Transcripts For BLOOMBERG Bloomberg Markets Asia 20170424

Coming to an end, partial deal with abu dhabi could be announced later. Rishaad reaching for the stars preciousraces on for resources in space. Lets get to the here and now. Its all about that French Election. Having a look at the reaction to this, 10year treasury yields screaming higher, 2. 3 , the euro moving above a 200 Day Moving Average against the yen. Asdo have more clarity perhaps not a populist leader coming through in france. That could allow mario draghi to do something with his tapering program. ,urther momentum for the euro bullish gaps from a technical standpoint that need to be filled at some stage. Also looking better when it comes to the boj as they head into their policy meeting alongside the ecb this week, governor kuroda getting rest fight respite with pressure , driving asian equities higher in terms of price action in japan. A sigh of relief for the markets that we have this progrowth, proglobalist options going into the election in france. The pboc governor has said chinas expected growth target of 6. 5 is within reach and Financial Risks are under control. Writing on the imf website, officials would maintain what he called prudent and neutral Monetary Policy and fully confident preventing and illuminating threats. It wille house says offer an outline of its tax reform plans this week, but specifics may not be ready until june. President trump told 28 million twitter followers, big tax reform and tax reduction will be. Nounced wednesday Mick Mulvaney admitted the full plan would not be ready for a couple of months. U. S. Treasury secretary Steven Mnuchin says the imf outlook for the economy is a little conservative as he repeated the administrations goal of 3 growth or more. Reiterated its forecast that the u. S. Would grow at 2. 3 this year, however he said the u. S. Is wellpositioned to expand faster, and that would help a wider Global Economy. Sustained u. S. Economic growth is good for Global Growth. So if we can grow the u. S. Economy, that is not just good for the u. S. Worker, that is good for International Growth as well and creates opportunities, so that is what we are focused on, and i think if we do a good job, it will carry over in the spillover. The ecb may be willing to move towards a qe exi faster than we thought. T faster than we thought. Of march, mario draghi said tapering was not on the agenda, but strengthening the eurozone economy now seen as changing his strategy. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Rishaad our top story, france woneurope, Emmanuel Macron round one with 23. 9 of the vote. Old,ntiyear antiimmigrant national is Marine Le Pen came in second with 22 . Emmanuel macron is projected to win the run off handsomely. I would like to say a robust what my responsibility is, and if i am full of joy, i know what it means. I will carry on with optimism, enthusiasm, and faith in a country in europe. Haidi you heard that clear reaction in the euro, the highest since november, and that relief rally we saw across asia giffen pressure coming off safe havens like the yen. The hikers of these polls going into the runoff vote, and also whether we will see the euro trade range bound until then. Sophie has been looking at the Market Reaction. Maybe not a super strong indicator of risks or risk catalyst, but certainly positive reaction in the asian open. The vote is seen as a positive catalyst of sorts. We may see that relief rally stop with other event risks on the horizon, u. S. And focus, whether trump will announce his tax reform on wednesday, also whats happening with the equities markets, a pop in japan, up 1. 3 . Sony and panasonic leading, sony jumping better than its better than expected results, so x orders, Electronics Players rising on the weaker yen. Earlier, a twoweek high against the dollar, the safe haven currency falling against the euro. The yen is not sustainable of fed 110 is a more hawkish has failed to spark dollar buying, geoPolitical Risks still remain. At auro is trading fivemonth high, although paring earlier gains. Lets look at the bond space. On see notes tracking treasuries as havens losing their appeal, bonds sliding across the curve. The 10 year yield is 2. 31 , and the twoyear rate is up seven basis points, the biggest rise since december. We are also singled tumble the most in seven weeks, other than percent as the euro advances. When it comes to volatility, that is getting crushed as the showdown between le pen and macron melenchon is off the table. Dollar volatility has dropped the most on record, while risk reversal sort of the most since 2003. That includes a second round of frenchin may, but elections may prove to be a positive catalyst, maybe short lived, but remains to be seen. Interesting moves when it comes to volatility here. Rishaad thanks for that. The investment director for Fidelity International is with us now. The polls got it right. So tell me, how do u. S. A fund manager look at this. It is almost as though there will be calm coming into the markets. We are over the first hurdle from a Global Political politics point of view, but lets not forget we still have may 7, and japan is still not out of the picture, so it is time to focus on emerging markets, risk on is japan. Ia ex stay true and stick to your guns. Rishaad we have been told that macron should win this hanley. Hat frees up this handily that frees up mario draghi. Then we have an environment where we have rising rates in two of the biggest economies in the world, inflation tamed and growth coming back, so maybe returning to the old normal. Exactly. It will the about fundamentals and valuation, so what we are seeing in asia is returned to fundamentals. Macro data has been quite encouraging, signs of better data coming out consistently now, and when you look at valuations, Asia Ex Japan 13. 