Transcripts For BLOOMBERG Bloomberg Markets Asia 20170327

Raise 2 billion. Haidi haidi Oil Producers considering extending cuts. Six nations say more time is needed to train the global glut. Rishaad China Southern confirming a stake sale with American Airlines worth 200 million. Suspended butock should resume when the session gets underway. , thatlooking at kaisa forerty developer suspended two years will resume trading. So a lot to look for two in the session ahead. Haidi absolutely. We are seeing a risk off session so far to kickoff the trading day. Lookof fence the two forward to, janet yellen speaking on tuesday, and as you said, hope springs eternal. Aroundd get more color this Monetary Policy trajectory out of the u. S. Given disappointment and concern over President Trumps Political Capital and ability to push through these tax progrowth policies. We are 30 minutes away from that open. Lets get it over to sophie with a look at the markets. What a great way to start off the week in asia. Sophie risk off this monday. We do have singapore, taiwan, and malaysia coming online, opening in the red. It looks like crunch time for the ringgit as the dollar weakens. Gold snappingrs, a twoday drop come up 1 , helping gold stocks in sydney, but that slide in prices for iron ore weighing on minors. Other indicators, the yen ,piking to a fourmonth high triggering a selloff in tokyo, the nikkei 225 falling. Shares in seoul, korea extending fridays drop, down. 5 , more foreign funds out of korean shares on friday with Samsung Electronics among the biggest withdraws. Galaxy aad of its device, samsung shares up after falling for three days. Ill strain stocks. 6 , resilience tested as iron ore prices slide and aussie share snapping a twoday slide. Something ahead, china manufacturing pmi do friday. We do have aussie bond yields tracking the drop in treasuries. The u. S. 10 year yield sliding over four basis points below that 2. 4 level in the reflecting expectations around that reflation trade fading. Brent fell below 50 for the first time this year. Crudehave print and treading water brent and crew treading water. 708 three, how u. S. And drillers have been adding rigs, countering the supply cuts we have seen out of opec over the weekend. We had that meeting with opec producers and their counterparts in that deal, looking potentially to extend that agreement into the second half of this year. That may perhaps give us some views as to what may be the outlook for oil prices, rish. Rishaad thank you for that. Sophie kamaruddin there. Lets get you up to speed with first word News Headlines and get over to singapore and joined join haslinda amin. Haslinda sinopec says profits demanduble as stabilizes, bolstering plans to boost spending by 44 , the first increase since 2013. Fullyear net income of 6. 8 billion. Investors are also eyeing sinopecs moves for an ipo next year of its retail business, which could raise 10 billion. Property Developer China vanke posted a 16 jump as it faces and ownership battle. Chinas housing boom boosted sales, net income rising over 3 billion. Vanke says management faces unprecedented uncertainty after a little known group emerged as its biggest shareholder, a move the company describes as hostile. Has confirmed it is in talks to sell a stake to American Airlines. Shares in the carrier will resume trading in hong kong later. They had been suspended since thursday after bloomberg reported that american was preparing to make an investment of around 200 million. Sources say it will be through China Southerns h shares and will gain american a nonvoting seat on the board. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. I am haslinda amin. Chinas biggest brokerage seeking to raise 2. 1 billion to a listing in hong kong. Guotai junan looking to offer one billion h shares at a fixed price. Guess why hong kong, and indeed what are they going to use the money for . Brokerages have looked to list as they Start International expansion. What they really want this money to expand into other businesses outside the core brokerage area. Rishaad lets talk about the , a greenne investor shoe offering, meaning they will extend the amount of shares they are selling down the line. The cornerstone list looks pretty good for this, surprising ar a listing from china, small investment from a japanese brokerage along with the usual list of chinese Asset Management firms. Haidi this is the biggest share sale of the year so far in hong kong. What has the appetite been like . Slow start, 1. 5 billion dollars in share sale so far this year, but things could pick up. There are a number of giant fintech ipos coming. It remains whether to be seen whether hong kong gets all of them, but there should be a steady pipeline. Haidi this is a company that made headlines because of its disappearing chairman of its international arm. Is it fair to say these uncertainties when it comes to Chinese Markets have subsided and the timing means they could get good appetite for this ipo . I think a lot of the worries have subsided. While these disappearances seems kerry are not that uncommon in china. Investors will be looking at the growth story. Comes from the normal brokerage business, which is subject to the whims of Retail Investors and the level of shanghai composite index. Intohey are looking to go feebased businesses, Asset Management, expanding overseas operations for things like financing, which will help them to boost the bottom line. Haidi thank you so much for that. We will take a look at how the international business, the hong kong listing of share start trading in just about 15 minutes time. Ahead, live at the Credit Suisse Asian Investment conference in hong kong, hearing exclusively for some pretty big names, including rishaad we will be hearing from who sayst managers lifestyle ships are key to finding opportunities in the markets. That is on the way. You are watching bloomberg television. Haidi i am haidi lun in sydney. This is Bloomberg Markets asia. Rishaad i am Rishaad Salamat in hong kong. The latest business flash headlines, a chinese insurer looking to diversify overseas, planning to place 100 million a year in japan, putting money with private equity firms that invest in food, Consumer Products, and health care. An looking to increase returns and manage currency risks. Haidi beijings recent capital controls have setback deals. One Film Producer remains optimistic, seeking to renew and expand with stx entertainment. The deal to coproduce, cofinance, and codistribute will expire next year, but the company says the two are discussing for the collaboration. Like to renew and deepen our cooperation with stx beyond financing. Stx has plans and television and multimedia. They have new ideas for the asian market. We have had a lot of contact in this regard. Rishaad the Singapore Dollar gaining has traders bet the central bank will avoid easing. All but one of 16 economists think the bank will keep policy unchanged. The twoyear swap set the lowest in five years against the u. S. Currency, the negative spread indicating expectations that the local Dollar Strengthen. Investors focusing their attention on President Trumps tax reform after his Health Care Bill went down in flames. We will talk about that and the political appetite, being able to push through his next set of policies, the chief investment director at bt private wealth, 130 billion under administration. Great to have you on. The risk off feeling we are seeing spreading into emerging markets. It started in the u. S. Is there concern the healthcare bill was the litmus test and it was of the backhaul and are we going to get these progrowth policies . Sure. This is an important question because our key focus is how realistic these key pillars of reform. In australia for example, the difference between success and political paralysis is thin. When i think about u. S. President trump come we are thinking about how he is using Political Capital wisely. We think the markets are a little intolerant and impatient. Everyone knows that the eHealth Care Bill requires time to mobilize and create advocacy across both sides of the parliament, so we think those issues will take time to move but we think the key pillar that will make a difference, that will be more realistically achievable, is the Business Friendliness and the smarter reform of the Banking Sector in will. S. , which we think create a lot of credit growth for Small Businesses who are the lifeblood of the u. S. Economy come a so what happened on friday is not a surprise. We feel it was impatiently handled, and these things need to be looked to thoroughly. Haidi doesnt speak to the since of chaos in terms of how these policies are introduced and debated and put through . In terms of Political Capital, he cannot have a clear mandate. Thats right. The mandate is clear from the public, but it is not as clear when it comes to the congress. The congress has a lot of things to weigh. They need to make sure a collocated bill like obamacare is changed for the better, and there are a lot of discussions that need to be had. Right, the mandate is clear from the public, but constituencies on both sides of the aisle need time to think it through. Haidi you look at what has happened to the u. S. Dollar, essentially lower against all majors, on the cusp of giving back its gains from before the election, is there a sense that traders are scrabbling to reprice with the fed might do and expectations of what we will get from the u. S. . Absolutely. The markets are a little impatient in our view. When you look at a company like fedex that made public announcements last week that basically wage costs are rising, therefore inflation is going to be in issue around the corner for a lot of companies, it is clear to us that traders are discounting that possibility very, very quickly. We think after a long time in terms of unemployment coming around thetion is corner, therefore the path from the mediumterm perspective is going to be a gradual rise in the u. S. Dollar. Haidi you talk about countries with huge trade sensitivities, in which countries in the do think have a compelling domestic story . We talk a lot about this reflation trade, but arguably the u. S. Reflation trade versus emerging markets are two different sets of drivers. Totally. In a show what is clear is that within each economy, once you break down the gdp, there are two clear current trends. One, when we think about nations looking at ecommerce, health care, and Services Come look at the penetration of basic financial needs in terms of Bank Accounts and insurance policies in countries like india and indonesia. We are not even a quarter of the way when it comes to opportunity, so we are thinking about asia 2. 0 as a summary of a thesis about what sectors in the u. S. Economy will be driven by domestic change and evolution, putting aside the bigger sector such as financials, commodities, they tend to be global in the nature. Haidi what about the implications of a potential if not a trade war, but trade titfortat in terms of tariffs and some conflict in that way . I find it interesting youre seeing this rise when it comes to korean assets. They are one of the most externally vulnerable in case of a potential trade conflict. It would be fair to say that the markets are looking to this and saying that common sense will ultimately prevail. If you think about the tempo from the u. S. President preand post win, clearly the language and the rhetoric visavis china has changed significantly. I think what is also clear is that behind circles, there are a lot of countries coming together outside the u. S. Saying we will continue with free trade at any price, and we will make sure the big picture remains relatively stable. That doesnt take anything away from trade friction on a country by country level. Markets have had in recent times pretty poor track record of pricing risks. Are they underpricing at the moment . They are, but the northern peninsula when it comes to asia is a classic example of your point, and your point is valid. Parts,re a lot of moving politics, security, economic dependency all of these issues have been ignored in the northern potential a, one of the air is one has to stay close you. Haidi where does it take this 30 year bull market when it comes to bonds . 