Transcripts For BLOOMBERG Bloomberg Markets Asia 20180115

Feeding Market Information to a swarm of japanese traders. Can you get more exuberance into this market . This fomo trade when it comes to equities in the u. S. And global, 24 billion flowing global sixth largest for inflows. ,hen it comes to u. S. Stocks 11 higher than its 200 day moving average, the whitest cap since 2013 idest gap since 2013. We do have a Public Holiday when it comes to u. S. Stocks on monday, so a wellearned rest when it comes to some of these u. S. Stocks and the recent rally we have seen. We have some breaking news when it comes to xiaomi. Considering chinese banks when it comes to their ipo, but sent to have chosen Goldman Sachs and deutsche bank, as well as Credit Suisse and Morgan Stanley, so more color on that story. Fromhotly anticipated ipo xiaomi, once a top contender when it comes to the smartphone space, a real disruptor for that space. 30 minutes away from the open. Singapore, taiwan, and malaysia coming online. Sophie taking a look at market action. Broadly speaking, asian equity markets are tracking gains in the United States, which saw u. S. Equities rise to fresh records, helped by the optimism around this Economic Growth story. In tokyo, bank and tech stocks giving the biggest boost, and softbank jumping after considering listing a mobile unit. Other shares are extending fridays gains. Waiting on ,re will postsday tmc results. Climbingnese dollar with other regional currencies, gaining. 2 against the dollar, which is extending losses after capping a fifth week of declines, so the dollar index languishing. The Malaysian Ringgit rising for a fourth day, trading at a july 2016 high. Jim rogers chiming in with saying Political Uncertainty clouds the Malaysian Ringgit outlook. The korean won and the yen gaining traction. Taking a look at the yen moves on this chart. The trend for the dollaryen is pointing lower. It should breach the november , then it could test the 110 handle. Bulls honing in on governor kuroda does language tweet, leaving out words powerful and aggressive, but the euro could also be propping up the yen. The korean won testing to 1060 handle, seen as intervention point for korean authorities. The korean won has rogan through has rogan through the averages and now a hot has broken through the averages and now at a high. 2. 1 inrices fell december. Taking a look at cryptocurrency stocks in korea as the government updates its position. Bill will be decided after a full discussion. The korean government is supportive of investment in blockchain. Some stocks have stakes in cryptocurrencies in seoul, korea. Some relief this morning on the back of that. Haidi interesting. We will continue to monitor that story. Thank you for that. Lets get you the first word news. The iranian tanker that burned for a week after a collision off shanghai has exploded and sunk. It went down the sunday afternoon leaving a 10 square kilometer oil spill. All 32 crew members are presumed dead. It collided with the carrier on january 6 and was carrying almost one Million Barrels of condensate. Republicans are holding out hope on young immigrants despite President Trump declaring a bipartisan agreement probably dead. That heightens the risk of a Government Shutdown by the end of the week, prospects of a deal were damaged by the president s disparaging comments about african nations and haiti. The pounds a rally may come. Nder pressure this week sterling jumped to a high friday after spanish and dutch finance ministers agreed to push for a deal to keep the u. K. As close to the eu as possible but germany made pour cold water on the idea. We are still going full steam ahead on our plans. This will look after the market, from the eu euros ofbillion yea business for us. We are going. Full steam ahead. Hashe philippine president rejected calls from allies to expand his sixyear term and cancel elections next year, while supporting moves to shift to a federal system of governance. He told the website he wants a federal government with the Leadership Structure similar to frances Leadership Structure. He also said he does not want to stay in power beyond global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. 2022. Beyond the 2022. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Beyond 2022. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Thanks. Chinas credit growth grew faster showing the attempt to cut risk is starting to bite, demand for exports has soften the impact. Tom mackenzie joins us from beijing for more. It seems policymakers have managed to time this nicely. It is a window of opportunity for china. Inna has played a big role stimulating the economy with its own domestic stimulus and now with this external demand picture being supportive, particularly for chinese exports , it has given them a comfort blanket when it comes to pursuing this derisking. In terms of credit flows, it did slow significantly, particularly the m2 money supply, where we saw eight point 2 growth versus the forecast of 9. 2 , the slowest on record, so it points to potential risks as they pursue this derisking campaign. Those export numbers picking up 10. 9 in december and over all the trade picture between the u. S. And china looking strong come up the chinese perspective at least. Come increasing 13 . If this external environment remains supportive, you would see more rollout of these regulations we have seen from policy makers here because it will give them that added confidence. Looking towards the end of this week, thursday, fourthquarter gdp number. The forecast 6. 7 from 6. 8 in the third quarter. Overall, the world bank and imf seeing six point 8 growth in total for 2017. We did have the premier saying it could hit as much as 6. 9 . That is the gdp number expected in the Fourth Quarter. Going forward, economists expect 6. 5 . It is that external demand for chinese exports plus the Deleveraging Campaign, how much those to support each other and how much of a balance there is to support that. The derisking continues. We are hearing from chinas thanking regulators saying it is ramping up oversight. Do we have any details as to what this looks like . Came out over the weekend, the China Banking Regulatory Commission saying they would ramp up oversight of the sector. The regulators here have all been under the gun to shopper and up their game. To sharpen up their game. They said they will focus on unhealthy Corporate Governance, shadow banking, and in the credit david numbers friday we sought shadow banking pickup. Regulators say they will pay closer attention to that. Also property loans. This is something we are expecting the property sector to slow down according to economists we have been speaking to as regulators say they will be focused on violations around lending in the property sector and will him up the punishments as well for any people or anyone lending and bar ring who violate some of those rules, also saying they want the banks to ensure there is a greater focus on funding for the real economy, and this is what the focus is for regulators coming weeding out the darker areas to ensure credit continues to go to the real economy. Haidi thank you so much for that. A little despite from those from those respite numbers. In theup, and ipo may be cards for softbanks mobile unit. We will look at how much that could raise. Outlookon bonds, the from bank of america next. This is bloomberg. Haidi lets get you a check of the business flash headlines. Xiaomi has selected Morgan Stanley and Goldman Sachs for its planned additional public offering, which could target as much as 100 billion. A 45i raised money at billion dollars by ua shannon in 2014 and is still considering chinese underwriters and has yet to decide on the timing and location of the sale. Vale to pay 1 billion for its 50 stake in a joint venture in brazil. Thevaluation includes provision that bhp would continue to assume its share of remaining fire abilities remaining share of liabilities. Hedge funds are secondguessing optimism on copper. Money managers have cut their that growing demand may be overwhelmed by new supply. Lastr prices jumped 30 year as the Global Economy improved. Plenty to talk about when it comes to fx. The yen strengthening against the dollar has we heard from the boj governor. It was a focus on what he didnt say, leaving out words like aggressive and powerful, essentially wondering if he is still about whatever it takes. Our next guest joins us now. Lets talk about the dollar side of the story. I want to throw out this quick chart, the bloomberg dollar index, which fell for a fifth week of last week, almost 1 lower friday. It is the longest losing streak for the dollar in a year, but that happened on friday despite retail sales and other data better than expectations, so what is driving this overwhelmingly negative sentiment when it comes to the u. S. Dollar . Right. Are quite it seems and feels like a oneway street. Those cpi numbers only stalled the decline. They did not reverse that heavy selling decline we saw. It last week was policy normalization, the focus on the boj and ecb, where we saw forwards curve, the repricing of european expectations of rate hikes, more aligned to our own view, but we think the deposit rate will be hike in the second and Fourth Quarter, and that provided a lift to the euro, while the yen has been a critical levels with the focus on normalization. We are on the dollar bullish side. Of cant get too far ahead yourself when looking at normalization for japan and europe, and we would be cautious about chasing this one way trend. Upside in theore dollar despite what looks like one way traffic on the dollar. Haidi lets talk about the yen. We are getting lines that the boj buying today came in and is expected. We saw dollaryen falling to the lowest in september on almost what governor kuroda did not say , the lack of saying powerful or aggressive easing. Is this scene in line with the camp that sees stealth tapering in the jgb market as well . I think to some degree. What we would be looking for are the wage numbers from the spring Wage Negotiations to see how that side of the equation is going. Failed twice in terms of normalizing and getting out of its qe programs, and they need to feel fairly confident about sustained inflation, and the only way to get that is to get positive feed through loop with higher wages, demand picking up, and inflation beings to pain. Until that time inflation being sustained. This that time, there is constructive ambiguity, trying to move the markets in directions they want without being explicit and without upsetting the expectations for inflation. The most powerful tool policymakers have is for guidance. Explicit about ford guidance, it does turn expectations. Thats why they will have to be very cautious about turning the corner and normalization. Haidi one of the biggest moves we saw going back to this dollars story, some movements and the yen, some strength in sterling and euro. On that last point, this chart, at the highest level against the greenback since 2014. This is on expectations the economy is going well and the come al pare back buying pullback and rein in stimulus later this year. Do you think it is a oneway bet for the euro . Or is there some concern with the periphery . The ecb tends to be better at trying to find tune its policy communicate communicate relative to the boj. It will be interesting to see if he tries to dial back anything in terms of policy expectations or the way he talks about euro dollar, because the ecb is focused on those levels and trade weighted terms. If it runs ahead of itself and tries to take the frost off the market, that is important. They have change the tone and talking about overall policy stance, but it is a complicated dance when it comes to ecb Monetary Policy in terms of sequencing it, turning the tap off in terms of net purchases of securities, then they want to guide in terms of trying to guide higher in terms of the rate expectations, so we are still early on in that game and they will watch the currency because they dont want to kill in terms of the inflation story or the inflation pick up with appreciation of the currency dampening down in terms of import Price Inflation and feeding back into lower inflation expectations. Week we started off last all terribly concerned about this their market. We heard from bill gross. Abouted the week talking one guest talking about it like a teddy bear market. Is it a bear market . Is it going to be a choppy ride am a but mild one . I would say it is a bear market to the extent the shoe that has not dropped is to some degree the term premia on 10 year yield. It is still around 50, 40 basis points, which is out of place for the market, particularly when we look at the fiscal issuance this year and the amount of supply coming onto the treasury market. That will push up the inflationary premia. Inflationen expectations turn higher, and yet the term premia, the compensation for taking risk, is still negative, and that has to turn positive and at a kicker in terms of the bear market for bonds. Haidi always a pleasure. Plenty more to calm. To come. This is bloomberg. Lets get you caught up with the business flash headlines. Whenwill double spending it comes to electrified vehicles , shelling out 11 billion by 2022. The executive chairman means the company is all in when it comes to dvds evs. The carmaker is shifting production of an electric suv from michigan to mexico, and ford says it does not support major changes to nafta. To do something that drastic is not something we support. Nafta could be modernized. We could get currency certainly in nafta, but nafta has served this industry well. Indonesia centralbank tanking a firm stand against cryptocurrency as it urges all parties from refraining from selling, buying, or trading. The bank of the niche it said they are risky and inherently speculative. They said the potential for terrorism and Money Laundering could affect instability and harm the public. Has accused alibaba of selling fakes online in a sign of increasing trade tensions. The u. S. Trade representatives included alibaba in its list of notorious markets, but alibaba says it is not an accurate representation of the companys efforts and called the u. S. Position on, biased, and politicized. Fiat chrysler ceo said the company can double profit in five years by exploiting the potential of the jeep brand. He said cheap good groep 20 of the global suv market, equivalent to 5 million deliveries per year, and says tax cuts could further boost profit by 1 billion a year. We are counting down to the open of markets in china and hong kong. We are just minutes away, the hang seng up. 9 when it comes to the premarket session,. 8 for hang seng futures there. The china open is up next. This is bloomberg. Haidi it is 9 29 a. M. In hong kong. Shanghai and hong kong markets with the feeling of positivity, picking up from u. S. Stocks. We had u. S. Consumer and retail sales and data beating expectations. Of course that yen trading strongly, dollaryen the lowest since september as we had what governor kuroda did not say in his speech today, the elimination of the words powerful and aggressive when it comes to that journey to 2 inflation. China fourthquarter and fullyear gdp thursday. There are expectations we may get a beat when it comes to headline chinese growth. Lets get it over to sophie. Sophie a mixed picture. Chinese large cap gains. We could be looking at a 12 a of gains. In hong kong, the hang seng at a record high, rallying for a 15th straight day. 8 . Gaining ground we did see the pboc set the yuan fixing the strongest level since may 2015. Taking a closer look at what is moving the dial in hong kong, sands china gaining 4. 5 after sands, supporting the sectors up turn this year. Thestocks, see note on upward momentum, 3 . Energy leading laggards down over 1 this morning. Some stocks have halted trading in hong kong. Chief among them is an aluminum player seeking 800 million in a top off placement. Include viva china. China resources rising for a fourth straight day. Surging in its hong kong trading debut. One laggard falling after a top off placement selling shares at a 6. 8 discount to the last close. , i. T. Stocksnghai falling 1 , but Consumer Staples and financials higher in shanghai. Chinese banking stocks are getting another vote of confidence, this time from Credit Suisse, which sees double digit Earnings Growth this year unless regulations tighten significantly. Tankingave chinas watchdog rampup supervision on Corporate Governance, shadow banking, and policy violations. That is not getting in the way of trader so far today. For that. Nk you lets get you first word news. The fcc said a wise emergency authorities lack safeguards to prevent a false alert that told residents a Ballistic Missile attack was imminent. The fcc said an investigation is underway. Hawaiians were sent into a panic for the false alarm, blamed on an employee pushing the wrong button. I love they took responsibility. They took total responsibility, but we will get involved, their attitude, what they want to do is terrific. They took responsibility. They made a mistake. Saudi arabia Sovereign Wealth Fund is considering borrowing from banks for the first time. Have held talks with local and International Banks to raise about 5 billion this year. Former u. S. Army Intelligence Analyst Chelsea Manning is running for the u. S. Senate for the state of maryland. The campaign released a video showing images of protesters and white supremacist and ins with the tagline, we got this. Granted clemency after being sentenced for leaking classified documents to wikileaks. A passenger jet that skidded off was just a turkey few meters from the sea. Passenger say it was a miracle the plane was evacuated safely. Pegasus says there were no injuries among the 168 people aboard the flight from on correct im correct, turkey. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Haidi thank you for that. Chinas banking regulator says it will toughen regulations in the move to defuse financial risks. Priorities include shadow banking, supervision, and consumer protection. Lets get it over to our asian finance reporter. Talk us through the new rules. What are they trying to achieve . One of the interesting things i have read from the most reduce recent money supply and credit data said it is irrelevant. Year, we havehis seen the Chinese Government making announcements on new regulations for the financial industry basically every week, issuanceow banking, to so the investments, Chinese Government is they want to close some of the regulatory reduce the risk of the financial system. So the government has been announcing new financial regulations, and it feels like it has ramped up in the last 612 months with the deleveraging of focus. Why is this latest development significant . Iswhat we have seen so far some of the riskiest corners of the financial system, because before they have been making announcements from time to time, but this time it is different, at least from the Economic Data over the last few months. You can see the chinese growing more confident and Economic Growth, so that basically gives them more power and room to. Eally do it i think that is the difference. Before you did not have that much power to really do something right, and now is time. Haidi ok. Assuming we get a good gdp read this week, and assuming that to puteijing a buffer through greater reforms and regulations, what should we be expecting for the rest of this year . I think we will see more and more this time of new regulations. What we have seen so far his they are doing all different areas, not only shadow banking, but Corporate Governance and other areas for the financial industry. Also, i think we will get a better idea in march after the National Peoples congress, then we will see more and more, because this time it looks like they are more determined. , and more determined maybe more of a window. He has fed mandate after last years party congress. Thank you so much for that. Has selected Morgan Stanley and Goldman Sachs among thanks for its planned ipo and could see a valuation of as much as 100 they you and dollars. Joins us now from tokyo. I am a little bit surprised about this news of up to 100 billion in valuation. In 20 14,ised funds it was a 45 billion valuation. Has the company gained value in that time . Question thee key ipo market is going to answer or xiaomi. Wrote about this a few weks ago for the first time, heard they were targeting a valuation of more than 50 billion. Now they have decided on banks, Goldman Sachs, and now they are talking about a evaluation of around 100 billion. We heard that number before, but it did not sound realistic. That is this typical dance goes on in an ipo process where banks will talk up the valuation and prospects and try to persuade management they will get the best value for them. Then the company and banks go on a roadshow and talk to investors and get a dose of reality. Investors will give them feedback about what that valuation should be. There is the possibility it could go down more up. How is xiaomi doing competition . I remember when it was the real disruptor to apple, samsung, and into taken of the home market of china and others. I wonder if it is still outperforming in that way. Thats right. Scene lede onto the by a wellknown entrepreneur within china, and they were famous for these online flash sales. And got tons of demand soared up the ranks and became one of the most popular phones in china. Since then they lost a step and lost ground to domestic , and they had a setback a couple of years ago. They have diversified since then and have gone the on smart phones to build an ecosystem laptopsey sell tablets, and air. Fires. Air purifiers. Haidi it has been a massive weekend when it comes to the tech space. We have in getting these headlines of softbank. What are the plans for the mobile unit . Clear Masayoshi Son ever sleeps. He always has deals going. This is an idea that has been floated in the past. Assetsk has a lot of worth about 175 billion theuding debt, and yet companys valuation is under 100 billion. Internallyrustration at softbank and there have been many conversations about unlocking the value of these thets, so this is one of prospects for trying to do that. It would spin out the mobile phone business in japan and shine a light on how strong that businesses as a profit generator , and