Transcripts For BLOOMBERG Bloomberg Markets Asia 20170203

Ipo for billion snapchat gives investors a new look. Ins the first day of trading the Lunar New Year in shanghai. The special Prosecutors Office wants to search the president s office, but according to text messages, the office says it will not allow prosecutors in for that search. That is what we have at the moment. Investigators have begun a search according to another headline. Not quite sure where we are. We will keep you up to speed. In kuala lumpur and taipei. David. Busy, busy, busy morning. When you look at what going to be happening in the next 1520 minutes or so, that could actually determine where we go. Lets quickly get through the open here in singapore. Up half of 1 . 142. 02 was the close last friday. Essentially, if we rise a little further or stay at these levels, we are poised for a week gain. Se sterling is what i am pound sterling is what i am watching right now. Session lows. There were some projections of inflation and markets started to digest those numbers and said ok, these look to be in line with what we were thinking anyway. Cable fell. Watching,gs we are dollaryen, 113, nothing to say there. This is the offshoreon shore. 688. Very wide discounts. The onshore is trading at the moment. Ets see how that narrows this is going to be important. Watch this space closely for the boj iso minutes, the ineduled to offer to buy about seven minutes. The reason that is important is markets are essentially waiting for signals from the boj if they will step in and bring yields down. The curve is selling off at the moment. We are over 1 now on the 10 year. Lots to watch. Rishaad absolutely. Lets go to sydney and the first word news headlines. Says south koreas why tm prosecutors have begun searching the president ial offices after getting a warrant from the Central Court. Earlier, the office said it would not permit a search of the president ial compound. She has been impeached over a corruptions scandal. It includes some of the countrys biggest corporations. Colonic is stepping down from the president S Advisory Council after criticism from customers. He says immigration is vital to the u. S. And his company and being part of the group was not an endorsement of the president. Brexit minister david davis outlined his governors that has outlined his governments decisions for the countrys futures. Exporters had been able to trade tariff free with the rest of the block. We want the eu to succeed politically and economically. Negotiations with the spirit of goodwill and an outcome to our mutual benefit. Authorities are considering a system for Inflight Entertainment that may have violated the foreign corruption act. News 24 hours a day powered by more than 2600 journalists and analysts in 120 countries. This is bloomberg. We have potential u. S. Sanctions against iran. They could be imminent. They are affecting the friday trading session on wall street. The moves are expected to come as early as friday. This follows Donald Trumps comments that iran is on notice. Su keenan has more. To be ais shaping up significant move for the trump toinistration and appears have bipartisan support, something we have not had in the first couple of days of the presidency. The move would punish iran for missile tests over the weekend and for sponsoring terrorism, according to people close to the matter who are not able to come forward publicly before this is announced, they say. On wednesday, the National Security advisers said that in the weekend test, iran acted in defiance of a Security Council resolution passed after the nuclear deal was reached in 2015. That deal was reached with six other nations, including russia. Both of the president and flynn have said iran is on notice. Friday could be action filled in terms of a move in this direction. These potential sanctions actually have the support of a bipartisan group. Tell us about that. Is probably the most important aspect of all of this. We now have a letter put forward by 20 senators, half democrats, half republicans, fully supporting the actions of donald trump in this regard. Letter,a part of the full enforcement of existing sanctions and the imposition of additional sanctions on array for its Ballistic Missile program are necessary. Byin, the letter was signed 20 senators, including bob corker, the republican chair of the Senate Foreign Relations Committee, and ben cardin of maryland, the ranking democrat on the panel. Again, this is a distinct difference from some of the other actions we have seen the president take that came under fire. Now, in terms of missile test that took place over the weekend i think the video we are running is archived video of prior test according to the letter, Nuclear Capability may be there. Spoke out against the criticism voiced by the National Security director and being put on notice. Iran has defended its defense actions, and it looks like this is shaping up to be quite a faceoff between the nations and a development that will definitely grab the attention of wall street. Rishaad thank you, su keenan in new york. Snapchats Parent Company is filing for an ipo with an initial size of 3 billion dollars, but that could well grow. What do snapchats financials look like here . I think it was surprising to see how unhealthy the financials actually looked. Their cost of revenue exceeded revenue, and they have yet to turn a profit since they started in 2011. This is a software company. Where do all of their costs come from . It is expensive to run on the servers. They pay hefty fees to google cloud. Rishaad what is up with this camera strategy . Its fascinating. They are calling themselves a camera strategy a Camera Company. They are trying to show they are more than a messaging and photo app. They are all about transforming the experiences and the way people interact with each other. They are creating glasses that capture images that can be easily shared. The strategy has a long way to go and its an opportune time. Gopro had another terror bill another terrible quarter. They are in other Camera Company trying to be a software company, and its not working out for them. There are a lot of risk factors. Y rely on monotony also they rely on millennials and they believe user growth rate will slow overtime. There is also competition from whatsapp and facebook. Another big risk factor is their data. Their metrics are not verified by third parties. Advertisers say there metrics kind of go into a blackbox. Rishaad still ahead, caught in the crossfire. Why japan could face fallout from donalds mexican policies. Tells us what he sees in store for asia. Rishaad lets take the latest check of the business flash headlines. A Ridesharing Company will invest in indonesia. It is ubers a guest rival in southeast asia. It plans to set up a research bankroll startups in mobile and Financial Services technology. Indiane is telling us Telecom Regulators have decided did nota services violate industry rules. The decision would be some relief to the start up. Market last year when it offered free voice calls for life and free data for a limited time. Automaker has introduced an upscale brand. It