1572, it shows it is still unbroken. We did see it pushing 2. 6 when it comes to the u. S. 10 year, something that bill gross said is the heralding of the bear market when it comes to bonds, and it hasnt happened. It has been range bound between 2. 3 and 2. 6. What is the next driver given the collapse in the Health Care Bill . There are two forces, the first one is the u. S. The u. S. Is ultimately looking at the possibility of unwinding some of its cute the next year. The president has been vocal about that. When there will be a change in the fed chairman post next year, we expect the Interest Income that is being reinvested now will most likely not be reinvested later, and therefore we will start seeing a soft qe year,ing in the u. S. Next but we fundamentally see that the European Central bank later this year having no choice but their operations. Once those two factors prevail, we will hopefully see a normalization in the German Government on curve, which is very much out of kilter with german economic growth, starting at 1 on two years, finishing at 0. 4 for a 10 year. We think the adjustment will start in germany and make its way to the u. S. Treasury market. About thisalk reflation trade, this reflation me in 2017, how much focus are you keeping a night on the fallout in commodity prices. Just starting to falter a little bit, the latest being the oil story, whether opec will extend supply cuts. Are you concerned these will be the Downside Risks we will see if prices start faltering again . If we think in the case of iron ore, there are three drivers. One its about the producers finally becoming disciplined about ford supplied. Second, the chinese governments focus on the environment, and thirdly some form of speculation , but the first two factors are here to stay. So we think in the case of iron prices have overstretched on the positive side. They will mature and come off a little bit. In the case of oil, the price range of today will persist, but the regulators are looking through the core levels of inflation, which are more a function of consumers and wages in the which we think in the case of the u. S. Are turning gradually positive. Haidi thank you so much for coming on and giving us those extensive insights. Up, China Southern confirms it is in talks to sell a stake to American Airlines. We will watch how that stock trades in the hong kong premarket up next. This is bloomberg. Haidi i am haidi lun in sydney. This is Bloomberg Markets asia. Inhaad i am Rishaad Salamat hong kong. We count you down to the start of the trading day and hong kong. China seeing a move to the downside. 5 in the preauction. Of Companies Making headlines. American airlines in talks to acquire a stake in China Southern airlines, up 5. 3 premarket as we get that trade, coming off suspension since march 23. That is when we first reported that the stake is likely to be representing an investment of 200 million into this company. Grab by other companies and other Airlines Taking stakes in Chinese Airlines as well. Up 5. 3 , but watch out for this. Up, trading resuming after two years for this chinese Property Developer, kaisa. That is what we have at the moment. This company, you went looking for its chairman. Yeah, that is right. This is what im looking at. Rish, if you think youre having thoughtnday, spare a for the founding chairman of chinas Largest Dairy farm operator. On friday, he went from a billionaire to a mere off 1. 3re wiping billion in wealth after that Stock Plunged 85 in the friday session. The stock is still suspended, not clear if it will come back to trading today, but there were that its largest shareholder misappropriated 435 million to invest in real estate , but coming out and saying that that is untrue. We are still not clear how or why the Stock Plunged by that much, but certainly pretty foundingor that chairman, his net worth just 145 million. We will be watching guotai junan , the International Listing when it comes on line in the hong kong session given that it has a hong kong listing for its brokerage. You, we ok, lets tell have the yuan setting, the strongest actual fix since a month or thereabouts. 6. 87 for the yuan against the dollar. That is what we have got come a little change when it comes to chinese equities. The shanghai composite and shenzhen unchanged. Movement to the downside for the Hong Kong Market as we look at kaisa about to end that twoyear trading halt in hong kong. A declining market come up at stock up 60 . Livestream your favorite sport at the airport. Binge dvrd shows while painting your toes. On demand laughs during long bubble baths. Tv everywhere is awesome. The allnew Xfinity Stream app. Xfinity. The future of awesome. Nine 20 9 a. M. In hong kong as we count you down to the start of the trading day in china. I am Rishaad Salamat coming to you from bloombergs asia headquarters. Haidi i am haidi lun in sydney. Basics back to looking at the fed and data. We have data coming through from japan, ending up the week with china prethem i pmi, but a lot to watch ahead of that shanghai and Hong Kong Market opening. Rishaad we have seen enough up 60 with kaisa premarket. China southern confirming a two hundred Million Dollar investment from American Airlines come up 5. 3 . That was suspended on thursday, i believe. We are looking forward to a big ipo. We have the china fix as well, the yuan at the strongest level in a month against its american counterpart. We are just starting the trading week here in hong kong and over in shanghai is Sophie Kamaruddin. Sophie lets kick off with chinese stocks. Shares in shanghai marginally lower after a van sing through friday. The pboc of being open market operations. Bloomberg calculations determine the pboc has drained net 80 billion yuan by reverse repos, and that yuan fixed stronger as the dollar slumps two of four month low over pessimism on the trump agenda. This is the first market hong kong stocks now lower. 5 after rising two days through friday. Lets look at some stocks in focus. Surge afterg kaisa returning to trade, up over 66 . 3. 5 withhern gaining news that American Airlines in talks of a stake. Sinopec up after profit jumped 40 things to cheaper crude. Guotai junan falling. 4 , the first drop in three days on news it is seeking that 2. 1 been dollar listing in hong kong. Lets check in on stocks. Analysts saying these stocks merit iwatch after that friday plunge in their he shares in hong kong. That tumble could be a reminder to mainland investors that potential risks in hong kongs market cannot be ignored given the absence of trading limits and the impact of shortsellers. Rishaad thank you very much indeed for that. That is of course Sophie Kamaruddin here. First word news, oil and focus. Here is more with haslinda amin. Opec an independent Oil Producers considering output curbs, saying more time is needed to trim the global glut. Haslinda five members of the close tell plus of the cartel plus oman say it should be another six months. The talks in kuwait pressure the level of compliance from current restrictions is high. At the moment in russia, areg our corporates, we seeing all companies conforming with the obligations which they installed upon themselves. It looks like all the Companies Want to show commitment and dont want to stand out among the full group, which has committed. Haslinda chancellor Angela Merkel has strengthened her position with the cdu Party Winning original vote. It is a disappointment for martin schulz, whose party saw a jump when he took over. Share ofncrease its 35 to 40 . Russian Opposition Leader alex navalny has been arrested as critics of president putin stage rallies across the country. Saysnticorruption group the protest of the biggest since 2012. The demonstration came after reports that the Prime Minister has amassed a fortune, including mansions, yachts, and land. The u. K. Government says facebook should open up encroachment of whats up to security services. They say the man who killed four People Near Parliament use the messaging service before his attack. Home secretary amber rudd told the bbc it is completely unacceptable that messages can the open. She has called internet executives to a meeting this week. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Rishaad what a dramatic return, kaisa back to trading in hong kong after a twoyear hiatus. ,hares jumped about 80 fulfilling all conditions to return, including releasing long overdue results. Our asia Corporate Finance the last these were hurdles for kaisa. What do we know . Releasedy, kaisa earnings, the First Time Since august 2014. It is a decent set of numbers because the Property Market has been booming in the past couple of years. Is based in shenzhen. Let me run you through some up 63 , the revenue was in 2016, net losses narrowed in the past two years, sales tripled to a record high in 2016. Rose profit margin rebounded to 13 from 3 in 2015, average themng prices jumped 78 up but on the negative side, its total borrowings grew 22 in 2016 to 88 billion yuan. Rishaad in fact, we have a note that says they are just above par here. That tells us a lot about confidence. Analysts are very positive actually. Rishaad lets bring up this chart, 7134. It has beenn see, hitting record highs. This is not the most updated par, sout it has passed analysts are relatively positive about kaisa on the equity side. Saying longterm Institutional Investors might come back after some time because shares were suspended for two years. Side, people were very positive as you can see from the bond prices. Some of them are saying it is because after rounds of investigations, the Company Might be the most clean Property Developer among the real estate space. Rishaad i guess that is the hope, yeah. Haidi that is extraordinary notoriously the first and only developer to default on its offshore debt, it is considered the cleanest when it comes to that Balance Sheet. Does this adjust the sector as a whole is a little bit more stable now that the risks have receded somewhat . Has its own problems it was probed by anticorruption investigations, and thats why it default it in 2015. It went to a few investigations, showed itsne that exemployees used undisclosed borrowings in the run up to the default. In the sector over all, property bonds are doing very well. Yields have been compressing. Prices have been rallying. Theaad we can see how Chinese Developers index has been dropping in the two years that kaisa was suspended as we can see here. The shares are doing very well. Of the last 20 couple of months. For some of them. Rishaad there you go. Haidi all right, what a comeback we have there, back from the debt, kaisa up 86 after resuming from its twoyear suspension. Still suspended is chinas Largest Dairy producer, sank by 85 in the hong kong session friday. That setting crash wiping out 4 billion of market value. One short seller saying the company was worth close to zero. He told bloomberg that his prediction led to the slump that we saw. Our report looks like it started a Chain Reaction, which that is a goal as activist shortsellers. We try to knock over a bunch of dominoes. It has been reported that Chain Reaction led to a number of lenders doing an audit of the companys books, discovering that shocker, a bunch of money had been misappropriated. More with heret asian equities and equity markets reporter in hong kong. Sorts of been all rumors from what i can see online, but what has happened here . What prompted that selloff . We have been following this company for a number of years, and what we were seeing a couple of years ago was the company was buying back shares and the chairman was buying shares in the company. At the same time, the hang seng index in hong kong was falling because of the stock market volatility in the summer of 2015 , so lot of analysts and market commentators were wondering why the share price was going out. We did have an analyst on friday talk about the fact that he thought the share price would come down, but the timing was a big surprise. It was a dramatic plunge on friday with an 85 drop. Rishaad this is not something this part of the world has not seen before. There have been three other incidences like this here it this. There have been several incidents like this. It has been quite dramatic in that sense. Rishaad something quite common in hong kong, isnt it . Something that people are talking about, this hong kong discount. Ive spoken to quite a few investors about this. Stocks can be suspended for months. For investors, it is hard to exit positions, and that causes negative sentiment towards the market in general. What happens from here . Are we expecting a bounce back from what we saw in the friday session . The shares are still suspended. We have reached out to the company numerous times and they said to wait for the official announcement. The announcement has not been forthcoming. We dont know how long shares will be suspended. Wait and see. In the meantime, going from a billionaire to a mere millionaire, the founder and chairman after that 85 route on friday. Coming up, we will be live at Credit Suisse is Asian Investment conference and talk with Helman Sitohang up next. This is bloomberg. Withad you are back Bloomberg Markets asia. I am Rishaad Salamat in hong kong. Haidi i am haidi lun in sydney. Considering a buyout of the singapore listed business that own some of its clinics. Indias secondlargest private hospital chain could make an offer, which has a market value of 499 million. Fortis may bring in a new investor to raise funds. Chinas biggest Search Engine planning to double its footprint in silicon valley. By do adding a Second Development facility which will 150 engineers, focusing on Artificial Intelligence as a way of generating revenue. Haidi reports from japan say toshibas nuclear unit is poised to file chapter 11 financial protection. Than 6hat more billion, toshiba shares soaring on the growing believe that a westinghouse bankruptcy is an example outcome. Rishaad hong kong is playing host to one of the largest princes, the Credit Suisse Asian Investment Conference Marking its 20th year , 3000 business figures expected, as well as leaders, central bank officials, and academics. Own yvonne man is right there for us. What a celebration we see here at aic, 20 years. Offtarted kicking things with the beating of the drum ceremony to mark the two decades we have had this conference. ,m joined by Helman Sitohang the asia pac ceo. Great to have you. What a year it has been. A year ago, china markets down, oil prices 28, now preparing for this trigger of article 50, and the next moves of donald trump as the Health Care Bill has been shelved. Are the tides turning . So far, this is our 20th anniversary of Credit Suisse Asia Investment conference. Over the last 12 months, we have seen interesting developments, brexit, and thats why we titled this conference the beginning of a new era, whether globalization growing towards protectionism, so i think there will be a lot of interesting debate throughout the conference. We are very excited and we will see how the development goes. What is sentiment like at the moment . What is the big question this year . Sentiment is turning. Some of thee saw political events. I think those are behind us now. Clients are more active. See interest in asia again. I think we will see better markets than what we had last year. Yvonne we ended the Fourth Quarter for Credit Suisse with a sense that clients might be pulling back in the region. Where are we now . Where we see a continued buildup and momentum in the First Quarter, or signs of a tapering . More towards the wealth , from the Credit Suisse perspective, it is great as it creates a level playing field. On how do wecusing declare value through that. From our perspective, it is a process that is ongoing and is here to stay. For us, it is focused on how we create value for our clients and bring the expertise of the bank in positioning in the asiapacific. Yvonne i want to focus on your Investment Bank business. On the equity side, you have had to let people go. This asia need some form of restructuring at the moment . When you think is still not working . In every market, there are always changes. Models, asiapacific just one decision division, we can control the destiny of the division to tailor it to client needs. That is an ongoing process and we are in the best position to adapt to how we position the franchise in the region. Last year, we finished at number one Investment Bank in the nonjapan asia. We have one a lot of awards for our private bank here, and that place to our strength. Yvonne if you want to play to your strength, does that mean more job cuts to reach your annual targets now . I think it is less about job cuts. It is about how we position the franchise. Also, focusing on the right opportunities. Our headcount in the region last year went up, but at the same time, we need to adjust the model to make sure this fits the level of activity the client needs from positioning and commitment. The question is that we see huge opportunities in asia. Asia has a majority of the listed companies, first or Second Generation entrepreneurial owned, and that is fantastic for our model. We focus on the entrepreneurs and cover it holistically from the Investment Bank, but also from Wealth Management. We advise them and work with them on grading value for their businesses. For us, we see huge opportunities scaling the business up. Yvonne stick with us as we go to a creek that quick bank. Helman sitohang with is here. Plenty more to come from the 20th Asian Investment conference for Credit Suisse. Stay with us. I am yvonne man live from the Credit Suisse 20th Asian Investment conference. This is Bloomberg Markets asia. I want to continue the conversation with china. We have seen tax programs, and reporting standards, signing imminent by china soon. What impact could that have on your High Net Worth clients if payingthat days of not taxes on income overseas coming to an end . Wefrom our perspective, always want to work with regulators. We are a big believer that having transparency regarding the status of assets, historical status, is very important. We do want to start working from a clean based with all of our clients. So whatever the outcome of that regulation, we are happy yvonne do you expected to spur outflows or withdraws . Not so much. Its not so much about outflows. Having cleaner and more certainty with the quality of the assets is always better, because then you can scale it up. We always believe we can create value for our clients come and that is our value proposition. Yvonne you are seeing more chinese trying to move assets overseas, so how do you mitigate that for your clients . For us, it is not about just one segment. Focus one entrepreneurs and see a lot of opportunities and can create value for clients not only on the Wealth Management side, but from the Investment Banking products. China forber one in Investment Banking. We have been active in the market. There are a lot of ways to help clients create value, and that is our value proposition. Yvonne what is the latest on your china joint venture . You have maintained a one third stake in founder securities. I would not comment on specifics, but we are committed to the joint venture. To Work Together with them and have been active positioning and anticipating what the opportunities could be for us on the onshore market. Yvonne what would determine a decision like that . You see the likes of ubs, morgan stanley, hsbc starting a new venture, are you worried that they could be taking business away from you in the mainland . Not so much. For us, it is a holistic approach. It is not only the onshore strategy. It is how do we cover our clients holistically. I think it is a continuous progress. The government is clearly interested in opening up the markets, but doing it in a very gradual process. Areus, i do believe we strong in the market. We have a lot of opportunities to scale the joint venture the way we want Going Forward. Yvonne great to have you. Thank you for meeting with us. Asian ceosse is joining us here from the Asian Investment conference. , planning toourse double their profits from this part of the world by 2018. That is what we have at the moment. Helman sitohang from Credit Suisse. More from that form coming up in the next hour, talking about the future of american monetary who hasith someone intimate knowledge about it. Our exclusive with former atlanta fed president Dennis Lockhart coming up. Rishaad heidi this is Bloomberg Markets asia. Rishaad story by more than 80 of the end of the twoyear trading hold in hong kong. Heidi China Southern also taking off after discussing a sale with American Airlines. Rishaad the yen climbing to a fourmonth high, triggering a sellout in japan. Six nations say more time is needed to drain. A bit of a mixed bag out there with the hang seng up slightly. The Chinese Markets are doing ok. Sophie, have a look at the markets. Sophie we are going to get to what is going on in just a second. There is a lot to digest for investors today given the weekend news we had. We have the u. S. Health care bill not being pushed through congress, weighing on Health Care Stocks. Take a look at how equity markets are shaping up. Japanese stocks on the nikkei 225. The dollar is a fourmonth low in fact. Pessimism around trump being able to push through the economic agenda. We have weakness coming through over elsewhere in the region but hong kong now is higher, up. 1 . Stocks are gaining to. 2 . Here,. 04 . Ower focus look at stocks in with toshiba. We have a chart here to tell you how toshiba is resuming after falling after rising friday. It is about ¥211 right now. Westinghouse may file for chapter 11 bankruptcy as soon as tuesday, march 28 after meeting with american utilities and other stakeholders on monday. Toshiba directors are expected to meet during the week to approve this situation decision. Electric powera as a sponsor for the reorganization. We are seeing moves in the currency markets. I want to show you what is going on with the taiwanese dollar. Take a look at this chart on the terminal. We did see the strike the strongest level since october 2014. Taking the year to date interest 6. 3 . That is the most in asia after the korean won. The Dollar Strength at this for a day. The strength extending it dropped to 411 . Rishaad the two the first word News Headlines with linda. Seeking to raise 2. 1 billion through a listing in hong kong. Overities looking to offer 1 billion each year at a fixed price of 15. 