highlight the investments they have been able to make. They have invested in a number of companies. Alibaba is there huge hit, and Masayoshi Son has raised 100 billion to make investments going forward, so the idea is to unlock value. The company said they are considering this type of offering, but have not decided on a time frame. Haidi investors lapping it up as softbank shares rise in most since june on an intraday basis. There for us. Thank you. Coming up, some help from the rest of the world. We will talk about this synchronize Global Growth story with our guest. This is bloomberg. Haidi quite a lot of data releases, u. S. Inflation and retail sales better than expected. Chinese exports better than imports. Plenty more to calm. Fourthquarter gdp out of china this week the major data point. Joining us to discuss all of that and the geopolitics from atg kong is a Wealth Advisor commercial economics asia. About this conundrum of inflation. It was the biggest theme last year as central bank struggled to explain why we were not seeing price pressures pickup. Is an argument i have heard before, but how do Central Banks respond to that . Off thiseed to get high horse of always looking at inflation as the big altar they have to pray to, and they need to think about structural , thingsment, education the central bank and not directly control, but indirectly control i helping on the credit side of the equation, so the obsession with money supply growth is driving with the Rearview Mirror. It has become cost push inflation, not demand pull anymore. What are the implications for where you are putting your money if you are saying this is driven by a Raw Materials demand, then it makes sense for the raw commodities rally to continue. What does it mean for the bond market . Maybe it is just a mild bear market. Pair market. A it is a bull market with the dips happening because people get scared about this Rearview Mirror view of looking at inflation. Every time inflation picks up, then they have to sell bonds. That is when you want to buy bonds. The inflation will continue to go down. The power has been broken by globalization, demography, and technology. This do you anticipate phenomenal start to the year when it comes to Global Equities it has been called the fomo trade that is global, the sixth biggest weekly inflows on record , 24 billion in one week. Is this sustainable . I believe so. There is an excess supply of money and excess demand for goods. That will stay for quite some time. If the Central Banks were to tighten too fast and too much, then this house of cards would come crashing down, so they wont have to continue going am afraid. China, fourthquarter gdp, no real surprises, suggesting a higher than expected print when it comes to fullyear gdp. Are you still concerned about shadow banking . That is a domestic issue will be impacting domestically in china. With xi jinping strengthening the power of the party, his whole focus has to be the creation of jobs, jobs, and more jobs to continue justifying his existence and his partys existence, so i believe they will handle this issue with shadow banking. They are already doing it by reining back on money supply growth and credit growth, and again they have to tighten up on the regulatory side with shadow banking itself. Haidi we are coming up to the oneyear anniversary of the trump administration, better or worse than expected . What is your assessment and outlook . One year feels like 10 years. It seems as he has transmogrified into a showman, yet again, this time with a president ial hat breathing fire and fury. It is an eyeopener. I did not realize just how awful this human being really is. A a shame with the country with a 13 illiteracy rate has picked this person as their leader. Haidi when do markets start to care . High think they will continue going with the flow on the money supply figures. As long as there is this excess supply of money, the markets will continue to do well, so no one will be challenged by academic arguments about how worthless this president really be ao im afraid it will liquiditydriven rally that will continue until what i call an unknown unknown coming through. Borrowingce people money and then investing in futures on bitcoin. Crypto you are more worried about than china or the southnorth korean potential for a Nuclear Disaster . Trump,to absolutely, and but crypto because you will find that will be the unknown unknown , the stuff we cannot gauge, an known unknown and we can gauge of somewhat. As long as trump keeps out of it, maybe they can arrive at a sensible diplomatic solution. Haidi always a pleasure. Never shy from strong opinions. Great to have you as always. Coming up, a little bird talking to traders in japan. How a mr. His twitter account is influencing the market. A mysterious twitter account is influencing the market. This is bloomberg. Haidi this story about an anonymous twitter account sending japanese traders into a frenzy. Are followed by more people than the bank of japan. Lets get over to our social velocity reporter joining us from tokyo. ,ho is this mysterious anonymous tweeter likely to be . Mysteryhis the biggest of all. We dont know who he or she could be. Or even ae a Person Coalition of people behind the heount, but we do know that is famous for tweeting market moving news on twitter. He will cover local and foreign newspapers and disclosures linked to the stock exchange. When news hits these platforms, he is tweeting it out in minutes and seconds. Why it is important that they traders looked to him for news on a daily basis. That is why japanese day traders and Financial Professionals follow him. He has quite a bit of credibility built up. He is quite famous. If you google it in japanese, some of the things you find in first search results are so a lot of people wonder who he could be. There is he a loan or are other accounts on japanese social media of this type . Alone. S certainly not there are quite a lot of twitter users in japan that talk about marketmoving news on twitter. There are other accounts that do similar things, but the consistency, speed, and the news , it is hard to find somebody like him, which is why most japanese professionals look to him. You so much. Our social velocity reporter in tokyo. Coming up, we will speak to david lipton at the asia financial forum. He says now is the time to andess global vulnerability is calling on china to look at its trade and investment practices. We get details on those next. This is bloomberg. Haidi it is almost 10 00 a. M. In hong kong. I am haidi lun in sydney. This is Bloomberg Markets asia. Haidi the yen hitting a fourmonth high as governor kuroda moves away from describing easing efforts as aggressive. Global optimism, the hang seng extending its recordsetting streak. Xiaomi targeting a valuation of up to 100 billion for an ipo. Ambitions given the 45 billion fine you way when it fund raised in 2014. A lot of details on this story, but the big data point is china fourthquarter gdp. Largely expecting upside of 6. 7 . That is edging down from 6. 9 . Full year consensus is 6. 8 , a pickup from 6. 7 in 2016. This is our Bloomberg China gdp track. It looks at industrial output and export trade. We have seen robust growth. Resilient,e been painting a picture of the synchronize global recovery. In the stuttering previous month, but domestic consumption and retail sales strong as well. Perhaps there is more upside risk than downside this week given that we heard from the premier saying he sees 20 growth the performance for chinas economy was better than expected. That is a good news story. Still a lot of concern about deleveraging efforts. Fridays money supply, credit, and loans data offering some espite. Shadow banking is still the thing to worry about when it comes to loan and credit numbers. Trading in indonesia underway. Lets get it over to sophie. Sophie indonesia, waiting on december trade figures. The surplus expected to widen. Stocks gaining a quarter of percent. The rupiah has climbed to a high ahead of that data. The uptick in indonesia bond yields is delivering in foreign inflows. Is bringing in foreign inflows. We did have governor kuroda speak this morning. During his a dress, the yen gained traction. That is not dampening enthusiasm for japanese stocks, gaining. 2 on the nikkei 225. While we wait for other data points this week, china fourthquarter gdp numbers are significant this week. Setting pboc setting the yuan at a strong level. Ground withing other currencies. Chinese large caps are up. The shanghai composite drag lower by telcos and i. T. Stocks. Over in hong kong, the exuberance is real. The hang seng gunning for its highs close since the inception and is set to clock a 15th day of gains. This is before the earnings onslaught, the bulk of which will come in february. Leading the pack is sands china, rising 5. 5 , the most since july 2016. It was upgraded on expectations the mass segment will sustain the sectors of trend this year, so helping to boost the Gaming Sector in hong kong. Ping an leading insurers. Country garden retreating from its record high last week. That. Thank you for lets get first word news with paul allen. Has been told that xiaomi has selected Morgan Stanley and Goldman Sachs for its planned ipo, which could target a valuation of as much as 100 are you and dollars. At a 45ised money billion by the way in 2014. It has yet to decide on the timing and location of the share sale. Earnednian tanker that after a collision off shanghai has exploded and sunk. It went down sunday afternoon, leaving a 10 square kilometer oil spill. Crewmembers are presumed dead. It collided with the carrier on january 6 and was caring one Million Barrels of condensate. Republicans are holding out hope of the deal on young immigrants despite President Trump declaring a bipartisan agreement probably dead. Of aheightens the risk u. S. Government shutdown by the end of the week. The prospects of a deal were sent back after disparaging comments against haiti and african nations. Philippine president has rejected calls to extend his term and cancel elections next year, while supporting moves to shift to a federal system of government. He told a website that he wants a federal government with the Leadership Structure similar to frances. He says he does not want to stay in power beyond 2022. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Haidi thanks for that. Readies markets for hikes and the ecb may be closer to reducing bond purchases, investors are looking at it shift at the boj as well. Kathleen hays has the latest. It is what he didnt say. Thatthat add to the camp say tapering is on the way . I would say governor kuroda has been so adamant about two things, keeping those bond purchases going and keeping the 10 year at zero, and also the boj can alter the number it needs to purchase at any given time. He stuck to the policy script. 2 ,xpects a pick up towards the target, and the boj will continue easing towards the price target. You can see three main lines, is the national cpi number, but the important one is the white line. That is 0. 