was introduced at the geneva auto show. Jagger e parent of jaguar and land rover. Stocks in asia are moving ahead at the moment. China is returning to trading, the first trading day of the Lunar New Year. Ofs bring in brian go, cia border in singapore. Thank you for joining us. Give us an idea why you are taking that position right now. Corrects first of all, the fundamentals are fine. They are not stellar, but they are ok. The Credit College mostly based on demand and supply. You are going to see of there a regressive tax system in the u. S. On the demand side, there is a Strong Demand for credit and yields. On the supply side, tax reform togoing to drive companies favor equity finance or not favor debt finance. I think there will be a demand and supply imbalance. One has to be very careful, however, that one does not accidentally by duration along with that credit. Rishaad in your research, there was one thing that goes back to what you just talked about, which is the notion of the american tax system. You say the growth of inclusiveness has failed the American People. Tell us about that and what you are suggesting. That is a much broader theme. We have practiced trickledown economics for a long time and argued that we need growth and inclusiveness. But perhaps we should have inclusiveness for growth. What i mean by that is, with greater equality comes a higher marginal propensity to consume and a slowdown in savings, but it is a boost to the economy and very programs. I think pro growth. I think it resolved requires resolve among the elite and the rich to make that sacrifice not for equality, but for growth. Rishaad so not a regressive tax system, but a progressive one, yes . Yes, we need a more progressive tax system with more transfers from the rich to the poor sibley because it will the velocity of money. I am not socialist by any stretch of the imagination, but approaching this problem purely as a mechanical one, if you need velocity going up, you need to redistribute income. Thatad with no signs of happening in the u. S. , quite the reverse, how does that change whats going on with investors you are talking to . I think one has to be very careful about distinguishing between what should be and what it is. I dont see redistribution coming anytime soon. Likect, i think populists trump and others in europe are very good at identifying problems but less good at finding solutions. Behink the solutions will shortterm and populist, and might actually exacerbate the problems. So, as we invest, we have to invest in reality and not what should be. Unfortunately, in the current be shortterm and populist, and investing using are a strategy all of us, not just myself, but the entire industry is in a game of chicken of being risk on and waiting for the moment to swerve. Its not ideal. Rishaad the game of chicken implies a third mentality, and thats dangerous. It is dangerous. Of chicken, if you swerve too soon, you make too little, and if you swerve too late, you take a huge loss. Unfortunately, this is what the antiglobalization seems to have driven investors into. Rishaad absolutely. And certainly, 2016, politics , and alpha, as one of my colleagues put it. And its likely to be alpha again this year, isnt it . Yes, but alpha can be positive or negative. We have come off a good eight years of investing on Central Bank Policy because markets were driven by Central Banks. The next five or 10 years will politics, and unfortunately, politics are a lot less predictable than Central Banks. The Central Banks were very accommodative. They told us what we needed to do, and if we did it, we turned a profit. I see that theme is probably gone in the u. S. And receding quickly in europe. Rishaad the bank of japans trying to steepen the yield curve, and we are seeing it jumping a little. What is your reaction to this move . The bank of japan began by controlling the short rate and took that into negative territory, which was counterproductive. What they then did was realize the impact this was having on their banks and insurance companies. The decided to control entire yield curve. This is feasible if you are two thirds of the market. Its not so feasible for the fed if youre not that size of the market. But in a sense, you trap yourself. Ist the bank of japan does sharpen the curve at the long end. They are able to buy at zero capital. They hold paper and aroldis down and it rolls down the yield curve and they generate a capital gain, and then they sell these bonds to the bank of japan. I think the bank of japan has created a situation where its able to coopt the private commercial banks into a , and yete situation help the bank of japan monetize the National Debt without legally buying debt from the government. Fantastic. Thank you for that analysis. Japan taking operations at the moment to lift the 10 year deal yield. Ready for the rooster . Chinese markets are open for the first time in the Lunar New Year. Rishaad welcome back. Financial markets in china are going to be reopening a few minutes from now after a week on break for the new year. What are we expecting . Tell me about it and what we are expecting at the start . There has been a big reduction in traffic and the air quality has been pretty good. There has been a halt in the Global Equity rally and a weakness in the u. S. Dollar, and that is the Silver Lining for chinese policy makers, at least temporarily. The yuan is coming through marginally higher than it was on the 27th. Reduced pressure on the yuan is the u. S. Dollar weakens. Its going to help around capital outflows. Of those will be seen as key for this year. At least temporarily, that will comfort toof some policy makers. In terms of spending on the holiday, we saw tourism in,. A big uptick in spending on retail and restaurants. Looking at consumer stocks when the markets open. Rishaad manufacturing is well. What are we looking at there . That comes out at 9 45 a. M. Beijing time. A survey. King at expectations it will expand 35 points. 51. 8 versus 51. 9. That will feed into the picture of continuing stability. We have also seen an uptick in south korean exports, 11. 2 . That could bode well for china. What flaming overall of this is trump and what appears to be an loomingvely what over all of this is trump and what appears to be an protectionist strategy. He has already ruffled fielders in australia and japan. Rishaad a lot of moving parts. We are looking forward to the first trading day of the Lunar New Year in shanghai. That just about underway. Also talking about manufacturing in the chinese economy. Number out in about 15 minutes. Also, japan in the frame. Bank of japan at the moment the longer and of the yield curve, lifting it by four basis points. Korea, theh prosecutors want to search the president s office. There is confused messaging from various news sources. One side says they have started the search. Another says they have been prevented from doing so. Most. S. Is out with its important data point, arguably, for the month, nonforeign today. , later but shanghai opens in about three seconds. Lets have a look. We are flat. In hong kong, the hang seng gaining. 