84 hong kong according to the deal obtained by bloomberg. The pboc governor says china is preparing to further open a financial sector, doing so will involve negotiations about how other nations swing chinese investors. Areas of potential liberalization include banking and payment systems. He said chinese investors to get a private investors must be treated better overseas. Kaiser is surging in hong kong. Finally publishing results reporting a net loss of 89 million last year following 81 60 million loss the previous year. The release was a final condition required to meet in order to lift the trading hold. The growing love and Political Division in the city after a victory on sunday. Receiving 67 of the vote, and it figures. Critics say she is to complaints to chinas wishes. The first woman to be chief executive. Values such as inclusiveness, freedom of the press, and of speech, respect for human rights, and systems which have taken generations to establish such as the independent judiciary, well of law, and clean the government. Matters that we hong kong people find russias and are proud of. As your chief executive i shall do my utmost to uphold one country, two systems, and to guide our core values. Reporter global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. Opec and individual Oil Producers are considering a extension with six nations saying more time is needed. Five members of the cartel supporting a extension kuwait saying it should wait another six months after the current rim ends in june. The talks over the weekend were assured that complaints with current restrictions is high. Russia, weoment in conforming with the obligations. It looks likely Companies Want to show commitment and do not want to stand out among the groups committed and conformity. We are moving in the direction from the discussions that have taken place since yesterday. The momentumild on that is being gathered in the last two months. For all occasions we expect to see very, very high levels of conformity. Decisiond inform the on the duration of this decision. The question is, where do we go from here . Mohammed a couple of notable countries have gone on board. Willing tohey are entertain an extension. Iraq this week is saying the same thing as well. Moreare saying they need time to assess what is happening in the markets. Lingering in the background is the u. S. Situation over the weekend. In september 2015. When the ministers gather again in vienna we will get a clear picture as to whether those cuts will be extended. He is saying this extension on the supply curbs will be a given. You have these from russia and u. S. Sales. Given that picture what do you see coming from here . Moment, for a the slow move upwards around to 58 dollars per barrel, the demand picture is improving. The second half is always been seen as good for the market. There are some of the market thinking that prices may plummet to 60. If the cuts are extended. Theres a possibility for the end of the year we may see it again. Under a bit of pressure and should climb above 50 and slowly move toward 60. Still ahead of well be hearing from the former fed president Dennis Lockhart wife on the Credit Suisse asian Investor Conference in hong kong. A look at chinese politics and Foreign Relations with the foundations professor. This is bloomberg. Heidi this is Bloomberg Markets asia payment city. Rishaad im in hong kong. A business flash headlines out there, china up in the shares. Jumping after confirmation about talks to American Airlines. Thursday, american was prepared to make an investment. What about 200 million . Americans American Airlines and nonvoting seat on the board. A chinese insurer is looking to depressed its investments overseas. Going to place 100 million per year in japan. The company will report money with private funds, food, Consumer Products and increase investment return and manage risk as it has fallen against the dollar. Watchdogordering the to review retail electricity prices. Examining the behavior of our companies in both residential and business computers. As effectively as they get. Heidi the president of china and the u. S. Are due to take first steps toward building a personal relationship about a proposed summit meeting next month. Lets head back to the conference in hong kong, matt is standing by. This at length. This trust over she political issues. Also really tough to overcome. When you get tensions in the south china sea, north korea also cover getting the relationship between the u. S. As well as china. Im pleased to announce and welcome the professor of the policy of asian globalization. To talk more about this meeting, thank you for joining us. We would love to be a fly on the wall during this meeting tomorrow. You actually advise his staff as you are telling me before. This may not be the best idea for china. Why . Taking a high risk. They do not have a team to work nominated 70 and 50 of them have come from another congress. I dont think donald trump as a policy framework. Last but not least i do not believe there is a constructive consensus in washington dc. The country is one of the washington establishment are deeply divided. She takes a risk to go visit donald trump because it could be quite underproductive. It might be too late to step back but he proposed this should be the most formal meeting of possible between the two. What needs to be accomplished and what are the priorities . Donald trump is a smart enough to ask her to go to his home instead of washington dc. She will not be exposed to the strong position donald trump has in the washington establishment. She should make the visit as formal as possible which means not a private visit to his house or his family. She will bring his team approved by donald trump. To make it more like a formal meeting. An air of the states not friends. She has to make it clear where he stands and what he stands for. Free trade, one china policy, so on and so forth. Even though donald trump may not Henry Kissinger style of expression. That she is not going there. She would want donald trump to repeat to his own up to the. Ublic the one china policy what Rex Tillerson said in nota, based on corporation compensation. Try to Ask Donald Trump to resume the strategic and economic dialogue between the major powers. The two of the greatest powers on earth. Our you upset that the Trump Administration doesnt have policies that are fully framed. For now we have heard that he is going to of health the one china policy for now. The other issues such as currency manipulation, trade tariffs, those things of not developed yet. Why do you think that is . Asked the president is the leader of the United States. Cannotsident alone govern the United States. He needs a government. He needs a team. His ideas simply cannot and will not be translated into concrete policy. You cannot tweak your idea into policy. That is what is so important for policy framework. A talking point. A talking point should be within the framework otherwise how can you do it . Do not worry that about Donald Trumps ideas. When youre president you have two lead. You have to govern. You have to you need a team and the politics framework. We just cannot the form with the pboc. Unstoppable momentum right now. How can china fill this void . Neither United States nor china is ready for it. China is the number one trading nation. Continuous economic integration. Lets keep in mind, the United States a global power. Even though he talks about tough keep inrotection ozone, mind. It has to be down it cannot just be done by the government. If you ask a businessman and , as wally globally street for example. All the past president s, the backbone of the u. S. Economy, none of them will say we want his ideas because after all this kind of economic integration globalization was not any government policy but market forces. Nobody can change that. He is frankly on the right sided onong side of history the wrong side of history. Are we underestimating all a trade war . We lock into each other not because we like each other but optimize ourn interests and profits. Everybody in the business knows that. Like i said, this kind of situation is not created by government policy and therefore cannot be overturned by government policy. Donald trump can create some hurdles and can make it difficult to achieve before him himself to overcome this, i cannot imagine. Three cabinet members in charge of economy, former managers at goldman sachs. They know better than donald trump what to do. If you want a good best friend of china and the United States, his name is goldman sachs. Stay with us. We continue our conversation after a break. Coming here from the 20th annual Credit Suisse Asia Investment. Stay with us. Reporter youre watching Bloomberg Markets asia, life at the Credit Suisse 20 of adderall Asian Investments conference. Professor teaching law, we talked about trade. Lets talk about north korea now. The u. S. And china relationship Going Forward because we heard from President Trump saying china is not doing enough to reign in north korea. Has the burden been shifted to the u. S. . Paranoid. Corners. If youre right person will make crazy cents. Neither of them can do it. Thats why they have to go to china and the United States to talk to each other. It is not because we cannot manage ourselves, eventually i think to control north korea really needs cooperation between china and the United States because neither power can handle it. Both of them have one very important capability, capable of controlling escalation. They are the ones to prevent that from escalating into a confrontation. Think youd be responsible for beijing and washington to work with each other. That is why i was very encouraged to talking to beijing and more encouraged after Rex Tillersons visit. That is very encouraging. Reporter he also said that all options are on the table for north korea including some type of military response is granted. I think the u. S. Has the capability to do that but i do not believe the United States will go to war with north korea. Its will have consultation from three countries, first and foremost china and south korea and japan. How much has this soured the relationship between u. S. And china . That thee of terms u. S. If you look at the history and the past 20 years. That is the United States and china. They can always talk to each other. China, japan, south korea, the United States. In other words, north korea you have to be very careful when you handle it. Reporter lets focus on china politics. A big Political Year for china as well as the president s. Once he consolidates power, how do you see the president using it . Reporter he has earned the title. Chinese edition at the core. That means he really consolidated, he is dominating in two areas. Personal arrangements, very important for the upcoming congress. From the report that chinese leadership is now more confident in the ways of handling the economy. Least there is more unity among themselves. Joining us from the school of public policy. Rishaad thank you very much indeed. At the conference in a little while. Coming up, seven shares on the up after confirmation is with talks with American Airlines. Benefits of a potential deal. It is 10 29 a. M. In singapore. These are the first word headlines. Opec and independent Oil Producers considering an extension of cuts, six nation saying more time is needed. Five members plus oman supporting an extension. Ensure then kuwait level of compliance with current restrictions is high. China will lift its ban for m eats from brazil. The industry has been accused of bribing Health Inspectors to win approval for the sale of tainted products. The Brazilian Agricultural Ministry says egypt and chile are resuming meat imports from authorized slaughter houses. Angela merkel has strengthened her position ahead of septembers general election with the cdu Party Winning original vote. The wind is a disappointment for martin schulz, whose party saw a jump when he took over. Cdu increased its share from 35 to 40 of the vote. The Singapore Dollar is gaining as traders that the central bank will avoid easing. Of 16 economists surveyed thinks the bank will keep policy unchanged in mid april. The twoyear swap has fallen to the lowest in five years against the u. S. Currency, the negative spread indicating expectations that local dollar with strengthened. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. I am haslinda amin. Thank you for that. Some breaking news crossing the bloomberg, prosecutors and korea are seeking the arrest of the expresident. This is according to local media , yonhap, via text message. South korea, we have confirmation that prosecutors on seeking the arrest bribery allegations. The expresident was question for 14 hours last week by prosecutors as a criminal suspect in this corruption southl that has engulfed korea and resulting in the Constitutional Court upholding the Impeachment Vote come a so we are monitoring this developing story. Is resilient, hitting a fivemonth high, not moving much in the wake of these latest of elements. These charges of cronyism leading to the impeachment and that confirmation coming through that for arrestg sought on bribery allegations. Lets look at one Company Moving to the upside, China Southern a stakeng talks selling to American Airlines through h shares and give american a nonvoting seat on the board. Robert crandall says having a footprint in asia is a necessity. What this confirms is that all of the big u. S. Carriers will be making deals of one kind or another with Major Airlines all over asia, and certainly within china. So the consequences, is it a . Eaction oh, i dont know. I think the reality is like with the european carriers 1520 years ago, these things will grow and because of the Network Nature of the airline industry, everybody will play, and Everybody Needs to play. Rishaad Jonathan Browning is here to tell us more about this , but it does have legs, doesnt it . Does. China southern an american are playing catchup. China southern is the last of the big three Chinese Airlines to have a potential partner. American is playing catchup to delta. Delta has an agreement with china eastern. 18 , butcathay pacific what does it bring to the table for american in particular. Team, American Airlines is one of the founders of one world. They are in different groups. American will get an observer status on the board, not voting rights. It gives a useful partner when it comes to the potential networking effects that an airline needs. American has struggled with air rights between china and the u. S. , and the Cooperation Agreement like this having a partner like China Southern would be pretty useful. Ok, as you say, China Southern is the only remaining chinese character not to have a stakeholder by an overseas carrier. Is it too little too late in terms of being the last of dr. In that market . Adopter in that market . They want to consolidate and continue to take on outside investors, so there is still a real impetus from the chinese. Ide for a partner China Southern themselves were obviously benefit by broadening the reach they have available. Rishaad you want exposure to accompany that is now projected to become the worlds biggest Aviation Market by 2024. The u. S. Says why not get involved there. I guess it is a nobrainer. It is. For american, it has been a name , and im sure they were envious of what delta was doing with china eastern. China is set to be the most popular country in the world for air travel by 2024. They need to be there. Rishaad thank you very much indeed. One of theern is companies on the way up. At what isa look going on. Here is Sophie Kamaruddin. Sophie its turning out to be a mixed picture and asia, the final week of the First Quarter of 2017, shanghai, taiwan, and kl on the rise. Falling 1 . Yennikkei down, this is the trades at 110. 36. The dollar slumped to a fourmonth low. We have volatility picking up across the region. He nikkei 225 rising the most. Trulyrket is well and trading trump fallout with further to run. Currencies like the Malaysian Ringgit and the thai baht gaining. It is crunch time for the unable to it has been reach 442, but with a softer dollar, that could be the breakout to watch. Chart 7144. T this that new bearish trend in the dollar, the blue line on the chart, that is proving to be a tailwind for emergingmarket equities. That is the white line on the terminal. Emergingmarket stocks are seeing to continue outperforming by. Counterparts, dragged some of the updates out of the state with the health care being pulled from the floor on friday, and certainly some pessimism around trumps agenda. Thank you for that, sophie. Coming up next, the former atlanta fed president expects tothree rate hikes this year. We talk about the timing of this potential tightening with Dennis Lockhart himself. This is bloomberg. Haidi i am haidi lun in sydney. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. This is Bloomberg Markets asia. Rishaad i am Rishaad Salamat in hong kong. Conditions are weakening as tapco boost peaks of power supply. An increase in peaks applied to more than 47 million kilowatts. Proces uber has suspended itself driving car program after one of its Autonomous Vehicles was involved in a high impact crash in arizona. Yield to car failed to the self driving suv and the company is not responsible for the accident. Crash,was hurt in the and ubers says it is pausing autonomous tests until it completes investigation. Buying a state in old mutuals Asset Management unit. Of billion since the start 2016, paying 446 Million Dollars in two parts for a stake in om Asset Management, the first part completed within 30 days. A is brought in his portfolio beyond tourism and aviation. Andi u. S. Monetary policy the fed decision on the agenda at the Credit Suisse Asian Investment conference taking place in hong kong. Man is there with a special guest. We have a big week of fed speak, and were going straight to the source. Straight to the source, Dennis Lockhart, the former fed president for atlanta. He retired last month, but 10 years that the central bank. Moderate, butf a also a bellwether of where fed thinking goes. Im going to get his take on the fed at the moment. Great to have you here in hong kong. I want to get your take. Take us into the mind of the fed at the moment. They have signaled we will see a gradual path for hikes and policy tightening. Worry aboutneed to inflation getting out of control according to some of these fed speakers. Which you have supported that decision . I would have supported it. I believe the mind of the fed germanl represented by tenan yellens press conference. I think the committee is pretty solidly optimistic about the outlook for at least the mediumterm. Oft would be a continuation a moderate pace of growth. The other think i think that is affecting the committees thinking is that the fed is itstively close to statutory mandates of full employment and stable inflation as they define inflation, so being close, it is appropriate to begin to remove a little bit of the cultural accommodation that led up to this point. Youre saying there was a change in the data that may have changed the mind of the fed. What about the prospect for fiscal policy, do you think fed officials are factoring that in now . That is an interesting question. When the election occurred and , optimismsm spurted improved, i think some of my colleagues, and i was still an office at the time, factored in the affective fiscal measures on their sense of what the growth rate would be. Then, thence committee, my reading of the committee, is that many have backed off that assumption that the fiscal measures would influence the outlook, but they are somewhat more confident in theoutlook, so i think decision two weeks ago on the 15th of march, the decision was largely premised on simply what the data were telling them about of outlook independent fiscal policy. A timewe are coming at when after friday we saw quite a big blow for President Trump and the republicans when it comes to repealing and replacing obamacare. Does this set for to test now have whether the Trump Administration and the president can perform when it comes to progrowth policies . In the markets, i would be thinking about adjusting my assumption in terms of the speed of fiscal policy come then i think there is the larger question of what is its actual impact and how will that impact play through the real economic activity. Outcome of thes health care nonvote, health , suggests that maybe reality is that things will take a little bit more time, and they will be a little bit more it will be more difficult to get to the fiscal impact of that was assumed in the surge of optimism just after the election. If you were still a voting member, i have to ask the question, where your. Would be. Would be. S dot there seems to be consensus of 23. Bill that lay saying, look, we will not be too harsh on that. Where would you pencil in . Where i would have come out, fori guess it is worthwhile me to point out that i started to do with the assumption of two moves, and of course these are not set in stone plans. Forecast atst ones the time here they are not a commitment. I would have adjusted mine to think thes, and i strength of the economy justifies that, and therefore to more moves in the course of the year, probably one midyear, and one later in the year. That is where i would have gone i wouldve stuck with an annual growth rate of little better than 2 . The atlanta fed gdp, the tracking estimate, for the First Quarter of 2017 is really quite low. Again we may1 , so be seeing the repeat of a weak firstquarter followed by a stronger Second Quarter and a stronger second half. That is the pattern we have seen for some years, so i would probably be taking all that in saying i still think to bring moves more is reasonable. Think two more moves is reasonable. Yvonne we are very close to the inflation target right now. The fed will become trouble with that level. Is that warranted . Is there a risk if it could be behind the curve . I dont see the fed behind the curve. I think the satisfaction that the numbers are still a little below 2 but moving in the right direction, that is the key thought at the moment. If i were in office i would not be worried about being behind the curve, which i a riskean to be taking with inflation getting out of hand in some way. I think the committee should be satisfied that the numbers are showing pressure that will move the inflation conclusion to close to target this year or early next year. Stick around for us. Joining us here from the Credit Suisse Asian Investment conference. Stay with us. Lets continue our conversation with Dennis Lockhart, the formal Federal Reserve president of the land to fed. The conversation on inflation and i wanted to continue on with that. What is still missing when it comes to the fed mandate . We still see wage pressures timid at best. Issue,yment, still a big are there still targets, room here for some of these indicators to hit the target . Well, you start with the. Efinition of full employment reasonable people will have different opinions. I am of the opinion that the headline number of 4. 7 is reasonably close, but of course that includes quite a number of people working parttime who. Ould prefer to work fulltime that certainly includes differential effects for different ethnic cohorts within the economy, so it is not an unreasonable position for someone to take, that there is still room for capturing more. Ains in the employment picture some would say that is an overshoot of full employment. Others would say no, it is simply moving closer to full employment. I think that is a reasonable debate. Is it time for the debate when it comes to the Balance Sheet . They have so far delayed doing anything when it comes to tapering the Balance Sheet, but is that a story for 2017 . Remember the term that has been used in fed communication is ceasing reinvestment, which would be the first step in dealing with the scale of the Balance Sheet would occur when normalization is well underway, so the question is, what is well underway . 