9 when you take up fresh food prices. Look at the progress it has made. Last week when the baker japan cut the number of super long bonds it purchases in regular purchases to keep that yield curve at zero, it did spark speculation they might be ready to announce some kind of tapering. , the chief pacific asia natixis says the issue is not bond purchases. It is inflation. Can knownot that we how many ciaccio piece they need to buy. It depends on longterm rates. It depends on how many they need to buy. It depends on longterm rates. Not focus a much on jgbs. I would focus on the inflation issue. A until governor kuroda gives clear signal, i think we have to assume the boj is not ready to taper yet. Haidi here is a big issue for the fed this year. What an interesting conversation it isr, i guessed saying over, dead, but what do the cpi numbers tell us . People are waiting for inflation to pick up. How can it stay so low with type paper markets in the u. S. . Even the smallest move causes stocks to rally. It did hit bonds hard friday morning when the numbers were released. To 1. 8 he u. S. Cpi rise year over year from 1. 7 in december. Bloomberg economics says this core cpi surprise is not heralding the end of low inflation. Now you will see the two measures of inflation. The turquoise line is cpi at 1. 8 . The bottom white line is the core pce, the main inflation index. If you buy more hamburgers instead of expensive steak, that is reflected in the core pce, not the cpi. It is certainly not moving in the right direction just yet. On the other hand, strong retail sales out solidify this idea in the market that inflation will start to rise in 2018 and the fed will hike at least two times. Lets look at world Interest Rate projections. They did jump up on friday, now 88 . They were 74 before the number came out here it what are we going to look for came out. What are we going to look forward to . We have the president of the cleveland fed, more of a hawk. Rob kaplan signaling a willingness to go ahead and get on board with hikes. We have the fed beige book on wednesday that could set us up for the fed meeting on january 31, and we will be getting Industrial Production and housing numbers. Speakers will keeping that be the bond markets attention. Haidi Kathleen Hays there for us in new york. Still ahead, why oil at 70 a barrel means for prices. Next, david lipton, the imf deputy managing director come about the risk he sees for the Global Growth story. He says china needs to address its shortcomings. This is bloomberg. China reports its fourthquarter gdp thursday. , within expecting 6. 7 the targeted range. Lets take you to the Asian Financial reform in hong kong. There seems to be a reckoning when it comes to what beijing needs to do. Sure. There is a lot of global risk, including china. 6. 7 . W down his still lets talk about the macro outlook and the risks in the system with the first deputy managing director of the imf. I just heard your speech. You said now is the time to address global vulnerabilities and risks. Where do you see them . There are upside and downside risks, and those are balanced. First to be positive, there are upside risks. E dont know the strength of this recovery has been surprising on the upside. The Global Economy is going from strength to strength. The Global Economy seems to be strengthening and broadening. While this is a cyclical recovery and Unemployment Rates in the United States have gone remarkably low, the Unemployment Rate in europe remains elevated, so there may be further room to run. That would be good news. At the same time, we have to be aware of downside risks. It is possible inflation rears its head. I hope inflation will gradually move back to target, but not forshoot and leave a reason Central Banks to step on the brakes. There is also the risk that Capital Market participants who have been very positive and have been willing to take risks have been channeling capital to emergingmarket countries become more nervous, its possible financial conditions tighten and leads to a greater response. It is possible geopolitical tensions could cause protectionism for some security conflict. We need to be aware of the risks, but bottom line, this is an important cyclical, global recovery. Time as Christine Lagarde has been saying to fix the roof while the sun is shining. I hope this is a year of opportunity. Is that what china is doing with this Deleveraging Campaign, which is likely to intensify . Some say it will knock off a few points of growth, but is this time to tackle the debt to gdp ratio . This is the time. The leadership decided to elevate Financial Stability as a National Objective alongside of growth. Last year, the central bank and the regulators and supervisors have taken important steps to fix the problems that were arising within the financial system, the complexity of institutions, lending operations across institutions. I think it surprised everyone, including the markets, that they were able to make important strides to contain that without sacrificing growth. Able to aeven been the growth rate of credit somewhat without sacrificing growth. My reading of Market Reaction is that this has impressed the markets. We are not seeing the external pressures on china that we were seeing. We are not seeing reserves declining. We are seeing them rising. There is more that needs to be done. The chinese have to bring credit growth down to grow less rapidly than the economy or credit will be too big relative to the economy, but the verdict so far is that what they have done has been useful and they are pointed in the right direction. There was some chapter last week, some chinese officials backtracked a little bit, saying china would back track on buying u. S. Treasurys . Ofi dont know what to make that report. I will not pass judgment on that. , policiest economics are based on economic considerations. China has been a leader, not just in reform at home come a home, supporting at but in supporting globalization and international cooperation. What impact do you see from the fed rate increases we are likely to get . When does that start biting in this part of the world . Korea has a ceiling because the growth trajectory and inflation does not seem to be there. The fed has done what it said it will do. Their policy change is not state dependent. Continues tocovery be a healthy one so the normalization can be a healthy one. If that happens, the net effect will be positive. Aat is most important is strong u. S. Economy that will help the rest of the world. It is entirely possible something gets out of whack. We dont see that. But certainly other countries would be vulnerable if for some reason there were a tightening of financial conditions and there was a need for fed to accelerate normalization, or if Capital Market sentiment merely would surely the fx the effects would be felt in the emergingmarket world, including asia, if Capital Market sentiment led to a retrenchment of capital. So far, capital flows have been supportive of stability and growth in emergingmarket countries. The stock markets not the point youo is there a start to think this is getting overheated . Particular view on any particular asset prices. They go up, they go down. We do look for vulnerabilities, and our global Financial Stability report goes into great engths, and we will be commenting on these risks in our ,pdate next week out of davos but right now while we see some vulnerabilities, including rising debt in asia, whether corporate debt in some countries, Household Debt and others, sovereign debt in others , we dont see this as something that is dominant in the baseline scenario. , thingshese has risks that should be looked after and contained. Does the u. S. Outlook does the u. S. Outlook get a new review . We are already at full employment. We will put out the details on this along with our global assessment in the World Economic out look, but we believe the tax measure ofovide some support for a few years in the u. S. Economy. Mainlymes because because the Corporate Tax rate cut will affect investment come handy temporary expensing of the investment will affect investment, and those two things will be supportive. It is very hard to gauge how close the u. S. Is to having no more slack. Sohave been surprised no far sing there is still room to run. We believe corporate and strengthening will provide some small or modest increases for a while, and we will be adding that to our assessment of the overall picture. What kind of impact do you see from what many say is an unsynchronized Balance Sheet reduction in Central Banks. You have the fed going one way, the ecb with no such plans. It is important that normalization is rooted in each Central Banks economic situation. It has to be a synchronized economic recovery. They u. K. In the u. S. Are further ahead because their economies are in a different part of the cycle. The japan and ecb are beginning to talk about regular rising Balance Sheets come but not Interest Rate action, and that makes sense because of the situation they are in. It is good news that the Central Banks are tailoring their policies to their recoveries. Bestwould not only deep for them, but best for the Global Economy. David lipton, thank you so much for your time. Back to you. More coming up from here and hong kong. Haidi look forward to it. ,reat conversation there covering all these risks, challenges, and opportunities for asia and beyond this year at the asia financial forum. Catch that interview if you missed it by using our interactive tv function. You can dive into any securities or functions we talk about. You can also join in on the conversation by sending us instant messages during our shows. This is for bloomberg subscribers only. Check it out at tv. This is bloomberg. Haidi a quick check of the business flash headlines. Hedge funds secondguessing optimism on copper. Money managers hedge their bets on signs demand may be overwhelmed by supply. Prices jumped 30 last year as the Global Economy improved. Softbank says listing its mobilephone unit a be an option, but no decision has been made. That followed a report that said the group made list in tokyo and overseas this year. Softbanks vision fund will make an investment in a german used car sales portal. Coming up next, trump declaring the dreamers deal is probably dead. Why key members of his party are saying otherwise, next. This is bloomberg. 10 29 in hong kong. I am paul allen. The fcc had says how wise emergency authorities lack reasonable safeguards to prevent the type of emergency that wrongly told residents and imminent missile attack was occurring. Hawaiians were sent into a panic by the false alarm. It was blamed on an employee pushing the wrong button. We will now get involved with them. I loved that they took responsibility. They took total responsibility, but we are getting involved. I think it is terrific here it they took responsibility. Analysts say the pounds rally may come under pressure this week. A highrling jumped to friday after spanish and dutch finance ministers agreed to push for a deal to keep the u. K. As close to the eu as possible, but germany may pour cold water on the idea. We are still going full steam ahead on our plans. This will look after the business from the eu 27 market, about 2 billion euros of business. We are going full steam ahead has if it will be a hard brexit. Saudiomberg sources say arabias Sovereign Wealth Fund is considering borrowing from banks for the first time. Haspublic Investment Fund held talks with local and International Banks and could raise 5 billion this year. Saudi arabia stepping up efforts to turn the pif into a global giant by giving it ownership of saudi aramco in what could be the worlds biggest ipo. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. I am paul allen. Thanks so much for that. Anothert markets, buoyant session when it comes to yenn equities, despite dollar trading. It is not determined the equity bulls in tokyo. Pretty much every other asian market with the exception of shenzhen and shall shy and shanghai following suit as we close out on more record highs. Lets take a look at the movers with sophie. Mistry when it comes to equity markets, asian stocks extending gains, dollar weakness supporting regional currency gains. After a fifthters weekly loss friday. We did have the pboc set the yuan at the highest level since may 2015, the onshore yuan has risen to the strongest level in two years. The yen will maintain momentum after the boj governors ,ommentary this morning excluding the words powerful and aggressive, so that has broken through the november low. Japanese stocks not being held back. 2 percent225 adding at the morning close. The Malaysian Ringgit trading at a high after that better than expected industrial output data friday. Jim rogers is chiming in with concerns that Political Uncertainty could cloud the outlook. Ae rupiah is climbing to september high ahead of december trade data from indonesia. And the won has ceded some of its advance. It is approaching a threeyear high has global funds pile into korean bonds. Authorities may become more vigilant to prevent the currency strength from denting prices. The rally in hong kong is a clear standout. Newhang seng looking at a record close has the rally continues for a 15th day. Sands china leading the job after its upgrade. Property stocks under pressure. 3 ,try garden falling retreating after a new high last week. Tencent has risen to a fresh record high. Last week, analysts listed lifted the price target to the highest a month analyst tracked by bloomberg on that positive outlook for we chat games. So tencent continuing to rally on the back of that. Haidi thank you for that. Republicans holding out hope that a deal can be reached to allow undocumented immigrants to remain in the u. S. , and that is despite President Trump tweeting that the effort is probably dead as tensions grow about keeping the governmentfunded pass this friday. Jodi schneider joins us now. When it comes to this daca deal, a weekend of heavy criticism for the president , and he has the leastsaying he is racist person this particular reporter would have interviewed. Thats right. At hisonded to questions florida golf course saying it was the democrats that the daca deal was not moving forward. To deale not willing with issues about border security. When asked about comments he made earlier about the countries , people from haiti and el , he said hed africa did not make that remark and is the least racist person they have ever interviewed. The comments he is making now are a bit of a turn from what he had been saying earlier in the week, that he wanted to make a deal. This is about these young people brought to the u. S. As children and their immigration status. The program he wants to get rid of was an obamaera program that allows them to stay in the u. S. To now he is saying he wants replace the program with something else, but he wants to tie it to border security. It could be part of the talks, is part of the talks, about spending levels that have to occur before next friday has the government will run out of after january 19. That is a dropdead deadline for that. Less is it likely or likely that a deal will be done given his tweet that this deal is probably dead . You would think that complicates the deal, however, in the interview at the golf course he did say that he hoped he doesld avoid this, not want to see a shutdown, that it would hurt the military. Thee will be talks in coming days, but it seems to be old over the place on immigration. Pushing backalso against a wall street journal report about whether or not he spoke with the north Korean Leader and their relationship. What do we know there . The wall street journal reported in the interview that President Trump was quoted as saying that he had probably they were probably friendly, then he said no, i did not say that. It is a question of i or id. So the journal his standing by this story and saying they have tapes of this. It is a distraction from the real issue, and the president rather than talking about immigration in north korea and whether they will have talks, again playing semantic games and tweeting about it. What hend calling out thinks is fake news. President also pushing european allies to make changes to the iran nuclear deal. Is it likely this pressure will result in any change when it comes to their positions . This is an interesting issue. The europeans who are signatories to the nuclear deal say that they think iran is is basicallyit complying with the requirements of the deal, and they will stand by the deal, and if president chooses to decertify the deal in the u. S. , he will be doing that alone. That would further isolate the u. S. On the international stage. He will do,r what but he seems to be giving an ultimatum to these countries that they need to make these changes he wants to see in the deal or the u. S. Will not stand by it. They have already indicated they think that iran is in compliance they have gotten from investigators there. Thank you so much for that. Lets take a look at the oil patch. Oil still trading near the highest close in over three years. Barrel,ude shy of 70 a new york crude at 64 and some change. We heard iraq echoing this call opecled output cut should continue despite the recent runup in prices. A big week of event risks when it comes to commodities. The China National petroleum output has the outlook for oil and gas, as well as opec and eia this week. The ie eight expecting a balanced oil market in 2018 and less venezuela or the nine provide a major surprise. Davis oftive director breakdown of his outlook for the year ahead. We have oil prices at about 70. Months, we see a balanced market. Global oil demand will increase 1. 3 1. 3 Million Barrels a day, but a lot of Oil Production is coming from the United States, from brazil, from africa , and that puts a lot of oil in the market. Balanced we expect a market in the next 12 months, unless we have some surprises. Supplydemandthe picture, i dont expect a huge increase in prices, but i can highlight two potential surprises. One of them is venezuela. Decline inhe venezuelan Oil Production in a short time is the biggest decline in the history of oil since 30 years. It is huge. And this the klein may well decline may go further and this is a major potential surprise. , and this isprise an upward surprise, and upbeat ,urprise from the United States 70 a barrel may be seen as very good news in the gulf and middle east, but 70 may give conditional incentive to produce oil in the United States, so the production may grow higher than we see today. Haidi that was the International Energy agencys executive director there. Bonds shaking up investors. Us why he haslls bonds in his crosshairs. This is bloomberg. Haidi china releases fourthquarter and fullyear Economic Data thursday, a key indicator of the resilience of emerging markets and rising Interest Rates. Lets look how this plays out in the bond market space. Great to have you. Going into the Fourth Quarter and full year gdp readout of china, not expecting surprises, but there is upside risk. Does that make chinese sovereigns and Corporate Bonds more attractive this year . Good morning. We agree. We believe this will be the year for asian local currency bonds very well anchored by Chinese Government bonds, Chinese Investment grade bonds, but a couple of reason why we think chinese bonds will do well this year. First, the economy is growing nicely. We have very robust external accounts. Capital outflow has been contained. Time, the trade surplus position is growing. We think china will be included in the mainstream pond market, up toat might trigger 200 billion of inflows into the chinese market. On full of risks in terms of chinese issuers. Our picks are Chinese Government bonds, as well as bonds issued s. Soa these soe is thewhat would you say biggest pain point if paging continues with the Deleveraging Campaign . Is a place where you would expect the Property Developers for example . Yes, the Deleveraging Campaign and intent by the leadership is very clear, but it is not outright deleveraging. The are trying to manage growth of debt in line with gdp. We think they can achieve their objective. We want to avoid idiosyncratic risks, highly leveraged Property Developers china has 20,000 developers. Some of them have various issues in terms of funding and equity financing. That his why we plan to stick more with a stronger issuers, the Investment Grade space. Lets not forget about trade. Since donaldplus trump became president is going to put china on the radar of retaliation for tariffs, something we have to be watchful of. In the mediumterm, we expect the chinese currency to appreciate against the u. S. Dollar largely because of inflows and the net trade surplus. Haidi i find your call when it comes to the other emerging markets, the indian sovereign attractive on the yield side come up and you expect this inflation struggle going on, you are expecting that to be temporary. Yes, we think in india that inflation has gone up slightly, modestly, towards the 5 level, but well within the range. Over the mediumterm, the efficiencies in terms of logistics and tax implementation will bring inflation to a target level of about 4 . , fivenk indian bonds years at 5. 