1 . Straight to the details of that open. David a bit and take a mac tech, a bit anticlement take anticlimactic. Mentioned, hang seng gaining. Interesting note this morning. They are essentially waiting on hong kong in the philippines and reallocating some of that to australia and china. One thing to note as we open up. Lets have a look quickly at what else we are following this morning. When you look across the currency markets, it is a bit of a mixed picture. Over in japan. Have a look at the broader picture of the asia percent effect. Just below 19000 and many k 225. Australia basically just wiped 225. Lmost on the nikkei australia basically just wiped out almost all of its gains. Things of really started to take off in japan. Back we did get the results of the open Market Operations on the boj. , and as a shooting up result, we are looking at the 10 year at about 14. We are way above 1 . What does this say . A lot of people were talking some point needing to adjust this in a world of rising yields. Detailsget you more later on. This really kicked things off when you look at the equity market reversing their gains. I will be back in a few minutes to recap everything else. Rishaad oil in qinghai are as well as we have a threat of recession in reselling sanctioning in iran. Lets get to headlines with heidi. Heidi trump has that he will impose new sanctions on iran as early as friday, aimed at punishing tehran for sponsoring terrorism and testing a Ballistic Missile. National security adviser mike flynn said on wednesday that a ran was on notice after it tested a Ballistic Missile last weekend. Trade falling in extended after projecting lower firstquarter earnings. Current period is less than a year earlier despite a forecast increase. On warehouses, movies, and gadgets will continue at the expense of profits. Nickel prices are on the rise. Least 23 minds will be mines will be closed. The philippine president campaigned on a promise to improve environmental and es. Fare standards at the min Deutsche Bank shares fell the most in september after the Fourth Quarter trading unit missed estimates. The division slumped with lower profit shares after the financial crisis. However, he says he expects to make a profit this year, which would be the banks first profitable year since 2014. Global news 24 hours a day powered by more than 2600 120nalists and analysts in countries. Rishaad getting a story out of south korea at the moment. Prosecutors have been able to search the president ial offices with officials after obtaining a warrant. We will head to our bureau chief in south korea. This is all moving very quickly. A bit of a bolt out of the blue. What is the latest . , specialght now prosecutors are negotiating to enter the complex. They have blocked access. They issued a statement to us will not allow access to the special prosecutors investigating allegations that the impeached president may have been involved in influence peddling, particularly allegations of bribery as well as other charges. Rishaad this is a scanned all that continues to deepen. How are they dealing with it now . Describe the situation. Peter at this point, it has almost become a daily routine. Top of the news every day, every hour so to speak. It has become almost i think to the public, they are becoming a little more callous to it now. Every day there is some new development. Nothing is amazing. Nothing is a surprise. Special prosecutors are house,to search the blue they have searched the trade agency and the Financial Services commission. The scope of the investigation is amazing. Rishaad the scope of the investigation would suggest well, the fact that it seems to permeate so many stresses of society, indeed, the World Business media and the executive arm, shows how deep bribery, corruption, and the influence scandal actually goes. Peter yes, in many ways, a lot of the Corruption Scandals have broken out over decades. What is different this time around, obviously, is the involvement of the president , but also, the general publics sense that they have had enough. They are not going to turn a blind eye anymore to the very that they relationship family and conglomerates have had with governments. All of this is unfolding now. Millions have turned out in protest. There is a landmark change going on here. Rishaad thank you very much. That was the sole euro chief. Seoul, south korea bureau chief. Meanwhile, a Refugee Resettlement deal that donald trump described as dumb. Give us an idea what went on here. Struck was a deal between australia and the Obama Administration to take 1246 refugees who have been waiting on the Pacific Islands for permanent resettlement. So, the deal was they would go to the United States. Most of them are from the run from iran. Most of been confirmed as legitimate refugee cases. However, in a latenight tweet, donald trump did describe the deal as done and later wondered what was in it dumb and later wondered why the United States had agreed to it in the first place. Media reports of eight first phone call between trump and the australian Prime Minister which ended half an hour early when the president allegedly hung up. The White House Press Secretary Sean Spicer has since held a press conference that suggests the deal will be honored even though it goes against the wishes of trump. Rishaad the question is, is this a storm in a teacup or does it seriously impair relations between the two . Well, it does raise the question and a number of thissts have raised question today this was relatively small beer. What is this going what is going to happen if there is a serious problem that requires cooperation between the United States and australia . The australian ambassador to the u. S. And former treasurer was called to a meeting with john mccain and paul ryan, two senior republicans. John mccain said the dispute was unnecessary and harmful, and that australia still values the relationship. Paul ryan saying australians should not worry about the relationship with trump or the United States, but as you describe it, a rather disturbing and unexpected storm in a teacup. Rishaad thank you for that. Now, indeed, Donald Trumps war of words with mexico he seems to be fighting with everybody putting several Japanese Companies in the spotlight. They all have mexican factories. It seems like some parts of corporate japan have been caught in the crosshairs of this war of words between mexico and the United States. Yes, it is not a good time if you are a japanese car manufacturer or the president of a Japanese Company. Access to the eu is going away. And honda aressan wondering how thats going to work in the future. Now this fight with mexico. , jp steel wasries recently given an award by the Mexican Government for being the 1000 company to invest in mexico. Givesreason is that nafta production in mexico access to the u. S. Market tariff free. If that is given away, the reason these companies have invested in mexico is going to disappear, which makes it difficult for them to continue to produce as they have. Biggest Car Manufacturers produce in mexico and their supplies are in mexico. They are all going to have a lot of questions about what they do