapore and taipei. majorou look at the
benchmarks, still seeing losses in sydney as well as tokyo. the kospi is fluctuating in negative territory. it could be eyeing a fourth day of lust is -- losses. having around the 1130 mark. the yen is picking up, 109.53. bonds seeing asian flying, while treasuries are picking up. elsewhere, we will be watching closely with the daily reference rate for the yuan, given that the offshore rate has rallied quite substantially in recent days. checking out what's going on peso,he philippine inflation data is due out this morning. it is snapping a five-day drop. no change expected from the central bank at its next policy meeting when it comes out later this month. we do have the rba decision also due out later this morning. no change expected from that
central bank. is going to be interesting to see what the rba may have to say about china and the commodity outlook, given that iron ore has advanced since the last policy decision. ahead of that, we are seeing aussie stocks slide, losing ground for a second day, led by utilities and energy shares. i want to highlight was going on with financials as well. macquarrie says the party is over for australian banks as mortgage profitability is under pressure. miners are eking gains, about a 10th of a percent up, tracking gains in some base metals like copper today. since thending gains height of september 2014. you can see some money piling
in. hedge funds have added to their net loss, which is now at a record. you can see in the green columns here on the chart. laggingemand has been supply over the past nine months. watch out for the eventual moment that investors may take profits, not because they love copper, but because they are anticipating that prices will surge. they have gained doubles 50% this year. rishaad: thank you. sophie kamaruddin there. let's talk about one currency that had a drastic fall monday before recovering today. with that and first word news, here is haslinda amin. reporter: bitcoin tumbled the most in two and a half years after initial coin offerings are illegal in china. fundsoc has halted all raising, and says there will be
harsh punishment for any offerings in the future, as well as for what is already completed. bitcoin fell by more than 14% monday, the most since january 2015. buyed technology is set to rockwell collins for about $23 billion. the deal is $140 per share in cash and united stock. united technologies says it is funding the cash to debt assurances and cash on hand. one of the biggest deals in aviation history is expected to close by the third quarter of 2018. the u.s. house of representatives will vote wednesday on a hurricane harvey won't containat language aimed at saving up a default on government debt. republican leaders are bowing to the most conservative members, and will not -- the harvey bill would provide almost $8 billion in aid.
the chinese and mexican presidents have pledged to defend multilateral free trade after meeting on the sidelines of the summit. says therea nieto has been promotion of growth and prosperity from nafta in the u.s., however there are not any major breakthroughs on a new agreement. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm haslinda amin. this is bloomberg. haidi: thank you. that's getting -- get back to in the u.s. has agreed to maximize pressure on north korea using all means at their disposal after the latest nuclear test. called an nikki haley emergency meeting of the yuan security council and said the time for half measures is now over. >> nuclear powers understand their responsibilities.
kim jong-un shows no such understanding. his abusive use of missiles and his nuclear threats show he is begging for war. we have yvonne man standing by in seoul. we keep talking about north korea crossing the so-called red line, seemingly with impunity. is there a sense that this time is different? i remember you are speaking to an ambassador. red lines don't even matter at this point, given the geopolitical tensions have escalated this far. yes, harsh rhetoric coming from the u.s. ambassador nikki haley overnight during this security council meeting. that only the strongest sanctions will enable pyongyang to basically stopped nuclear ambitions and resolve this problem, they say through
diplomacy. this is something that i think president millon here in south -- moon and south korea would be supportive of. we have had multiple conversations with his counterparts urging for russia to cut oil supply to north korea. also, there was a phone call with president trump as well. we do see this joint effort from both countries to try to maximize their pressure on north korea. some significant moves in particular. president trump essentially allowing south korea to load heavier weapons onto their ballistic missiles. it's interesting the significance of this. the u.s.he first time has lifted these weight restrictions in 38 years since they were writing the framework for some of these guidelines. also, the u.s. essentially allowing south korea to buy more weapons as well as military equipment from the u.s. as well.