25 , represents a attractive real yields. Is a lot ofere improvement that can be made in terms of distribution of vegetables which can actually reduce inflation in the long run , so this is mainly transitory. , again,a, for example some of the inflation is mainly transitory. Think indonesian bonds, the quasisovereigns, 13 years, inflation rate under 4 , remains fairly attractive interview. Thank you so much for joining us on real yield. Up, big data in japan, how Customer Loyalty cards are set to knock current profit projections out of the park. This is bloomberg. Wayi they are normally a for retailers to gather consumer data. Loyalty programs taking on a new purpose in japan. One company has teamed up with a Big Data Company for a fresh approach to research. Our macroeconomy editor is with us from tokyo. Half of japan uses a loyalty card regularly, so what are they planning to do with this data . Has you said, half of japan is using the cards. To someme you go supermarkets, convenience stores, petrol, you can get your points on your card. Dataompany will take that and analyze it and see how sales of Certain Companies are doing. When they start the program in april, they will be looking at the sales of 50 companies. They are hoping to increase it to 100. So you want to know how sales are doing with Certain Companies, they will look at the data week by week, month by month, and give you a forecast of how that companys sales will do before the quarter ends. At the end of january, january sales, right, they will do this much business. That will be faster than company at thes that come out end of april am a may. When they are purchasing this companyey will see Earnings Data faster than normal. So how does the sales forecasting work . The company that has all this data come they are kind of japans netflix. Do online streaming, but mostly they have been taking third rate up from video rental cards and selling that data and getting more people to join their program. As you purchase something at a shop, you can put your points on the card, and they keep all that data. They know how old you are, where you live, and exactly what you purchase, what you purchased last year, and they can take that data and say here is a company. We want to look at sales, and they look across the 65 Million People who use regularly and can see when and where they are purchasing it, and can make predictions on how this company will do this month, this quarter, and they will be able data to people who are interested in what the stock of the company will be doing. Half of japan has one of these cards and uses them regularly, and it uses the massive data set to predict where stocks could be going in a week, month, two months. Haidi efficient, and a little bit alarming. Thank you for that. Ahead, we will be updating the big stories of the day. I just dont know if i want my spending habits laid out in black and white like that. I would not want that either. Looking ahead, markets continue to build on gains, another new record perhaps. To the asiang back financial form in hong kong, tore we will be speaking luxembourgs finance minister. The focus is brexit, whether a second referendum will take place, whether that is possible. We will be talking about how solidarity can be maintained as brexit moves to trade. Us, another guest joining tensions between china and australia have been building. Have they damaged relations . What about the travel sector . How will australia boost its performance. All that is coming up. Stay with us. Show with apacked look at the biggest stories of the day. , anotherts right now stellar start when it comes to the asian session. Foru. S. Markets are off Martin Luther king jr. Holiday breather froma this new years rally that has seen eight sessions out of nine with the s p closing higher. Is it the fear of missing out rally taking place globally . This is bloomberg. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. Host a brandnew week. Happy monday. Im haslinda amin. Yvonne asia. Yvonne Global Growth optimism drives markets even higher, up 10 straight days. Haslinda the yen hits four months highs. Hires banks to work on an ipo. Thai airline why stocks are losing out to despite a tourism boom. Plenty of great guests coming up later in the show. We will be live at the Asian Financial forum in hong kong, and dont miss our interview with luxembourgs finance minister in about 10 minutes. We will be talking brexit and more. Plus australias minister for revenue and Financial Services will be also joining us later on 11 40 hong kong metoo 40 p. M. Kong, 2 40 hong p. M. In sydney. Yvonne what a day has been in the markets. U. S. Markets closed for Martin Luther king holiday on monday, but we didnt really need them so far. Lets see how things are faring in the asiapacific, extending this years surge to more than 4 . The regional benchmark of 7 10 of 1 . A lot has been due to the broadbased dollar weakness story fueling it. Those are for use highs for the currency on progress of these German Coalition talks. Ake a look at what is going on the strongest in two years for the offshore yen. Weve been looking ahead to that indian open, but thailand so far is seeing quite a bit of green, up 7 10 of 1 . Those futures in india i mentioned, we have inflation serving best surging to a 17 month high surging to a 17 month high. This rally we have seen in the rupee, the strongest and 32 months, some saying to be pretty shortlived. Haslinda and in india we are awaiting data, important export numbers. Over in japan, the nikkei trading up 2 10 of 1 . Bank stocks leading gains. Softbank also rising. The company confirmed it is mulling over listing its unit at home overseas. That may raise as much as 18 billion. M trading shanghai com higher. We also heard this morning the one is a strong it has been since may, this morning is as stronge yuan as it has been since may. ,e heard from xi jinping leading to play this lead role mf the Global Economy, and i says if you want to do that you have to do more. Lets get the first word news with paul allen. Tanker burnedan for more than a week and exploded, going down sunday afternoon, leaving a 10 square kilometer oil spill. Preserved rs are are presumed dead. It was carrying almost one Million Barrels of toxic and highly flammable hydrocarbon. The sec had says hawaiis emergency authorities like reasonable safeguards to prevent the kind of false alert that incorrectly told residents a missile attack was imminent. Hawaiians were sent into a panic by the false alarm, which the state governor blamed on an employee pushing the wrong button. Were going to know get involved with them. A love that they took responsibility. They took full responsibility. But we are going to get involved. I think it is terrific. They took responsibility. They made a mistake. Paul a passenger jet that skidded off the runway in turkey stopped just a few meters from the sea. They say it was a miracle the plane was evacuated safely. Pegasus says there were no injuries among the people on board the flight, which came from the capital ankara. Prosecutors are investigating. Rallyts say the pounds may sink this week on hopes of a soft brexit. Germany may pour cold water on the idea, still planning for a hard brexit. We are still going full steam ahead on our plans. This will look after the business for the eu 27 market, 2 billion euros of business for us. We are going full steam ahead, and this is going to be a hard brexit by january 2019. Paul global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im paul allen. This is bloomberg. Yvonne bloomberg has been told that xiaomi has selected Morgan Stanley and Goldman Sachs for its first initial public offering, with a target valuation of more than 100 billion. Bloomberg Technology Editor Reed Stevenson joins us from tokyo. We have long been waiting for this ipo from xiaomi. Finally happening . Reporter it certainly looks that way. I think what is happening here is that it is a window of opportunity. Xiaomi made a very successful entry into india after facing tough resistance in its home market. Equity markets are looking up, and so it looks like this is opened,the window is and you maybe never know when the next one is going to open, for xiaomi to finally pull the trigger on its ipo. Haslinda we are looking at 100 billion valuation. Is that even realistic . In 2014 when the company went to market it was valued at 45 billion. Four years on, should be valued at 100 billion . Reporter it is an eyepopping figure, and one that many agree will be tough to achieve, both in terms of topline and bottom line. This is not a business was very high margins that would justify a valuation of that level, and so i think it is attracting a lot of attention, but as you did reach itsomi highest violation in the private market, that was 45 billion. I think that should be the benchmark off of which we work. Whether we go above or below that, that is really going to depend on the financials that the company will disclose to potential investors before we can actually confidently say that xiaomi is worth x amount of money. Yvonne theres still a bit of skepticism on that potential valuation. I think it was just last month we were talking about 50 billion. Turning to softbank now, which has been a big news story today as well, what more do we know about its plans for its mobile unit . Reporter that is the other big telecom tech news out of asia today, initially from a leak in the nikkei. The company is essentially saying it is considering an ipo of its wireless business here in japan. As we all know, that is the cash cow for softbank of about 32. 8 million subscribers. It funds a lot of the other activities that the ceo has made , particularly with his 100 billion vision fund. The ipo probably signals a shift to a structure that would resemble more of a Holding Company or you have a company at the top, a cash cow or cash generating business like mobile under its wing, sprint in the u. S. , and other various investments, as well as its huge holding in alibaba. This is one way to sort of unlock the value of those separate units, and taking the mobile business on to the Public Markets is one method of unlocking value in providing some funds for potentially another Investment Fund they may launch. He has not kept it a secret that he is even willing to launch another 100 billion Investment Fund, and this may be the seed or the kernel for that. Yvonne with what we are just getting started. Thank you. Those shares are up 4 in tokyo today for softbank. Still ahead, we are live at the Asian Financial forum to speak with luxembourgs finance minister. That interview coming up next. This is bloomberg. Yvonne this is Bloomberg Markets asia. Haslinda some say the pounds rally may come under pressure this week in talks of a soft brexit. Spanish and dutch finance ministers agreed to push for a view that keeps the nikkei desk keeps the u. K. As close to the eu as possible keeps the u. K. As close to the eu as possible. Lets take you to the asia Asian Financial forum. Reporter we have here the finance minister of luxembourg. Thank you so much for joining us. Here in asia, and what opportunities do you see for luxembourg or other eu economies in new areas like tech or cryptocurrency . Guest i am here for many reasons. The Asian Financial forum brings together so many people. It is an event you cannot miss. Were going to talk about sin tech thats about about and cryptocurrency, but also about traditional businesses. With that vehicle you can finance a lot of things, and on top of it europe is back with 2 growth. I think it is a very good time to connect china with europe. Reporter how about cryptocurrencies . Bitcoin has been in the news a lot. Have any plans to add any Regulatory Framework on cryptocurrencies, like in asia they are starting to see in china and south korea . Guest obviously Virtual Currencies are here to stay. They bring added services. They are convenient. They are almost simple, so consumers love them. I think the regulators and the countries will have to monitor it and will have to regulate it to a certain extent, certainly more than the case now. The dangers of Money Laundering are known. There are other issues at stake. Europe will probably handle it together because it is something that touches upon the european Single Market, so it has to be done at european level. Reporter we really want to talk about brexit, dont we . [laughter] the negotiations are tense, and there seems to be a break in consensus, whether the dutch or the