now. Where should they produce . Should they move elsewhere . Very uncertain times, and right now, there is no real answer about what they should do. Shot is there any night nub of going to the that issues, it does show supply chains are global in orientation. Protectionism is not binary at the end of the day, is it . Know, and these companies are worried. There is a team in new york to advise Japanese Companies what is going to happen with mexico and tariff policy because semi Japanese Companies invested in mexico so many Japanese Companies invested in mexico and elsewhere in the world need advice. Globalll happen with the supply chain . Boeing cant make a 787 without a Japanese Company that makes the wings, a Korean Company that makes the tail, and other places. To unwind the Global Supply chain is going to take a lot of. Ime and be very expensive them,ies supplying Japanese Companies, but also the endusers, boeings, and the customer. There is an unwinding of if there is an unwinding of Global Supply chains, is going to be very expensive. Rishaad coming up next, the rooster crows. China returns from them, its ner holiday. Rishaad breaking news crossing the bloomberg terminal that concerns the pmi index. Slightly weaker than productions. Thats right. The number is 51 for the month of january. This is a Manufacturing Survey for the month of january. The expectations had been for 51. 8. The number is 51. A bit of a mess there. Its official pmi data that came expectations, but slightly below the month of december. There is continued expansion. We have known that the smaller firms have struggled more, particularly in getting access to credit. Some of the cheaper credit going to bigger firms. It does point to a lower expansion rate than expected. Do expect that this will continue, though it may ease up slightly. We will look at how the one plays into this. We have seen that strengthen marginally on the back of the weaker dollar. X boards for china, we have seen that south korea number jump. That bodes well exports for china. We have seen that south korea number jump. That bodes well for china. But the number today is 51 for the pmi. Trade numbers at this time of year are always fun for a lot of head scratching. We have to work out what really happened. Markets opening in shanghai. Trading inay of the the new year. 51. Is does this mean more stability looking at the chinese economy . Official figures a couple days ago. Now we have seen these figures. Basically demonstrates that the chinese Manufacturing Sector interest ined, but the growth rate or related areas is to be slow. We need more policy to demonstrate that china is really in recovery mode. We are optimistic about the chinese economy, but at the same time, we are cautious. Asiaad what is the do for that do for asia . Interest rate is something we need to look at cautiously. We have talked about liquidity. I think they will adopt a more flexible approach to maintain liquidity and economic growth. At the same time, we see that in the Chinese Market we have seen benefit from liquidity as well. An increase in Interest Rates could lower the pressure for the pboc to counter the outflow of capital as well. Situation in china is optimistic over the short term. Right. Been a there has turnaround in china. Tell us about that. , theythe announcement hinted at earnings and financial figures. , ithat really happened means the Chinese State of. Conomy will be improved. Ishaad last question what about reform . Will we get it this year in any meaningful way question mark yes, in a political conference positivepeople have expectations on policy. There is one area we need to. Ocus on we have to release the value of companies and the private sector dish sectors well. Rishaad thank you for coming. Of a threat isch donald trump to export dependent nations around the world . Rishaad donald trump promises lowball global trade deals and put america first. This creates a threat to lowbaln companies. Lets talk about the dangers of a more protectionist u. S. To watchk we have closely some of the changes that will come from the new u. S. Administration. On the other hand, it is fortunate that we are part of asia, and asia is the Growth Engine for the Global Economy for some years. Its the asian middleclass, urbanization of asia and movement of growth and services. I think that will provide services for companies in this part of the world. Do you think china will be the savior . Can china pick up the slack . I think savior is overstating it, but china will be looked to as an alternative to the u. S. In tpp. We will welcome that be happy to participate. How about invest ins . A lot of American Companies have set up regional bases in ,ngeborg, every in singapore everyone from hewlettpackard to linkedin. With trump wanting to bring jobs back to the u. S. , will that impact jobs and investment since report . Singapore. Tments in for the past 510 years, a lot of companies have been investing in singapore to participate in the growth of asia. Tech is a good example. From 24 people in 2007 to more than 1000 people today. We dont see that trend reversing. Riskst then do you see as to gdp . I am cautiously optimistic. If i look at some of the data thing out, it is project projecting about 3. 5 growth in global trade volume. If we look at the pmi in months, itfor six was above 50. Likewise in china, it has been in positive territory. Commodity prices have stabilized. Realistically, two percent3 is reasonable. I think in 2017, there is still somewhat of a drag from real estate and so on, but for the mediumterm, certainly we believe this, yes, 3 is sustainable. Rishaad shares surging the most since may. We will discuss what is behind the election us behind the bullishness. This is bloomberg. Almost 10 00 a. M. In singapore, 1 00 p. M. In sydni, 9 00 on thursday evening in new york. Tom Rishaad Salamat coming you from bloombergs asia headquarters right here in hong kong. This is Bloomberg Markets asia. Rishaad chinese stock slipping on their return to trade, but the regional benchmark stays positive, yields jump. Officials negotiate with prosecutors as they arrive with a search warrant. And it is trump versus australia, the white house attempts to suit relations soothe relations. A mixed bag, a lot of things going on. Yeah, talk about a need for a quiet friday. The story is, lets take a step back from the broader view of equity markets. Nothing is happening there. China, a story of rising rates, 14,boc selling seven day repos. Daveday could be a bit of catchup. Not much reaction when you look at money markets. Story number two, lets look at japan, yields on the way up, a lot of disappointment over this bond buying boost from the boj. When you look at Market Reaction and see how bonds are selling across the board, across the yield curve, in japan, the market not impressed. , 10 00 a. M. Yields tokyo time, that is the bid. Bps to 15 basis points, takes the dojto the date announced implementation of negative Interest Rates. Almost full circle on the 10 year jgb yields. Yields on the way up, thanks as well, higher rates, higher net interest margins. Lets flip the page, the nikkei 225,. 