increasingly, we are seeing flexing of muscles coming from south korea as well as the u.s. what are people saying about this? seem to be carrying on about their daily business. reporter: certainly that is the case, you can see that here, where we are here for a second day. morning traffic once again. groupere we are seeing a talking about raising awareness on traffic safety as well. there are indications that life goes on, but there is a feeling that something feels a little different this time around. once again we are hearing calls, even from south korean intelligence, that the north is preparing possibly for yet another icbm launch. inle we have been hearing the last 12 hours or so is that korea, they south
are possibly deploying u.s. to thisgroups, bombers region, in light of the threats we could see. been quite a development. we have seen this such a contentious issue from the likes of president william j -- president moon. the president himself has been dialing back on that rhetoric the last few weeks ago. we have a new agent -- news agency saying that up to four of these anti-ballistic defense systems could be deployed in the region soon. we are seeing possibly south korea leaning more towards military measures to pressure north korea, by the margins we are seeing a shift in town. rishaad: thank you very much for that. we will be back with yvonne over the course of the program. still ahead, north korea coverage continues, assessing
rishaad: we are back with "bloomberg markets: asia." am rishaad salamat in hong kong. lun in sydney.i a quick check of the business flash headlines. blackstone has plans to some of all or part of its australian resource -- retail interest. the total portfolio includes centers in sydney and milburn, and is said to be worth $2.4 billion. rishaad: japan post will september,ans in
according to bloomberg sources. it could be delayed if the tensions on the korean peninsula increase. a chairman has been barred from serving as company director in hong kong for eight years. a court ruled he was involved in misconduct related to the running of the former giant. other independent nonexecutive directors were banned between three and four years. he briefly became china's richest man in 2015 before energy shares plunged 40 -- hanergy shares plunged more than 40% in one day. rishaad: we are expecting inflation numbers to cross. consumer prices for august on the way up. 3% up from a year ago. consumer prices in august rose
3.1% year on year. essentially bang in line. core cpi up 3%. if you look at that on a month ismonth basis, august cpi 3/10 of 1% higher. with a look at what's going on with asian equities, a mixed picture. gold and the yen maintaining some gains. next guest believes negative reaction to markets could actually present a good time to bottom fish. he is the chief operating officer at delta asia securities. how are you looking at the tensions on the peninsula? >> i think the markets get used that have full
capability of nuclear power. the situation is that it is difficult to get teams to the negotiation table. i think there is a one track mind to develop the nuclear capability, because his opinion [indiscernible] us the: that brings bottom fishing. what do you mean by bottom fishing? the biggest stocks have fallen back. >> because bottom fishing>> is, for this kind of situation, is sort of political minds.
this kind of political noise can give investors opportunity to do bottom fishing. rishaad: so what are we talking about more specifically? has believe the market dips, then they can buy into it, like for example tencent, some of the s oee reform stocks, as well as domestic stocks in china. haidi: there has been increasing voices, and to be fair, the commentary came through before the latest north korean aggression. ray dalio saying we should be part -- putting more money in holdings, we have a np saying 30% should be in cash. is that something you subscribe to? >> i believe that if you really you should board --
try to invest. if they know pay is certain, they will try to avoid it, and walk backwards a few steps to try to reach equilibrium strategies. i think that the market is trying to get used to this kind of political noise. until the markets desensitize itself from north korean threats, then investors will come back into the markets. hsii: when it comes to the are even mainland chinese stocks, some reform sensitive stocks, what is the strategy going into the party congress? >> i think that the 19th party keeps chinese leaders and incentives to foster a and incentives for
hong kong and china. think up to the 19th party congress, the markets should be environmentrom the that the chinese leader wants to foster. your main fear is not about north korea. you are suggesting that russiagate, or the relationship between donald in moscow, is the biggest key here. explain. russiagate, i think after theing months, investigation goes on and dig steeper, the irony is that the risks may come from america itself, especially when the markets in the states are high
in valuation. rishaad:rishaad: what you are suggesting is this is not priced in yet. >> yes. rishaad: we don't know what the result is either, so there is nothing to price in either. the fear even of something and fresh revelations, and possibly donald trump being raked over the coals -- >> i believe apart from the russia gate, when they try to get through the congress, there may be some political difficulties as well. you also give the markets hammer. rishaad: thank you very much. from delta securities. coming up, let's look at united technologies, buying rockwell collins for $23 million. details next for one of the biggest deals in aviation
rishaad: united technologies has agreed to buy rockwell collins for about $23 billion, creating a technology that can outfit jetliners and warplanes. let's talk about the specifics of this deal. reporter: this is a major announcement. a lot of -- united technologies making it official they agreed to buy rockwell collins for about $140 a share in cash and stock transactions, about 18% higher than the share price before talks. united technologies share price has come down about 3%. rockwell collins come on the other hand, their shares have climbed almost 10% since bloomberg first reported the talks.
it will be very much in the spotlight as the tuesday session opens. dealrms of what is this about, the squeeze they put on suppliers are for higher output, and the higher -- combination united and rockwell are able to create gives them not only a good possession against that, but they are able to offer a broad sweep of products, as mentioned from touch screen displays to the engines themselves, which united patent division makes, which changes the game in aerospace. it will be interesting to watch going for it. aerospace.g bet on what is the state? -- stake?