spaniards saying lets be more pragmatic. We can go for a soft brexit. What does the u. K. Have to do for its banks to retain access to the Single Market . Guest i think the whole situation it, in a way, is dramatized extensively. Reporter you think over dramatization is hindering . Guest oh yes. Ramatize ande to ded look at things as they are. What we have seen in the last 18 months is lots of players in Financial Services, not only based in london, need to have a subsidiary. They need to have substance in the eu Single Market because they will lose automatic general access. Everybody realizes that. You 18 monthswith ago here in china, that question was still open and many people s minds. Everyone now realizes this is not possible. Reporter can it make it more say,able to the eu 27 it for example, the u. K. Continue to help pay for the budget contributions . Would that enable Market Access for Financial Services . Guest i dont think that is the way the negotiation has been structured. The first round with three major issues, one being contribution of the United Kingdom for the next three years , and that we have seen discussions about free flow of people and the Northern Ireland problem. Now we are entering phase number two and there is very little time left. I think we need to deed izematize need to dedramat and take the time to look into Financial Services. It needs to be hammered out stepbystep, and Financial Services is extremely complex. It took us decades to have a Single Market in Financial Services. Reporter but the dramatization is coming from all different sides. Some in the eu are talking about a bloodbath coming in the postbrexit eu budget talks. Where is that shortfall going to come, the gap is the u. K. Is not intervening . Do you see that is not contributing . Do you see that happening . Guest no i do not see that happening. The swiss Found Solutions without being members by having substance and presence in the eu Single Market, so theyre always best so there are ways. So there are ways. Business always find solutions. Lets be cool about this and take the time because it is complex. Mentioned when we met at the World Economic forum in june 2016, just after the vote, that we are not there to take business away from london. We are there to do business with london. Brexit is sad news for europe. But luxembourg is benefiting. Guest yes we are, and i am glad about it, but in fact it is about building bridges. What is happening is that business, Financial Services are not closing down shop in london and opening up somewhere. They are adding presence or putting more substance so that they have a subsidiary that can do all the things in the eu Single Market. For the time being it is not necessary because the u. K. Is still a member, but that will be necessary. We have quite a few Insurance Companies who have chosen our company. We have Asset Management firms, private equity firms. Most of them have chosen luxembourg. Some major market banks have decided to make luxembourg their main headquarters for private banking. Again, all of this will be a kind of bridge between london and us. Reporter how palatable or unpalatable when a compromise the with the u. K. Out of the Single Market, but Financial Services companies, which london excels at, having access . Guest i think this is very unlikely to happen that way. I think also that the United Kingdom has realized that. Reporter there is hope still. , but there is still hope between zero and 100, theres lots of numbers. Between white and black there is great. Reporter we talked about the potential for a budget shortfall in the eu. Is there even any right now in the short term to even discuss an enlargement of the eu . Guest i think we are going to lose the richest contribution to the budget. That is one issue. At the same time we had a French Initiative and maybe frenchgerman initiative to deepen europe, especially the european monetary union, the single currency of the eurozone. I think we are going to discuss that during this year. If we want to be credible in doing more at the european level, if we want to do more at the eurozone level, we need also more budget, so i think the whole discussion because of the u. K. Leaving is opening up new perspectives of deepening European Union that would be the first priority. Traditional enlargement is always on the horizon. There are quite a few countries in the balkans and others who are expecting that, but i do not foresee that happening very quickly. Reporter not very quickly, so the next two years not likely . Guest it goes stepbystep. It is a long process. Reporter how about greece . They expire in august. On theirready to stay own or do they need a financial net . Guest their economy is much better. There is a surplus now, so the numbers look much better than they used to. The second thing that is very good is that it is a stepbystep implementation of the third bailout program. Weve been monitoring it very closely and optimistically. Reporter lets talk quickly about the u. S. The tax overhaul has brought out some reviews by eu officials. Was startedreview possibly looking into the tax overhaul being discriminatory or against the view seo rules. Against wco rules. Do you see it that way . Guest because it has been adopted only very recently, some of the major issues that are worrying the European Union were taken out, so there must still be provisions that need to be double checked. Obviously the European Commission on behalf of the whole European Union is going to see with the United States if it is compatible. Theuld say quite clearly United States has decided to lower taxes for business. It is a very good thing for business. We do that in europe, too. Reporter it is also something that Angela Merkel has said the eu needs to review, the Corporate Tax strategies. Guest exactly. That is what we are doing. We need to be competitive, so lets be realistic about this discussion. Reporter thanks so much. Always good. I could do another 20 questions with you. More coming up from the Asian Financial forum here in hong kong. Back to you guys. Yvonne steve, thank you. Good conversation with luxembourgs finance minister at the aff. If you are a subscriber, catch up with all our interviews on bloombergs tv. Send instant messages to our team, as well as our guests during a live show. Check it out at tv. This is bloomberg. Yvonne hedge funds are secondguessing their optimism on copper. Money managers have cut their bets on a rally. Copper prices jumped more than 30 last year as the Global Economy improved. Sourcesloomberg say the valuation includes bhpons that the hp would assume responsibility for mine. Of noblehe sale american corp. Was completed for 400 million. The company has been battling for survival after a string of asset sales. It is pushing to restructure about 3. 5 billion in debt as soon as this week. Haslinda weve been talking about the markets in the asian markets may be going for a new high. Listed a look at Chinese Markets as they had towards the lunch receiver. The honk saying the hang seng adding to gains. We know it is rising for the 15th straight day, 36 from last year, and is about to recover all of its losses. This is bloomberg. Haidi this is Bloomberg Markets asia. I am yvonne man. Space,he commodities gold his flat. Is flat. Crude oil just over 64. One commodity going gang busters his palladium. Chart,to bring up this 6308. Palladium has gone up. I want to take you through what has been happening. Other outperformed 33 major commodities. Climbed almost 4 . Set 17rpassed the record years ago. Palladium is used to curb pollution from gasoline engines. If you are wondering what else jewelrypalladium for, and dental fillings. We always need our jewelry. Rallied like has gangbusters. The trade numbers on friday continue to show the chinese are buying commodities, not just palladium, zinc as well. The longest run in 13 months. So that healthy Global Demand picture holds, not to mention dollar weakness. A lot of these countries scooping up and buying into this right now. Goldo would have thought would be back to being a safe haven, right . Absolutely. That is the pulse from commodity so far. Lets check the first word headlines. Republicans are holding out hope of a deal on young immigrants despite President Trump declaring a bipartisan agreement probably dead, heightening the risk of a u. S. Government shutdown by the end of the week. Prospects for a deal were damaged by the president s disparaging comments. Confirmednning has she is running for the u. S. Senate in the state of maryland. Her campaign released a video showing images of road testers at White Supremacists and ends with the tagline, we got this. She was rented clemency by president obama after being sentenced to 35 years for classified documents releases. Rejecting calls to extend his term and cancel elections next told aodrigo duterte philippine news website that he wants a structure similar to france. Rodrigo duterte said he does not want to stay in power beyond 2022. Saudi arabias Sovereign Wealth Fund is considering borrowing from banks for the first time. The public Investment Fund has held talks with local and International Banks and could raise 5 billion this year. Stepping up is efforts to turn the public Investment Fund into a global giant by giving it ownership of saudi aramco in what could be the worlds biggest ipo. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. I am paul allen. Thank you. Oil trading near a threeyear iraq andack as other producers call for a continuation of output cuts. Say whetherrly to brent can stay at 70 this year . Our next guest expects Global Demand for crude. 