5 . The philippines the story you want to follow. There is confusion right now in the manilla. Some have not received a letter from the Environment Ministry. Some of these mining stocks are suspended or halted from trade for about an hour. All of this comes down to the story on nickel prices. Will talk more about this later on, but the Environment Ministry came out with audit results and said 26 mines noncompliant, lets shut them down. When you look at the possible , thet on global output philippines accounts for 25 of output. Because of these closures in the take halfs, but might of the output capacity off the table, so interesting to watch ahead. These of the contracts in shanghai, up 3 . The index up. 4 . Japan and china, rising rates. Philippines, the nickel story. Rishaad thanks. Right, more talk out of london that we will have a clean rake from the european union, so lets get that story with the rest of the first word news with haidi lun in sydney. More details, the u. K. Leaving the eu to gain control over its own tariffs and trade deals. David davis has outlined his vision for britains future and a 77page white paper. He confirmed that u. K. Would leave the Single Market and the customs union. We want the eu to succeed politically and economically, and so we approach the negotiations to come in the spirit of goodwill and working towards an outcome in our mutual benefit. Amazon fell after reporting a mess on holiday sales, projecting lower firstquarter earnings. 250e somewhere between million and 900 million, less than a year earlier despite a forecasted revenue increase. Warehouses,ing on movies, and gadgets will continue at the expense of profits. Deutsche bank falling after fourthquarter revenue missed estimates. Thetrading division slumped lowest since the financial crisis. However, the ceo does expect to make a profit this year, the first positive year since 2014. Ceo Travis Kalanick is stepping down from President Trumps economic Advisory Council after criticism from customers and drivers. His participation prompted a backlash after trumps executive order on immigration. He explains that immigration is vital to the u. S. And his company, and joining the group had not meant to be an endorsement of the president. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Well, its all happening in south korea. A searchrs discussing of president ial offices with officials after obtaining a warrant from the Central Court. Lets head over to south korea now. This is moving quickly, and indeed, quite a surprise. What is the latest . Prosecutors,l investigators have been talking to the blue house at the entrance to the president ial offices for about an hour now, trying to gain access to documents in the offices. Blue house in a text message said they will not allow access to the investigators. They will provide documents that prosecutors request. Special prosecutors want to gain access to search on their own. We dont know how long this will go on, but it may be a while. Rishaad this is just yet, isnt it, weve had figures in all strata of the economy, being question and perhaps making headlines every day for the wrong reasons. Is the general feeling among the south korean population when they look at this and are being bombarded by information of allegedly doing . Wrongdoing . It reflects the publics wariness. They are tired of the perpetual ongoing Corruption Scandals that have broke out for decades. They are not going to turn a blind to these Corruption Scandals anymore, so as we reported before, that is why millions turned out in protest in the streets over the last tubing months. Two months. It now include samsung, as we talked about, the blue house, the special Prosecutors Office said they are searching government regulatory agencies, the Fair Trade Commission and the Financial Services commission. This is on allegations that insung may have paid bribes return for favorable government treatment, specifically on a megamerger of two of its samsunges that helped solidify control. Rishaad thank you so much for this. Seoul, korea bureau chief. President Donald Trumps administration expected to introduce sanctions on iran as early as friday. Ramy inocencio is in new york with the details. Why are they doing this . It dates back to this past week when iran has said and admitted it did do this other Ballistic Missile test on sunday, so that is one aspect. The other aspect is the white house is accusing iran generally of supporting terrorism, terrorist activities. His nationaland security adviser mike flynn, both came out saying as much. Mr. Trump saying iran is now on notice. Not clear as to what that means, mike flynn director said the missile test was in defiance of a un Security Council resolution passed in 2015. One thing we do know is that with this action against iran, up to 17 entities could be facing sanctions against their links to this missile test. On top of that, eight more entities could be sanctioned for actions against terrorist activities, but none are linked to Irans Nuclear program. That deal coming through during the barack Obama Administration. To white house has a client comment, as well as the state department and treasury department, so we will see what happens when and if anything officially comes out from them. Got some,his has well, crossfloor support, hasnt it . Quite a lot than other policy certainly. Im holding this press release that dropped in my inbox from the Senate Foreign Relations Committee saying that republicans and democrats are leading a bipartisan effort in terms of supporting this effort to sanction iran. Let me read you one quote here. They are saying that full enforcement of existing sanctions and the imposition of existing sanctions for its Ballistic Missile program are necessary. They goes on to say we look forward to supporting your administrations efforts to hold iran accountable. To doaid it will continue its own defensive actions to protect its own country. Rishaad thank you so much for that. That is Ramy Inocencio in new york. Still ahead, the white house moving to ease a diplomatic rift between President Trump and australia. Sunny jumping the most in the year despite a writedown in its movie division. What is driving that optimism . We discussed that with jeffries. That is on the way. Rishaad business flash headlines. The Ride Hailing Company investing 700 million in , saying it will build on its Digital Payment service and set up a Research Base in jakarta. Set aside 100 million to bankroll startups. The indian telecoms regulator will ruled in favor of the countrys richest man, and do so by deciding free Data Services offered did not violate industry rules. A decision would be somewhat of committing 30 billion dollars to the start of. It offered free voice calls for life and free data for a limited time. Tata motors introducing an upscale brand to shed its budget image. It will rollout the first product in march at the geneva car show. By new division begins sales the Financial Year to follow. Tata has reported losses in six of the last 10 quarters. Lets look at sony. They share price upentially on fire in tokyo, 6 up, and down to optimism about gaming and