200 basisure that 75 points, the current range for the policy rate, is well underway, but i think another couple of moves and the Balance Sheet questions ought to come to the fore and the front and center for the committee so in the course of the year, the committee to be thinking through what its plan up to the fourth the gradual reduction and scale of the Balance Sheet or not. If not, it will be that the thought his Monetary Policy will be conducted in the context of a large Balance Sheet for quite some time, so there are a lot of questions to be answered in that respect. I expect the committee is deliberating on those questions and will be deliberating on those questions. Yvonne you said it would take years for the fed to start to normalize its Balance Sheet, so what would be the process behind that . It would take a predictable manner, which the fed has forecasted, but how would you mitigate this without trying to bring up financial conditions and tighten conditions . There are a lot of options and the committee will deliberate on those options. Step one is sees reinvestment, reinvestment, then allow runoff to reduce the scale of the Balance Sheet in a natural way. Then the question becomes will conditions allow or even require an actual asset sales. Asset sales imply some capital losses on the part of the Federal Reserve, which are not the end of the world, but something to think about. I think the most likely approach will be the natural approach, which is seethree investment and allow runoff based upon the maturity, schedule of the holdings, so it will still take several years to get to a lower level. Yvonne what could the fed due to bring up productivity . I dont think there is a great deal that Monetary Policy can do to enhance growth and productivity. I think Monetary Policy will create the conditions. Some thingse are that fiscal policy could conceivably do that would enhance productivity, but the underlying question is the profound question. Do we have the forces at work in terms of technology and Business Investment to actually improve the growth rate of productivity . The most likely thing to improve productivity growth is conditions that encourage Business Investment. Nexte which leads to your chapter, which is an for structure. We will get to that another time. Dennis lockhart, great to have you. Back to you guys. Ok, taking a look at markets, down at the moment. We will be looking at that, and david is updating us on the stories of the day. David it is a stock pickers market. One of the that are performing stock, the bestperforming across the asiapacific, we will look at why and whether it is too late to get in. We will look at everything happening in the markets. Index, make or break. We will talk about that next. This is bloomberg. David it is almost 11 00 in hong kong. Y name is david ingles welcome to Bloomberg Markets asia. David right, here we go. The yen hits a fourmonth high, selloff in tokyo. Fed speeches, important data out of china. Consider extending cuts, sending more time is needed to drain the global glut. Korea, prosecutors seeking a warrant to arrest the former , accused park geunhye of corruption. A lot to consider in the markets, but at the center of the story, a big gap for down in the u. S. Dollar in reaction to what didnt happen in washington on friday. How does this take is for when you look at the levels across the currency space in asia. Have a look at this. We are looking at dollarwon. Why . Death cross. Imminent . Maybe. 200have this 50 day and day, so you might cross that at some point. Wo won north of this level. Given the pace across markets, do we get there . We have to start about the impact if we remain at these levels for a currency like the south korean won on the economy. , we are getting a strong move in the markets. When do we start expecting policymakers to step in our try to soothe the markets. That said, we are nearing the end of the First Quarter. Let me shift to this quickly. Despite everything seemingly wrong with the world, asian equities excluding japan are still on track, still on track for the best quarter going back 2010. The closest one was First Quarter 2012 at 11. 5 . 2010, 17 pop in the third quarter. That is where we are at the moment. A lot could happen in the next four days. At the moment, good for asian Equity Investors them a drop in the correlation between where we are here and what is happening across developed market stocks. It is breaking down correlations across markets right now, so we will be flushing this out for you. In the meantime, paul allen with first word news. Chinas third biggest brokerage seeking to raise 2. 12 billion through a listing in hong kong. Guotai junan securities is looking to offer just over one billion h shares at a fixed price. According to the terms of the investorserstone two groups. The pboc says china is preparing to further open its financial sector, but doing so will involve negotiations over how other nations treat chinese investors. Said areas of potential liberalization include banking, insurance, securities, and payment systems, but said chinese investors, particularly private investors, must be treated better overseas. Opec an independent Oil Producers are considering an extension of output curbs. Five members of the cartel plus oman support the extension, with kuwait saying it should be six months after the Current Program ins in june. The talks in kuwait assure the level of compliance with current restrictions is high. At the moment in russia, among our corporates, all companies are conforming with the obligations which they themselves bestowed upon themselves. It looks like all the Companies Want to show commitment and dont want to stand out among the full group which is committed and conforming. Rosalind Angela Merkel has strengthened her position ahead of the general election with her conservative cdu party. The result is a disappointment for the new social democratic leader, whose party saw a jump in the polls when he took over. The cdu increased its share of the vote from 35 to 40 , while the spd fall is share saw it share fall marginally. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. I am paul allen. Thank you. Now, looking at the markets, well, we could be looking at a better start, but this is what we have. Markets phase, yields on the way up, so a decent session as far as fixed income, but Everything Else comes down to the dollar and what is happening across the currency space, right . Sophie it is still early monday, so dont jinx us just the gmm take a look at function on the terminal. Volatility up, the kospi falling, but not much reaction to the decision to arrest park geunhye. Dollar slump, yen on the of the ascendancy. S p futures are also looking week, the u. S. Benchmark on track for its worst month since october. As markets are digesting with what we saw friday, traders seem sanguine about how deep losses could be this week as focus shifts to capital tax reforms. Trump in congress cannot afford another humiliating defeat. Emergingmarket stocks are climbing, set for again. You have the yuan rising to a fourweek high, the pboc fixing the yuan by the most in a month. The ringgit is eyeing that for 42 support level. The taiwanese dollar. 4 , the strongest since october 2014. The function here on the terminal. Slipping despite earlier gains it made following the weekend news opec may consider extending the curbs around production into the second half of the year. We have Health Care Stocks materials dragging 1. 3 . Iron ore miners falling in sydney. That is offsetting gains made by gold miners tracking that rise in bullion. In in all, read in asia terms of how sectors are playing out, but still a mixed bag, early in the week. Perhaps. David sorry to jinx it. Didnt mean to. ,hen you look at the iron ore 4. 3 down when you look at the contracts. Lets move things along. Our top story, south korean prosecutors seeking a warrant of park geunhye, accused corruption, was questioned at length last week about the scandal. We are joined by our asian government editor dan kincaid. The news broke a few minutes back on this development. What does this mean for the investigation . It has been going on a while. Special prosecutor, about 40 indictments already related to the scandal. Park managed to avoid that by having immunity when she was president. Of course she was kicked out this week and prosecutors move swiftly to bring her in for questioning come and now requesting the arrest warrant. The next step is they will have to approve the warrant, then they have a certain amount of time to issue an indictment, which will bring the charges and potential trial. David when that happens, this will explode. That said, we will get likely public reaction now. What will that look like . She has had people supporting her when she left the blue house. She was met by a contingent of supporters, but Many South Koreans believe that this is a justified action on the part of the prosecutors. They have been rallying months now, millions of people looking for to this day when she would go from the blue house to being detained and facing the music. Ofid i guess representative this backlash against elite. What does this mean for the economy and the country in general . Be interesting how it plays out in the election campaign. The parties are just now holding primaries, so the first rounds of voting have happened already. We should know by early april how that plays out, but there could be a backlash in the sense that her supporters, the question is do they rally around the conservative candidate who would take on her mantle . Do they feel the state as being too harsh on her . That is how this trial could play into the election. David we will get the usual realignment as we moved to the campaign here. The latest out of south korea. Up, the bestperforming telcos stock in asia. Drivers also to thank as far as that is concerned. We will hear from technical index, 99 islar make or break for that benchmark. This is bloomberg. David this is Bloomberg Markets asia. Stocks jumping after a confirmed talks it will sell a stake to American Airlines to the stock had been suspended since thursday when bloomberg reported american was prepared to make an investment. 200 Million Dollars will be through China Southern h shares listed in hong kong, giving american a nonvoting seat on the airline board. Sticking in china, big companies, chinese insurer ping an looking to diversify, placing a hundred Million Dollars a year in japan, putting money with private equity funds that invest in sectors like food, Consumer Products, maybe even health care. Is looking to increase investment returns and manage currency risks as the renminbi has fallen against the u. S. Dollar. The Australian Government has ordered its watchdog to conduct a review. The inquiry will examine the power of Power Company contracts or both for residential and corporate customers. Saysrime minister electricity markets dont appear to be operating as effectively as they could, and initial findings are expected within the next six months. Lets check back into the markets. One thing i like his numbers dont lie. The charts are helpful to have a look at perhaps what they are telling us. We are now joined by tom schroeder, managing director at chart heart mirrors. Thank you for joining us chart partners. Thank you for joining us. We were exchanging ideas last week, and when you brought up dollar index at 99, it was far from that a few days back. Look at where we are at the moment, 99. 28. You are saying this is a make or break level for the dollar index. Actually the shorter term signal was below 101. I started to shorts and dollars against various currencies like the korean won and some of the emerging markets fx. Im holding on to some dollar longs from 102, the euro from 1. 