reporter: it is clear that the ceo for united technologies said he would make major moves, and has clearly made one here. it is also important given the follow-up on what has taken place in trying to compete with the big giants. again, they are boeing, airbus, and they have dominated the industry. what is clear is that this to lookcan go quickly how well the companies are doing. boeing is one of the best-performing stocks of the year. in terms of some of the deals that have happened, united technologies did stumble in developing a jet engine that cost them about $10 billion. it was a rocky start. they are already building and $8.6 billion deal this year. deal, a really major pretty big merger for this tuesday session. thank you for that. next, china coming down hard on
rishaad: that is victoria harbor. 9:29 here in hong kong. hang seng free market of 2/10 of 1%. monday, gold and the yen. they are still maintaining gains we have seen in recent days, but down to the tensions on the korean peninsula -- later this week, trade data. well.erves as reserve bank of australia, and the current accounts for the second quarter in australia as
well. haidi: that's right. as the world focuses on the tensionscal situation, on the korean peninsula amid reports from intel in seoul saying north korea is preparing for another icbm launch, it is still a full macro and central-bank calendar. the r.b.i. -- rba out later today. -- the record low is stuck between a rock and a hard place. another tidbit of data here in australia for the rba. paul: the current account tightening now. $9.6 billion deficit for the second quarter. a bit of a mess. we were expecting 7.5 ilion dollar deficit. a bit of a blowout on the first quarter, almost three times the size of what we had back then. context,ou a bit of first off, the current account has not been in surplus since the mid-1970's.
even so, this is a big improvement when it was closer to the $20 billion deficit. look at the aussie dollar, slight uptick on the release of these numbers. with net exports of gdp, that , which is third encouraging considering we have gdp figures out later wednesday. haidi: haidi: that'll will be something the rba will be looking at more. we keep saying they are really kind of stuck. paul: absolutely. they are pulled in two directions. we are seeing encouraging signs in terms of business investment, around 17%. encouraging in the non-mining sector, jobs have been very good. 200,000 added in the last six months, and a lot of them full-time. wages growth is just not showing up, really. that is why -- weighing on consumer sentiment as well, along with household debt.
there is a record for australia. i'll economists agree we will not see reaction later today, and trade is not pricing in a rate hike until sometime in 2018. haidi: rba decision out later today. paul allen in sydney. the markets are seeing some calm, but still safe havens are holding onto gains for the last part of the session. shanghai and hong kong markets just getting online. let's go over to sophie. sophie: if the countdown to the services pmi read. chinese stocks a little changed. hong kong shares are rising the most since august 30. the hang seng up about 2/10 of a percent. weakness and other major benchmarks so far in asia today. i want to turn to the renminbi. despite a stronger fix from the pboc, we have weakness for the onshore and offshore rates.
the offshore yuan extending the day losses, snapping a 14 day rally. it is the biggest slide for the june, andate since the you want. that is snapping a seven-day advance. the aussie is picking up momentum, up about a third of a percent after the latest data from down under. we are seeing a bit of a reversal when it comes to gains for a-shares. on monday, a-shares. the region trend. the shanghai comp slightly lower after a two-day rise. we have a fund manager saying mainland stocks are at the start of a two to three-year bull run. he points to improving fundamentals, corporate profits, and relatively low valuations. they also say it earnings in steel and coal suggests that bad debt problems have eased. today, financials and consumer
staples. some bright spots, materials and energy stocks on the back foot, materials sliding despite the rise in base metals like copper this morning. now let's take a look at what's going on with the hang seng. the hsi index gaining about 2/10 of a percent when it comes to some of the gainers, specific stock movers were among the top performers. we do have china agri products jumping. the hong kong stock exchange has rejected its right to issue plans. the big picture today, chinese stocks and the mainland on the back foot, while the hang seng is edging higher by 2/10 of a percent.
rishaad: thank you. one of the things we have been withssing is this impasse pyongyang. let's go to the latest on that and first word news with haslinda amin. haslinda: the u.s. ambassador to the u.n. says north korea is begging for war with its latest nuclear test. nikki haley call for the strongest possible sanction on north korea, telling the security council that the u.s. wants a september 11 vote on new measures are the white house says president trump spoke with his south korean counterpart, agreeing to pressure the north with all means at their disposal. ambassador haley: the stakes could not be higher. urgency is now. 24 years of half measures and failed talks is enough. haslinda: a senior european lawmaker hinted september 21 maybe the day you get a promise aeresa may gives
much-anticipated brexit speech. a u.k. official has told bloomberg that is wrong. speech on to give a brexit, with negotiations stalling and the government losing its parliamentary majority. taiwan's premier has quit i had of local elections next year. he is stepping down to give his successor time to prepare for the polls. his resignation sets the stage for a broader cabinet reshuffle. the central news agency says his successor is expected to be the taiwan city mayor. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm haslinda amin. this is bloomberg. ♪ hit the booming crypto currency market with a fund-raising ban.