its chip business. That despite its latest results missing expectations and a lowered outlook. Our next guest has a buy rating on the stock. You said it wasnt good, but you strip out that impairment charge for the movie business and you have yourself actually a good story. Tell us about it. Thank you. Charges his or writedown, noncash, for a business acquired 30 years back, so it essentially the current management is owning up to the mistakes of the management past. In the current numbers, what we saw excluding that one off, which is noncash by the way, there is no cash loss on that one. The operating profit numbers were much better than the street was expecting, so you have to the one offerlook noncash charges for that business and every business from which sony is exiting. If these are nonstrategic lossmaking businesses, that has added up to a lot of one offs in the past three years. Exclude that, then sony itself is about ¥450 billion operating profit, a number it has not seen in 25 years. These are very big numbers, and sonys new management for the last three years is continuing on the right path and trajectory. There are challenges in different businesses come at this management is setting accountability and driving the company in the right direction. We quite like this. Rishaad what about the film business . Of course this may be simply down to a couple of bad years with not enough hits, but that could turn around. A quote you just mentioned saying that this loss and films is being taken extremely seriously by management. Yes, it is. Its not about a few hits and misses. Business,ys movie dvd production hand media exports. The Motion Picture business is in deep trouble. There are two reasons. One, the consolidation under disney. It is not just sony having struggles. Disney has consolidated all the biggest ip, and all their studios maybe with the exception of universal, are struggling and having a difficult time. That is the first issue. Secondly, in the last 34 years, the movie Business Management was monetizing the cash flows with out actually investing in building franchises. That is the mistake they have made in the past, and they need to correct that. They have also gotten rid of the management and are looking for new management. If they can get some good people, especially the a disney ceo who might join them. If that happens, that is a big positive. The alternative is that there are bidders for sonys movie business, a value of 20 billion to 30 billion. The entire market capitalization , and the movie business alone, some people value it as very valuable. Now to im one to move panasonic. They are out later. What do you make of them and what you looking for . Driver isic, the big a complex and opaque organization now. Business business to that,sses, and within they have not a single business line of more than 5 , but the one big driver is the Automotive Battery for tesla, about 2 of total sales, but that could be a big driver in the next 35 years as they have to produce 10 times to 15 times the number of batteries, so that could be the big driver, but still a complex organization, and counting the transition now, it makes it more complex, so we have to rely on what the management is saying until we get visibility and accounting terms. Recently they were investigated in the u. S. For bribery as well, so there are a few issues. Rishaad is that going to be something that will overshadow these numbers . This threatens to overshadow some of the good work being done it panasonic certainly. So we dont know the outcome. It is under investigation. Panasonic does not know much more than that. We have to wait and see that if it does happen, they are found to be guilty, then yes, it is an issue. It is an issue to be worried about, because this is one business where they are profitable and have high margins as well. Rishaad always great talking to you. Snapchatming up, filing for a 3 billion ipo, the first u. S. Social network to do so in three years. We have details of its newly to disclose numbers on the way. Tech worldsof the most highly anticipated ipos is a step closer with snap filing billion,fering of 3 but it could grow. We have more details on this. Can snapchat convince investors it is worth that much . Some would say even more . Rosalind we are told that snap is aiming for 4 billion for its ipo. That is with the market value of as much as 25 alien dollars, so will investors be convinced . Snap revenue grew seven times rishaad where do they get their money . Rosalind mainly from advertising. 2016 against the loss of 515 million. Users, snapchat has more than one 58 million daily users. Quarterly average revenue per user on a global basis climbed to 1. 05 in the Fourth Quarter of 2016. That goes against . 31 a year earlier. , daily average , but not looking so great the potential in the average revenue generated per user. Rishaad now, tell me something here, how do their daily user numbers pan out compared to some of the others . Snapchat has more than 158 million, but Something Like instagram, 400 million, and 150 million of those are using stories, basically instagrams equivalent of the snapchat function. Snapchat acknowledges it could see lumpiness and daily active user growth, which could be an issue going forward. At snapshave to look cost of revenue, the amount it spends to generate the money it makes, and that is where some interesting figures, up. It is very reliant on google cloud services. It has signed a commitment over five years to spend 2 billion, and snap itself says it relies on google for the vast majority , and itting bandwidth listed this dependency as a key risk for investors if they want to invest in snap. Aad its called can keep now you pictures for a certain amount of time, send messages. It is not as controversial as it was when it first started out, but the question is whether this is something investors will buy into because it will grow and compete with twitter, instagram teenagerst appeals to , but they dont have that much money, so they are not a target rich environment. Base is the user growing in north america and europe, and all must nowhere else. Much. D thank you very coming up, the japanese bond market as 10 year yield surge, the bond buying boost, how far will traders test the central bank . Is 10 29 a. M. In hong kong, 129 in sydney. Bloomberg has been told president Trumps Administration will impose new sanctions on iran as early as friday aimed at iran for testing Ballistic Missiles. The sanctions are not related to Irans Nuclear program. Mike flynn said wednesday that iran was on notice after it tested a Ballistic Missile last weekend. Jamesefense secretary mattis is the latest official on damage control after a rocky few days of diplomacy from President Trump. Trip, herst overseas reassured them of any attacks from north korea. Trump hit out this week at japan and australia, allies that have helped the u. S. Maintain stability in the region since world war ii. Any attack on the nine states or our allies would be met with a response that would be effective and overwhelming. South korea says prosecutors are talking to president ial staff of offices after getting a warrant from the Central Court here it the president s office said it would not allow them into the compound. Park has been impeached over a Corruption Scandal that engulfed some of the countrys biggest corporations. Prosecutors are searching the offices of the Financial Services commission and Fair Trade Commission in relation to their investigation into samsung. Come upres trading about 5 after it cut its fullyear profit forecast for a second time. The chips and gaming divisions where the bright spots, the playstation 4 had its best quarter to date. Sony says net income will be 231 million by the end of march, down from a reduced outlook of 532 million. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Do,haad without further a action amongst jgbs. David is having a look at that and general equity sentiment as well. Right, if there is one way to describe today, it is a story of rising rates, japan, china. One year swaps and china up 11 basis points, 3. 42 is what you pay. In other words, markets ares darting to price in rates going up from here. Tighteningt leads to from the pboc, we have to watch. Seven,the pboc selling 14, and 28 day repos at higher rates compared to the last operation. Story number two bank, japan, yields up across the board. Where it is not lackluster trade, screaming height the moment because yields are pushing higher. It comes down to this bond buying boost from the boj midmorning in tokyo, looking at have these are trading. , it you look at the 10 year shows you markets were expecting more. Whether or not that is a problem with them communicating or their resolve to anchor the 10 year yield at zero, that is in question. A lot of analysts talking about how the need to do more. Would you believe the ship is anchored if it starts moving . Analogy of looking where we are. 10 year jgb yields, coming from way up, january, yields shot down, the past 68 months, yields creep up higher. We are back to the day when the boj introduced its negative Interest Rate policy. We will get you the chart later on. The other thing i want to focus on is when you look at what is happening in the philippines. We now have so nickel prices in shanghai have started to creep higher, but that being said, the Mining Chamber in manila has hit back at the results of the audit announced yesterday, basically saying it does not seem that it was not biased, compromised. What they are asking for right now is a reversal of some of these mining policies, some of the closures. That being said, when you look at the markets, that is playing out. Have a look at nickel futures, may futures in china, 2. 8 . There we are for the benchmark, lower for the Overall Index in the asiapacific. We are also following pound sterling, session lows here. Projectionthe boe for inflation came in at for 2018. Getting a bit confused, lots of stories, a busy day across markets, especially these rates and bonds and where yields are headed at the moment. Right, absolutely, also being affected by the prospects of a hard brexit after david daviss remarks and talking about yields, japans 10 year surging to the highest level since january last year. This questions the bank of japans expanded on purchases. Joining us from tokyo, what is the real worry here . A concern about what the boj is doing. The boj increased its purchase was the same as , so it wont stop has such an the boj has to do more. Also, this came soon after the boj december meeting. Want markets, the boj still trying to stick to targets. There was not much elaboration. They did not indicate any unified view. I think what markets are trying to find is more information, how the boj is trying to contain yields and how they will operate its bond purchase plans. Rishaad tell me something, how did those boj minutes play out today . What do they show . Different opinions on how the boj should be maintained. Japans yieldd curve could be steeper, and another says the boj could have we dont know who said it and how many people said it, but that is an indication that the boj has not come to a conclusion , a unanimous conclusion, on how it should be monitored after it was introduced. Rishaad thank you. I suppose the finance minister has been making remarks. How have they been taken and what did he say . Heit wasnt the first time slipped his tongue. He said basically japans quickly easing to contribute to the strength of the yen. He corrected his comments by saying japans monetary easing was to end deflation. Has president , sop was meeting shinzo abe after comments surprise some market participants. Thank you very much indeed for that. Lets turn to what has been going on with australia and the u. S. Australias ambassador to washington has met with Top White House officials to smooth over a sudden and unexpected diplomatic rift between these two allies. Lets get to paul allen in sydney. This is all over a Refugee Resettlement deal, which President Trump tweeted is being dumb. Are a number of refugees waiting resettlement on Pacific Islands north of australia. Before the Obama Administration tond up, the deal was struck central hundred 46 refugees to the United States. 80 have been processed and found to be genuine, coming from a variety of middle eastern iran. Ies, mostly from late last night, donald trump put out a tweet calling it an dumb deal and later questioned why would we do this, and it did seem to reinforce a report we saw in the media late yesterday of a very terse phone call between President Trump and the australian Prime Minister malcolm turnbull, which ended early and donald trump called the worst phone call he had had. However today, sean spicer suggested the deal will be honored, the Trump Administration i guess, who really knows . Rishaad so this text the question if this is a storm in a teacup. Or does it have more hidden depth to it . The alliance is very old between australia and the u. S. , and austria has followed american troops into wars where other allies they are not tread. However, there has been a lot of damage control today, the off strain ambassador called for meetings with senior gop officials, including john mccain. John mccain called the dispute unnecessary and harmful and said the Historic Alliance with they shouldnd that not worry about the relationship with President Trump in the United States. Other analysts have said it is such a trauma over a small issue , so what will happen if there is a big issue . Rishaad thank you. Paul allen in sydney. Right, coming up, closure orders, how philippine miners are pushing back against government plans to shut dozens of minds. Mines. The quick check of the business flash headlines, sources telling us that pfizer is exploring the sale of drug treatments as it looks to raise cash and streamline portfolio. The company is considering sale care. Diology and primary pfizer is hoping to sell the treatments as part of a package and has higher j. P. Morgan to advise on the process. An Advisory Board may be pushing ahead with a possible sale, the company interviewing Financial Advisors to consider strategic options. While finding a buyer may be difficult, it could attract interest from the health care sectors. Company surged 11 before settling back at a 2 gain. Continental seen as a laggard in the u. S. Aviation industry, just passing american theines in market value, turnaround strategy push the market capitalization to 23 billion. United has advanced 54 in august, when scott kirby was appointed as president. It has outpaced the broader index for u. S. Airlines. Mining companies in the philippines, they are at loggerheads with the president as they rail against site closures. The government plans to shutter two dozen suppliers in the worlds biggest nickel shift. We have more from the nelle. Rom manila how bad is the fallout from this . Good morning. You look at the numbers, youre looking at closure of 23 mines around the country, five facing suspension, but when you about 1. 