11. Supporte price pattern should not break that. If the dollar will move higher some trouble had with trump problems and the yields backing off substantially from the treasuries, but that level will be important. We should be able to hold this if we are in a bullish type of environment. David how does the fed bacon to all of this . The projection here we are seeing a lot of people are starting to reap price more support from the fed and we might not even get three this year. How does that all bacon when you look at the charts . In when you look at the charts . Ecbhe market is pricing the taking your foot off the gas pedal. But may in fact keep qe, start to raise interest rates, because they have inflation troubles coming their way as well, so there is some discrepancy, and the dollar is having trouble. With trump problems come of that gets lack of confidence to the dollar right now. To the s p brings us 500, because a lot of people are looking at that market. That has stalled. You correctly called 2400. Could we go from here for the s p 500 . Do we stay away and come back to asia . The really prefer, at dollar is going to break that 99 level, the s p will have trouble climbing again. You are seeing some momentum problems. What we dont see is the advanced decline line, the stocks trading above their 50 day averages and 200 day averages have been declining substantially, so my call was protection for a late march bottom. It looks very interesting around 2320 on the s p. 2290, belowk to 2280, we have bigger problems. I am expecting the internals start to improve before i want to jump back in, but i will nibble at 2320 with a more aggressive level around 2300 with a stop at 2280. I think asia represents better opportunity given the wobble of the trump confidence level. David so where does this take us into the summer and perhaps into the fall . Highs, 2450,recent and then see a massive pullback down, perhaps bear market 2100 . I think my base case sequences for a move from lets say 2320 back up to 2450 four final top in the summer. If we break below 2280, i will adjust and we should be slipping back to 2100 or lower. My base cases 2450, then we retreat to 2100 with risk to maybe 1820 or so, so im looking for a big correction from that 2402 2450. I was selling exposure above 2370 in late february, so that worked well for the correction march. Ofid correction call march. David a few weeks back, people were talking about this break above 2. 6 . We did a peekaboo, but it was a false positive, if you will it what is the outlook here on the 10 year yield . What levels are we looking at . 2. 35 , that area was the recent lows on yields, and that should hold given another two hikes. The market has backed off a lot. It surprised me somewhat than we actually went that far below 2. 4 . I was looking at 2. 4 . My upside levels are 2. 74 and 3 later in the year. I still believe in the higher yields scenario. I dont want rate below 2. 3 . Wrong,ould be something and that would be more of a confidence issue of those major lows, heading to that fourth low. This is a serious test for the bond market, and that will reflect incredibly on the dollaryen, nikkei, and emergingmarket equities and fx. David before we moved to the nikkei i want to pick up on one last point on the tenyear treasury. What would you consider a clean break of 2. 35 and to the upside, how long do we get to 2. 7 . 2. 6 was enough to handle already. Well i think it would probably be just a low 2. 3 or the recent low we saw a few weeks ago or last month. That would be the level i need to hold. Below that there would be something terribly wrong, deals would weaken further, the dollar comes up harder, the s p may have more trouble, because in the s p we have seen things like the transports come off. That is a trump trade. We have seen the financials come off. That is a yield trade. We have seen small caps because tax problems. We see the dollaryen breaking is seekingand that out the 110 to 109 area. David plus we are entering the quarter, see wicked Japanese Companies buying yen to repatriate into the country. We will continue our conversation after this break and talk about the implications on the japanese equity market as well as what we are seeing in hong kong. We will be talking about that next with tom schroder. He will stick around to it stay tuned for that one. This is bloomberg. David lets continue our conversation with tom schroeder, managing director at chart partners. You for sticking around. Japan, below 19,000 on the nikkei 225, the bloomberg chart for our viewers. It is a big if really. Yes, you could argue we see a break out, but a lot of that will depend where the currency ghettos. Right. Exactly the dollaryen has broken 112, and that change my view. Int week, i had recent longs the nikkei. I took some profits and had to cut loss on dollaryen, but i think it is important that the nikkei did not break 19,500. It tried three times and after so many weeks of consolidation, normally that consolidation pattern breaks higher. At the dollar yen is breaking lower, that does increase the Downside Risks and i said we will go to 18,500, them below that i would be looking at resetting. The nikkei has held up incredibly well compared to the dollar weakness in the so im looking at that files and relationship to where it the dollaryen does bottom at 110 or lower, then we will have a trade higher in the nikkei. Part of that is due to the global bullish cycle we are seeing correlation in asia. Asia is looking more supportive, so the nikkei is doing better than the dollar. David china though, this is one index, the shanghai composite. This is 7135. It has not done anything since the massive crash in 2015. In fact, the summer there. I mean, what are we doing here . There is a tight range. What is your call . Yes. Well, i tell you the whole bottom, the whole sequence up from 2015 resembles a choppy rising channel, and that typically is correct it. I expect another push up on the shanghai composite. I have supported 3180 on trend is a strong price support. At 3400, 3380 come i will turn from long to short. Doesoverall rising pattern imply this is a major corrective rally and it will start to break lower again in the second half of the year. David very quickly, hang seng index, city out with its latest forecast, bumping to 2500 for this year. 2400 has been a challenge for the hang seng index. What you see coming out of this one . Quite a few years now we have had Trouble Holding gains above and 4000. We are about that. We are struggling a little bit in hong kong, and there is a big property component reason why that is happening, but that is where the u. S. Yields break or make scenario falls into play, but the hsi moving up to 25,200, that is my target for the summer lets say in may. I think china a shares and h shares will start to lose steam in may ahead of the global cycle in june, so in fact in parts of asia, the weaker parts in april, we may start to see some markets fade. I think h shares represent a better opportunity if you are playing a shares, but hsi still has some work ahead of it to get to 2500. David absolutely. Thank you for joining us on the program. That was tom schroeder, managing partner at chart partners. We are counting down to the reopen in tokyo, hopefully better than the morning session. That market was whacked. That is because of what you see at the bottom of your screens. 110. 39 on dollaryen. That reopens in three. This is bloomberg. I am paul allen with the latest first word news. Seeking toecutors arrest park geunhye. She was question last week and is accused of pressuring a business to do donate millions of dollars in return for government favors. The scandal has roiled jay y. Lee. Trouble chinese Property Developer kaisa surging after a twoyear suspension. Results, a loss of 89 million last year, following a 160 million loss the previous year. The release was the final condition kaisa required to meet in order to lift the trading hold. The Singapore Dollar gaining as traders bet the central bank will avoid easing. All but one of 16 economists surveyed thanks the bank will keep its policy unchanged. The twoyear swap has fallen to the lowest in five years against the u. S. Currency. The negative spread indicates expectations the local dollar will strengthen. China will lift its ban on meat from brazil monday. Brazil accounts for 20 of global beef exports and 40 of chicken. The industry has been accused of bribing Health Inspectors to win approval for the sale of tainted products. The Brazilian Agricultural Ministry says egypt and chile are following china and resuming imports. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. David thank you. Lets check in on the markets. Japan reopening. Initial bids a little bit off lows of the day. Hopefully this thing improves. Theie we are seeing decline in the nikkei 225 ease somewhat, still lower 1. 4 , back below 19,000. Earlier,hroeder said if the yen bottoms at 110, we could see a lake higher for the nikkei. Composite,ghai extending gains for a third day, but in hong kong, a losses of. 2 . Guest earlier also mention hes looking at the hsi climbing to 25,000. Iti did revise upwards their target for hsi. Kaisa jumping, a welcome return by investors. Take a look at what is moving on thats beeng, swinging between gains and losses, but now the hang seng index in particular, shares falling. Your guests sees shares losing steam ahead of the global cycle. Ke the biggest laggard today. China Business News reporting the real estate player is considering a change to its board of directors. It has listed a profit thanks to the housing boom, but high profile ownership fights have led to uncertainty. Other stocks falling in hong kong as well. Great walls chairman said it for the north American Market in the u. S. Sales ofl is to start their premium brand that the shanghai auto show. David we are waiting for pricing their given fierce competition. Thank you. Right, the oil markets, one of our bigger stories his opec an independent Oil Producers past juneg extending for curbs on output. Members of the cartel had been meeting in kuwait city, where yousef gamal eldin is life. Talk to us. What are the talking points . Do we get an extension of these cuts . We are now expecting it to happen. At this point, going into this meeting, this was never meant to be a policy decision, making committee meeting. It was meant to be a review of compliance or conformity. Given some of the Shifting Sands and global oil at the moment, the rising inventories and like of impact off the back of this agreement, remember all the gains have been reverses the deal was struck late last year, so we pay close attention to ministersvery word have been saying, and in terms of compliance, they are pretty happy with where things are at. Lots of pats on the back, lots of praise, 106 for opec members , 64 for nonopec, but any of the voices in terms of concerned, they quashed of those and are confident that number is going to bounce back. The other factor was the picture and terms of challenges, and they did cite the fact there are rising inventories, refinery maintenance, and low seasonal demand. The Kuwaiti Energy minister had this to say in terms of what they are looking for exactly when it comes to inventories. What we are looking for is a fiveyear average of inventories. 285 stands right now at above that fiveyear average, so start goingentory down, hopefully we will go towards the fiveyear average of which we hope to reach around the end of the third quarter. Even though on the sidelines of the meeting, a lot of opec members have been vocal about the need for an extension, the fact there is still so much oil out there. Nobody was able to comment as to whether they would be open to refining the agreement, amending quotas even further. The russians are saying well until the data comes in. Early and the inventory drawdown is not expected to materialize in numbers for another month or two, so waitandsee as far as they are concerned until april and the formal meeting in vienna to make a call as to whether to extend or not. David absolutely. At some point, the math has to make sense. You talked with the Energy Minister of kuwait. They had a target for where inventory should be are what the ideal levels eventually should be for opec. I know nothing has been hammered out as to how much those cuts should be or how long these output cut should be extended for, but are there any numbers you are hearing from where you are . At this point. Again, the question is extension or not extension. In terms of numbers, 34 months from the algerian minister, but the base case is for an extension of the same timeline, and ultimately they are going to be looking at making an impact in making sure the inventories drawdown. They are confident this will work in their favor. 