the pboc declared initial coin offerings illegal with groups raising money heard -- order to return funds, sending bitcoin tumbling. tom mackenzie joins us from beijing. tell us all about it. reporter: this is the biggest regulatory challenge to ico's so far this year. the initial coin offerings, they are basically people getting together with very early stage business ideas. they put out a white paper and offer up virtual currencies or tokens. you can buy does usually using something like bitcoin or business takeshe off. then you would see the coins go up in value. this has been a burgeoning sector of the cryptocurrency world. the pboc is now issuing regulations.
clearly the regulators here have seen already the problems with things like p2p lending and --.r lending schemes mid schemes. they have failed to get money. they want to get ahead of the curve. illegal,say they are that fundraising via ico's are illegal. they have banned banks from working with ico's. they say the funds that knee -- have already been raised need to be given back. this has led to a selloff from a lotkes of bitcoin and of the virtual tokens and coins are sold and bought using those cryptocurrencies. haidi: does that mean the future of ico's will be pretty bleak, given the huge market that is china? reporter: it's interesting. there were around 43 ico platforms as of july this year here in china. as you pointed the
cryptocurrency sector here in china, it is huge, whether that is the miners or exchanges. the ico's has -- has been part of that environment. a number of investors of bloomberg say this might be a positive thing, because many of these ico's were coming up with fairly sketchy business ideas. there were concerns around fraud. investors saying that a clampdown or increased regulation can weed out some of the bad players, and set up a framework for some more ethical ico's.h-quality more broadly, you year from the likes of mark mobius of templeton emerging markets saying that now given the concerns, and uses by some in terms of money laundering and cybercrime, that there will be no greater focus on regulation, not just in china, but other places as well. >> with the u.s. treasury trying to shut down financing for
terrorists and access to dollars and banking, the terrorists lords and others are now moving in other directions in order to have some liquidity. in some ways, they have to be able to move money around. cryptocurrencies are ideal. there's no traceability. the government will definitely crackdown on these. reporter: the u.s. securities exchange commission, they are also looking into ico's and whether or not to increase regulation around them. other jurisdictions are doing the same thing. mark mobius touched on cyber criminals there. according to some estimates, around 10% of the funds raised by ico's have been siefert off by sabr crit -- siphoned off like cyber criminals with phish ing schemes. china has put officials into some of these exchange offices,
sitting there for three or four months to monitor what was going on. they have passed on a lot of information. they are keeping a close eye on those exchanges. clearly, regulators in china are trying to get groups with a very fast-moving and fast-growing cryptocurrency sector here in china. haidi: and we know how wildly speculative and quickly the markets move in china, so they have to clamp down before it gets ahead of them. tom mackenzie in beijing -- shanghai. the official page shows a slowdown analysis from bank of america merrill lynch. this is bloomberg. ♪
-- received as much as $1.8 billion. vw purchase the italian brand in 2012 for just over $1 billion. rishaad: the company will push ahead with separation of its parts division after it failed to secure a deal with another carmaker. componentts of the d is this do not belong, and it could be purified from assets. is a final five-year business been before leaving in 2019. haidi: boeing has won the backing of the wto in the long-running trade dispute of a tax incentive to develop its triple seven next yet line or. the wpo overruled an earlier $8.7 billion of tax incentives rewarded by washington state and subsidy restrictions. of unfairbeen claims
competition. looking out for the pmi ,ata on non-manufacturing including services plus construction. versus 51.5. that is much better than anticipated. the composite is also much better than expected. let's bring in helen's how, economist at the bank of america merrill lynch. the nonmanufacturing site is also doing better than anticipated, so the reports of the demise of the chinese economy faltering, greatly exaggerated. >> indeed. there were concerns that a lot of the numbers right now are subjected to more scrutiny because of the upcoming
political events. i think this is a very good retort to that, because given effect that pmi is independently being made, also showing the economy is doing well, it is a great answer to other questions being posed earlier. rishaad: so what is the all-around headline from manufacturing composite and nonmanufacturing? pmi, it isok at the saying that growth is still firm, demand is still robust. external demand is not bad. with them both being firm, this is indeed saying the macro environment has been stable, and policies may not have to support even more. rishaad: with the manufacturing side during -- doing well, and none of manufacturing as well, we are lining less about the rebalancing story of the chinese