7 billion of investment, half of the nickel output of the country, the leading supplier in the , 17d, and 40 of the jobs thousand employees, at risk if these closures and suspensions push through. Rishaad indeed, and tell me what are the drivers for the latest order . Well, one thing to look at is that you are looking at a single ne of the person in charge to oversee the mining, and what it is is a carryover of her pursuit against largescale mining ever since she was an environmental activist. Audits andbeen protracted reviews, and it looks like it will not end soon. You are looking at a continuous audit and the idea that Regulatory Risk is expanding, and she has claimed that she actually has the support of the president with regard to her current crusade against the largescale miners in the country. Rishaad isnt it the philippines, about a quarter of global output when it comes to nickel . So what happens next . What else and what is left for the Mining Industry to do their . Re . All, she has outlined the only recourse they have, so lets take a listen. Rishaad indeed, we did not quite get to that. Thank you for that. Lets go to president Donald Trumps promises to terror global trade deals and put america first. Is one of those whose economic success has been based on playing a role in the flow of goods and services. Haslinda amin talk to him about the dangers of a protectionist u. S. Some have to watch closely of the changes from the new u. S. Administration. On the other hand, singapore is very fortunate as part of asia, and asia has been the Global Engine for the Global Economy for some years now and we expect to continue that. It is the asian middle class, urbanization in asia, the movement of goods and people, and growth in internet asian crossborder deals and trade. Will provide the list for countries in this part of the world. Haslinda do you see china being the savior . Chemchina think up the slack can china pick up the slack . China can look at the possibility of rcep as an alternative to tpp. Is one step towards that, we welcome that and will be happy to participate. Haslinda how about investment . American companies have set up regional bases here in singapore. With Donald Trumps u. S. Policy, with donald trump wanting to bring jobs back to the u. S. , with that impact jobs and investment in singapore . Many of these companies are in singapore, a lot of them have been invested in singapore and the growth of asia. Tech is a good example. 24 to more than 1000 people today. We do not see that trend reversing. Haslinda you seem confident t about singapores future economic growth, but what risks do you see . If i look at the data coming 3 and 2017 will still have to 5 growth in global trade andmes compared to 1. 7 2016. If you look at the pmi in singapore for four consecutive months, above 50, likewise china , pmi has been in positive territory, so all those are positive signs. Commodity prices have stabilized, oil prices have come back up. 2 to 3 is reasonable . Not in 2017. 2017 is something of a drag from real estate and so on, but for the mediumterm, 3 . Coming up, and new police on life. We look at what is giving chinas box office a boost. You are watching bloomberg television. Rishaad you are back with Bloomberg Markets. Chinas Box Office Sales have risen for the First Time Since august, a 13 increase. Tom mackenzie has been looking into this. What is behind the jump . ,om one hit film in particular the producer stephen chow and his film, a record in terms of oneday ticket sales. It fed into overall sales of , 485d 3. 3 4 billion yuan million dollars, and that compares to just under 3 billion yuan over the same time last year, 2016. Executives are paying increasing the Box Office Sales, because they slumped last year. 2016 Box Office Sales, the lowest since 2008. Fromrt shows the numbers august last year to the middle of january this year. September and october, sales holiday numbere will be of some relief to executives who have invested a lot of money in the Chinese Market. The market was expected to be the largest in terms of revenues in 2017. To bed the question has here, is it just a case of the chinese audience getting more discerning . Certainly it seems that these simple formulation of crying together a top director and a top star is not working as well as it used to take for example the great wall, a big fantastical movie, start matt damon in one of the lead roles directed by one of the most successful chinese directors. To 150about million, but received a lukewarm welcome. In terms of what it means for businesses, we have seen alibaba sun Group Investing in facilities, but there has been a big push by the government to grow the consumption, and this is part of that. So they will be concerned to see those ticket sales pop up. It also has implications for u. S. Companies, the likes of disney partnering with Shanghai Media Group last year to produce films in the mainland and get over this cap and western movies about to be brought here, so disney will be eyeing these numbers. Nomura analysts say we could see a big pickup in ticket sales in april, the true, tried and tested franchises coming back to the screens, fast and furious, pirates of the caribbean, coming gnomeo china screens and are expects sales to pop up again, but we will have to wait and see if 2017 makes china the biggest market in terms of ticket sales revenue. Rishaad thank you very much indeed. Looking at the box office in china. Will update you on the date stories of the day so far and what she is looking at in the coming hour. We are dissecting the Chinese Markets as they come back from that holiday. Strengthening the fix, but not as much as many thought. What that means and what message are they trying to send . We will ask that to geneva advisers don gimbel. About south koreas ongoing political scandal, investigators planning to raid the president ial office over that scandal. Whenll have the details Bloomberg Markets asia continues in two minutes. Su from our studios in new york city, this is charlie rose. We begin with the supreme gorsuch ise neil President Trumps nominee. President trump made the announcement in the east room of the white house tuesday evening. Millions of voters said this was the single most important when they voted for me for president. I am a man of my word. I will do as i say. Something the American People have been asking for from