13 under 13 Analysts Expect that extension to happen. Orrgy aspects are saying rise above 60 a barrel is likely if they go ahead with the extension. Counterfactual game and ask yourself if the extension doesnt happen and inventories rise and opec fails to react, then where is the floor and what can we expect from this group in terms of reaction, so plenty to keep us on the edge of rc. So many moving parts to this. That was yousef gamal eldin life out of kuwait. Top of the hour, joining me for Bloomberg Markets middle east. Been joined by some gas at the Credit Suisse Asian Investment conference. One guest remains optimistic for growth in the region. I think the Client Sentiment is turning. Last year, youve seen some of the political events. I think those are behind us now. Morenk clients are seeing active strategies. We see interest into asia again. I think we will see better markets and what they had last year. Talked abouto president xi jinpings muchanticipated trip to the United States. The president is actually taking a fairly big riskier. Risk here. Not beinping will exposed to the opposition trump is facing. Impress xiat, he may jinping and visiting him. I think we should make the visit as formal as possible, meaning not a private visit to his home or his family. President xi jinping will his bring will bring his team and President Trump will bring his team to make it more like a formal meeting, like to heads of state, not friends. Said heennis lockhart would have supported the most recent rate hike. Yvonne man asked him whether inflation is a concern. Would havenly supported him. I think the mind of the fed was well represented by chair yellens press conference and the statement that accompanied the last rate move. I think the committee is pretty solidly optimistic about the outlook for at least the mediumterm, and that would be a continuation of a moderate pace of growth. The other thing i think that is affecting the committees is the fed is relatively close to its statutory mandate to full employment and stable inflation as they define inflation, so being close it is appropriate to begin to remove a little bit of the ultra accommodation that led up to this point. Youre saying there was a change in the data that may have change the mindset of the fed. Arctic conditions were favorable at the time. Do you think fed officials are factoring that in now . That is an interesting question. A few months ago when the election had occurred and the optimism spurted, optimism and , i think someoved of my colleagues, and i was still in office at the time, factored in the affective fiscal measures on their sense of what the growth rate would be. Committeence then the come my reading of the committee, is that many have backed off of that assumption that the fiscal measures would theyence the outlook, but are somewhat more confident in the outlook, so i think two weeks ago, the decision on the decisionarch, this was premised on what the data were telling them about the outlook independent of fiscal policy. After friday, we saw a big blow for President Trump and the republicans when it comes to repealing and replacing obamacare. Does this set forward here test now of whether a test now of administrationmp can move forward in terms of progrowth policies . Would be thinking about adjusting my assumption in terms of the speed of fiscal policy, and i think there is the larger question of what is the impact and how would that impact play through to real economic activity. Theink fridays outcome of health care nonvote, the health thatsituation, suggests may be reality is that things will take a little bit more time. Be, it will be more difficult to get to the fiscal in thethat was assumed search of optimism just after the election. That was the former atlanta fed president Dennis Lockhart speaking to yvonne man. We have more guests come a big names, coming up from the conference on tuesday. 8 00 a. M. Hong kong time, there ceoo, the Credit Suisse joins us. We will hear from the former chairman of the White House Council of advisors under president bush, Glenn Hubbard joins us at 9 10 hong kong time. , 9 40 in york. 11 30 hong kong time, we speak to that managing director of oil surge, the longest ceo of all firms listed on asx. Stay tuned for those interviews on tuesday. Brexit,hat, coming up, how negotiations wont keep the eu down. That is next. This is bloomberg. David a quick check of your latest business flash headlines. Has suspended itself driving car program after one of its vehicles was involved in a high impact crash in arizona. Police say the other car failed to yield and the company as not responsible for the accident. No one was hurt in the crash, and uber percent said is pausing testing until it completes an investigation. Na group adding to a shopping spree that has top 30 billion since the start of last year. Million foring 446 a 25 stake in om Asset Management and will be completed within 30 days. Hna is broadening its portfolio beyond aviation and tourism. Government says facebook should open up encryption of whatsapp. British newspapers say the man who killed four people new Parliament Last week use the Messenger Service before the attack. Amber rudd said it is completely callingable that it is executive meeting next week. , portugalst economy minister says negotiations must not be allowed to drag down the rest of the union. , he saidto bloomberg the block should focus on making the talks successful and then move on. Is going to be bad for all, but i think in the next two years for the next five havinge have to focus on a good result from negotiations but also have to focus on moving forward. Drive to the the only agenda being brexit. Should be that europe leaving his an agenda of opening to the world, of negotiating with asia, of being part of this initiative of one belt, one road and establishing links with but, not only china, india, brazil, argentina, and establish trade talks that give serious results. I think if we drag into a negative discussion only about are we are going part is we going to waste a lot of time and energy only on negative issues. How much damage to see from the recent comments by the euro Group President when he pitted north versus south and what has been called sexist, racist, xenophobia comments. Does that does all unity that the euro group needs to have heading into these negotiations with the u. K. On brexit . I dont think we can let the euro group be divided in that way. For that reason, the best person and does out of euro not represent the euro group. One of the worst things that some european responsibles have done in the past is not being meters and trying to surpass their own difficulties being leaders and trying to suppress their own difficulties at home by blaming other countries. So he should resign . I think it would be the best thing for europe and the best thing he could do. He just lost an election. I think you should not be trying to blame others for his own failures. David and also speaking at the form with the former commerce secretary of the United States, he told bloomberg that although President Trump was finding washington frustrating, he is right to move on when things dont go his way. I think it was a wise move to say lets pull the bill and lets go on to something else, because if not, he would be there for three years and everyone is expecting that tax reform. That is why the stock market was up, and that is why the stock market is down today, that there are questions as to whether he can pull that off. Taxcutting combined with protectionism a disaster waiting to happen . That is the biggest issue, right . Defense spending goes up, taxes come down. We want to spend 1 trillion on infrastructure, and pay for it through a border tax. Now that border tax could very well create a protectionist andiment across the world, that could undo everything the is aeform will gain, so it quandary, and he does have a jigsaw puzzle to figure out, and it is not an easy budget to figure out. He made a Campaign Promise to get rid of obamacare, so he spent his first Political Capital in the first month there. He has to do something about nafta, so now he is forced to do something. He was very aggressive about china. He has to do something. The trick here will be can he do something that will satisfy his base, but not impact the economy. How long does his mandate class . He is not only polarized between democrats and republicans, but has split republicans as well. You are on record as voting for hillary clinton, and you are calling that plan by donald trump at least in the campaign that would be to economic disaster, so how long does this mandate he has last . I dont think there is a lot of time. I think that people want to see results. Gate soout of the strong that people thought this is for real. We will start to see things very quickly, and he is finding that nothing moves that quickly in washington. How about tpp . To think tpp can survive without the lead signatory, the United States . I think it is very doubtful, but whatever it is we are going to do, we need to get started. We cant just ignore trade. Lysing,asia is regional ,nd rcep is becoming a reality and asia will become a regional trading block over the next 10 years. David coming up on the program, driving asias bestperforming stock, how apps such as cooper uber, youtube, facebook have given one Telco Company a boost. That is up next. This is bloomberg. Asias bestperforming toco stock this year has enjoyed a boost from bluebird drivers and users of mobile phones. Indonesiasng about. L axiata group why . Haslinda it is all about data demand. Engine of anyth Telco Companies business, and especially for xl axiata group. Give attempting to users the fastest data in knee should. In indonesia. It has only 50 of market share. ,ts next biggest competitor its users pay 40 more on data consumption, so not surprising that investors are buying the story. Take a look at this chart. Of 42 percent today, outperforming its competitors, and clothing including china unicom and 5k telecom. It says it is no longer about providing the cheapest price. It is a balance between price and performance, and customers like uber drivers and millennials are willing to pay for a faster network. We all know how frustrating it is to have offering while trying to access video data. We dont we want speed, dont we . Give us a sense, millennials, customers there in make into how do they this story about datadriven services and where we are with the stock price . Haslinda lets put it in perspective. A thirdals account for of the population in indonesia, so data consumption plays a significant role. When you talk about indonesia, it has the secondhighest number of facebook users in all of asia , so xl axiata has ensured its network is less congested. Biggest data capacity per user, twice as many transmitters per 1000 customers than its rival, and now it is exploring other ways to grow with an increasing middleclass and deeper pockets. The question is how to get more revenue. That is the question that axiata wants to address. David thank you for that. Xl axiata will hold at about 50 per barrel just barely as producers consider extending the cuts. Time is needed to drain the global glut. A the japanese yen hitting high. We have a lot of data out of china. The dollar is going the other way, putting pressure on middle eastern markets come as well. Theres concern