70 for a couple of hours, if it stays for the rest of the year, lets have this discussion again and see what sort of a but it may have come think we are getting ahead of time and excited. It is too early to conclude brent is at 70. Sixt does stay at 70 for months, then maybe we need to run numbers and see what is happening and why and how and so on. But if it does last for a long time, it means the market support 70 must so there is no problem. That is a point of discussion because the focus has been on the supply side, and we often dont discuss the demand side of the equation. Maybe we need to do some more , because all reports are suggesting 2018 there will be growth both on the gdp worldwide triggerand that will better demand. And we have a responsibility to meet that demand. I think this discussion needs to look at both sides. Sideten discuss the supply , shale oil particularly, as if it were an infinite resource. They have a limitation like the rest of us, although i dont know what is the limit, but i have a suspicion and we heard from one speaker saying shale oil will have a peak production and everybody talks about, we forgot how to spell it in the last couple of years, but there is peak production, even from shale producers. Job isetary committees to monitor the agreement that was the understanding we had between opec and the nonopec the in a. In we can talk about everything we want. But has a committee we dont have a mandate to enter into those territories that we are not mandated to buy those who signed the agreement. Discuss one will not the issues of geopolitics and demand and supply and the morers of High Oil Price price, on a huge drop in all this speculation people are speculating. We may discuss it, but we really dont have a mandate. Omans oilat was minister. Rising oil prices have become a headwind for airlines in thailand. That is despite record tourist arrivals in recent months. Bureau chief is with us. Quite a strange situation. What is weighing on Thai Airlines . They are facing intense competition. All carriers complained about the conditions they were facing, particularly hindu china routes, and that was reflected in earnings and share price. The shares are either flat or down as much as 27 . Apart from competition, they found it difficult to get enough pilots, engineers. At the start of last year, the government increased the tax on jet fuel 20 fold to bring it in line with other levies, and that set a negative mood for the entire sector from the getgo. A number of Different Things led to the pressure on carriers, and they have not really enjoyed it dividend from this incredible boom in tourism. They are expecting more than 35 Million International arrivals this year, and Domestic Tourism is increasing as well so that is where the pressure came from, competition and an early increase in taxes on carriers. Mind taking a next her trip to thailand to help out. What would it take to help then . Has signed said, the tourism boom keeps on expanding. The number of arrivals from overseas is equivalent to more than half the population. A number of tax breaks have been rolled out in different parts of the country. Last year there was an important United Nations moved to increase the aviation safety rating for thailand. We expect the u. S. Federal Aviation Administration to follow suit this year and raise thailand aviation to their high safety rating. That should be positive as well. Those factors provide possibly at tailwind this year. Some analysts argue the negative news reflected in share prices come a for now the focus is on oil prices up 50 and what that will mean for jet fuel costs. Thank you. Car bank. Chief joining us live. Australias bureau for revenue. That will be next. This is bloomberg. You are going to have a financialragmented Services Sector if we are not careful. That is one of the worries for all of us. So we are hopeful that will be environment that can accommodate Financial Services operating still on the global market. , this is anne important cyclical global recovery. It is a good time as Christine Lagarde has been saying to fix the roof while the sun is shining. I hope this is a year of opportunity. Europe is back with 2 growth. It is a very good time to connect china with europe. Some of the take names from the Asian Financial forum. Australias Services Sector but onlys 70 of gdp, 21 of export trade. Financial Service Exports in particular seem to be underperforming. Lets get back to the Asian Financial forum. Have the australian minister for Financial Services. Kelly o dwyer his the minister. Those specifics are interesting. That is what we were talking about. Lets bring in our guest. Thank you so much for joining us. The anchor just mentioned these numbers, 70 of the services gdp made up of 70 from the Services Sector, but Financial Services much less. A critically important , 9 off our economy gdp and so many australians employed in this sector. One of the reasons why im here his to talk about the new International Passport that will be implemented this year. The number of artistic painting ofnomies, it will participating economies, it will allow consumers to benefit. It could reads of some much of the duplication when it comes to regulation. Why australiasons was focused on making sure we can have a new Investment Vehicle corporate collection Investment Vehicle to enable people to make that investment. How often . Fromow all strain exports mining to dining, but financial Performances Services have been underperforming. We know there has a long way to go and more we can do. Such ang has been important part of the Financial Services sector given that it is critical to the economy here. We hope to encourage, to. Articipate in the new passport i have been having great discussions in hong kong. We have a number of countries signed up. Thailand, japan, new zealand, korea, and we are hoping ticket even more countries in the region to be involved. At fundight is good management. We have more than 3 trillion under management. As opposed to hong kong or the United States . We do it incredibly well. Our Fund Managers to be able to compete with the best in the world, and vice a versa. There is a mutuality there. People can come and sell products into australia. It is a benefit for the participating economies involved. What is the next regulatory , butto get this feasible lowering the Corporate Tax rate as well to attract . We have a strong plan to ensure we can cut the Corporate Tax rate in australia. Right now we have a tax plan to reduce the Corporate Tax rate to 25 percent. We have been able to legislate that for companies up to turnover under 15 million, down from 27. 5 million, and we are looking to take that further. When you see the reduction in the Corporate Tax rate across the globe, in order for australia to remain competitive it is fundamental, and that has been a focus for me, the treasurer, and the prime minister. Trumpn more so with the tax plan going into law. Angela merkel in the eu saying we need to get our ducks in a row and have for synchronize Corporate Tax structure that is not prohibitive. In a Global Environment where we compete for funds and investment. While australia has had a economiceaking run of growth, it is not something we can take for granted. We have to put in place the right Financial Framework to make sure that growth can continue to be delivered. One way we can do that is to make sure we have the right Corporate Tax rate. If we do that, we will encourage investment. We make sure we can bring in new jobs and expand Job Opportunities in australia. Under our government, we have increased jobs on our watch to the tune of more than 371,000 in the last 12 months alone, and more than 300,000 of those have been fulltime jobs. There are concerns 2018 might not be a banner year for jobs. We are fully focused on getting the policies in place to deliver that Economic Growth. There is no one silver bullet. You have to combine all elements to deliver that drive and focus. How do you think china perceives austrian business relations right now . There have been comments from your prime minister. His that weighing things down or temporary . Is that weighing things down or is it temporary . The foreign minister and government recognizes china has a critically important trade partner and investor in australia and an important part of twoway trade. We hope to deepen and strengthen those relationships. We welcome investment. China has been a significant investor. There has been 100 billion worth of investment in australia, and australia has invested into hong kong to the tune of 50 billion, so there are mutual benefits in this investment and deepening ties. What is your feel regarding protectionism in the asiapacific. The ceo of lloyds saying the overall tone is more protectionist. Our you still hopeful free trade can win out over protectionism . Advocated always strongly for open trade. We are negotiating a Free Trade Agreement in hong kong. Benefitsthere are huge two ways for that agreement. Australia has been developed through these open trade agreements, whether Bilateral Agreements or multilateral agreements, and the all strain government will always make decisions that are in australias National Interest. It is in our National Interest to have those open trade relationships across the globe. Thank you so much for your time. We will talk about the innovations down under in Financial Services. I look for to it. Back over to you. More in the next hour from the Asian Financial forum. Thats right. Speaking with all strays minister for revenue and Financial Services. The Indian Markets have just come online. If i have to hazard a guess, you are watching infosys. Sophie that is one of the stocks. We have some Economic Data on the agenda. We will be waiting on wholesale prices. More thanrices rose forecast because of higher oil prices. Met has increased the odds for a rate hike of issue. The rupee climbing for a second day. We have the indexes climbing for a Third Straight session, extending gains at record highs. Three of 50 nifty 50 companies have reported earnings, all matching or beating estimates. One stock rising after the company was raised to overweight at j. P. Morgan following those results. The Company Posted a 38 surge in thirdquarter profit. Idfc bank and Capital First on the radar regarding a possible share swap. That is the mood in india so far. Not seeing asia lot of ask austin. Sophie no monday misery. Extending gains at record highs. It is a 15they rally for the hang seng. Investors dont want to wait to get in on the action. Breaking it down. We are seeing weakness when it comes to the index of small caps and tech shares. It is retreating over 1. 5 amid concerns Earnings Growth cannot support current high valuations. Rising for acaps fourth session. Rising along with other Companies Jumping after the government said it will support blockchain. To freshas risen highs, and sands china is the best performer on the hang seng after it was upgraded along with sjm. He will have to do a lot of things when it comes to your portfolio, including kapok. A twitter account influencing trade on japanese markets that has more followers than the boj. This is bloomberg. Anonymous twitter account is sending japanese traders into a frenzy. Are followed by more people than the boj itself. Quite remarkable. In our social philosophy reporter from tokyo. He or she has been dubbed the locust florida. What else to we know . Lord. Ust what else to we know . Is not much else we know. It could be a coalition of people behind the account, but he tweets market moving news 20 47 and monitors local and for newspapers and magazines and disclosures linked to the stock exchange, and when scoops hits these platforms, he is tweaking them out in minutes and seconds. In ave him on twitter public space is quite remarkable in very important. Has there been any reaction from day traders and finance professionals who follow him . You just told us why, but how much money have they made . Is that an indication of that . And spoke with several daytraders. None of them knew are ever met him in person. He has trader said that never made or lost any money, that found his tweets crucial because they gave indications of why stocks or currencies were moving a certain way. , our social velocity reporter in tokyo. Thank you for your insight. How theke a look at markets are doing in hong kong. The hang seng up. 6 . Pretty much in line with the rest of the region. Asian stocks have been gaining throughout the morning, headed for the highest close ever. The nikkei up. 3 . This is bloomberg. Yousef the Global Equities rally rolls on with fresh records amid optimism. 28 teens strong start continues. Strong start continues. Way . Pering on the is saudi about to borrow from banks . Be talking toto local and international