economy. is this something which is or is it in policy, that it is happening, we don't need to talk about it? >> this is more mixed in terms of the data. the official pmi, official manufacturing pmi, it's actually getting better in august him about non-manufacturing is getting notably worse. from an empirical perspective, this seems to be saying there an some rebalancing, but not overall consensus on how much the rebalancing has happened. said, in the last two years with the infrastructure and property investment ongoing, probably a lot of the rebalancing has halted in a way that consumption may not have been growing faster than investments, and service sectors may not have been growing too fast. i think going forward with the policies already turning, the more likely outcome is that a rebalancing work continues. rishaad: you have to have the
software before the hardware. >> exactly. he already have infrastructure and properties. if the investments continue to slow down, then this is the time for consumption and services to step up. how much attention or concern are you assigning to the possibility -- as unlikely as it is at this point -- of some kind of regional trade were? president trump grasping at options available to him in how to do with north korea. he also threatened that some of the countries that might be targeted would be anyone that does business with north korea. do you think the possibility of some kind of trade war developing between the u.s. and china as a result is something that you are watching? absolutely. i think those risks have been rising, although it is clearly not in our baseline case. at the moment, it looks like the u.s. and china relationship has been going through ups and downs
in the last eight or nine months. right now, they have been cooling off a little bit. because of the north korean situation complication, there is potentially more upside for risk of a trade were to go up. that said, have to say china has been very cooperative in terms of implementing the sanctions more rigorously against the north koreans, and therefore i wouldn't say it is an outright break of a trade were just because the u.s. would blame china for not doing anything. potentially, the conflict could still arise as a result of disagreement over how much has been done and how much more can be done. haidi: what about the yuan? we have been talking about how that has been the great policy success when it comes to currency. we know that stability is really the theme going into the party congress. --you accept or accept
expect stability in the currency to be maintained after congress? >> great question. i would say at the moment, the currency has been strengthening, not the least because of a very weak dollar trend. at the same time, we have been polo -- puzzled to watch the >> because volatility, the basket does not seem to be important driving the movement anymore. what has been driving it?? could we get back to the old days where political events are more important? we cannot rule that out. then potentially about a month and a half of the cpc national congress. with those events, there is a important?ntive
we cannot rule that out. at the moment we will have a summit, and incentive most liker keeping the currency at a relatively strong level. i would say that is probably where it will go, especially after the cpc, would largely despite -- depends on the dollar haidi:. just treading water until mid october. chief greater china economist from bank of america merrill lynch, always appreciating your insights. coming up, future bidding on off-line shops. we interview a travel company ceo, next. this is bloomberg. ♪
they told, kennedy about the opportunities across the nation. >> they represent the fastest-growing gdp growth around the world. the buying power for these countries are very significant. for example, this year in russia, we sent 1.5 billion people there. in south africa, the rising number and the curiosity about africa is increasing. for brazil, because they hosted the olympic games. lots of people are going there as well. for india, it represents the second largest population. all these countries represent a very attractive travel destination for chinese tourists. reporter: domestically, no you are focused on the second and third tier, and also online booking, you make about 10% of all travel booking in china. where do you see that growing? >> it started in shanghai, very
strong in first-tier cities. now we are penetrating into the second tier and third tier cities. first of all, increase the branding advertisement into the city. secondly, we also opened up 6500 off-line stores a couple with our online efforts. thirdly, we also developed comprehensive products to serve customers in this area, such as not only hotel and tickets, trains, bus, restaurants, etc. anything they need for their travel, we offer it to the customers. with that strategy, i hope we can boost travel volume from the second here and third tier cities. reporter: is it becoming a more competitive stays -- space? >> as live you keep up with focus on customers and make the right investment in ai, big data, cloud computing, you will extend leadership in this area.
reporter: but you are keen to make further acquisitions? >> we are very disciplined in terms of investment strategy. we have three criteria. first it has to be related to travel. second is the verticals we are looking at, always investing in number one or number two. we try not to invest in number three or number four. the third criteria is that valuation needs to be reasonable. reporter: you are still looking for future deals potentially if they fit the criteria?? >> exactly. >>we are open-minded, yet very disciplined. up, a look atg what's going on with markets ever since we have had tensions between pyongyang and d.c. we have seen flight. we discussed, -- how long the
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