2 times and pricetobook still quite and a wide universe of companies, so bottom of this still good. Some of these markets like china, india, selective asean where the domestic consumer is driving growth, that is what we are encouraged about. I want to bring up this chart which shows you clearly going into this weekend vote, 7550, the yen preferred hedge against euro declines, the level around brexit time. Does the outcome over the weekend and assumedly a victory in the runoff for macron strike you as a hyper catalyst for more risks are to suppose back to neutral . We think it is somewhere between neutral to a little bit of calm coming through. Geopolitics is here. The will be pockets you keep seeing in packs from, but at the aboutime, it is still fundamentals. It is still about Economic Growth and looking beyond the shortterm, so yes, shift in sentiment, but when you look at the asian markets, what we are really seeing is that investors are not getting more and more constructive on china, so this bullish china trade is definitely here for the time being. Haidi right, and something you know even though we have a , economists,lysts and academics saying this is a and a gauge of Global Sentiment when it comes to populism, when it comes to disenfranchisement and going against the establishment but when it comes to the impact on fisher, it is limited if you gauge it by the volume of x is between asia and europe. Of exports between asia and europe. If you look at asia today and or dependence on the u. S. Japan for thea ex region is only 4 of gdp. Malaysia, 10 of gdp, but when you look at taiwan, even india, very big consumption driven, consumer markets. There is a lot happening within asia itself the dependence on exports for growth, investors have become were aware, and that is what has been priced in. When were looking at markets, clearly we have short attention span. Moving beyond today and the outcome for the weekend, what is the next thing you would be looking at . We are setting up for another potential Government Shutdown in the u. S. , and that has implications for the reflationary trade and treasury yields. Exactly. A marketre seeing is in the u. S. Where vibrations are higher than asia. We are seeing an environment coming from the government were ande it is more noise rhetoric rather than reality, it isrefore going ahead still very much what will happen in the eurozone with the deadline for brexit coming up, then the u. S. , but asia is a beacon of hope because earnings have been increasing and improving, so we are going into another important two weeks where we want to see earnings kickoff and report, but Asian Company earnings would be , andng and improving trend within that, still very much the that aremy, companies a play on the asian consumer, suppose if on the part of the market. Rishaad what about the reflation trade . Is this back as well . We got the comments from Steve Mnuchin and saw a pop up on equities, just hinting that tax reform was on the table. Over the weekend, we heard more about this. It is amazing how a few comments can change things. That is how its react to shortterm news flows, and even if there is a reflation trade, governor kuroda talking about Monetary Policy containing the way it is for a while. Yes, exactly. Lowquality names, high beta names will rally a lot more than when you look at the quality names, so we remain focused on quality. Beta being a euphemism for lowquality. Thank you so much. What is next for opec . We talk oil with the chairman of sge consultants. Haidi what to expect from the ecb and boj meetings. This is bloomberg. You are back with Bloomberg Markets asia. I am Rishaad Salamat in hong kong. Thei what does it mean for European Central bank meeting . Kathleen hays in tokyo to cover the boj and meeting on thursday. Lets start with the ecb, maybe more room to maneuver in terms of how they react to this le pen macron race. Su if it if it had been a different now, the at least for ecb does not have to worry about supporting banks with special arrangements. It will mario draghi be inclined to start looking seriously, he and his colleagues at communicating their eggs in strategy and when they will say we are getting ready to start buying fewer ponds and backing away from what was seen as unprecedented policy steps. Bottom line, no real change in policy from the ecb meeting this week. We have to wait how this stronger euro area economy place out. To ecb policysing makers who have been praying for a pickup in the economy. Lets look in the bloomberg, 1131, steadily growing, accelerating gdp growth in the euro area. Inflation heading towards 2 , backing off a bit. One reason why, no since there is urgency for mario draghi to communicate anything on the exit strategy. But he may be willing to answer reporters questions in the press conference and say that the day is getting closer that they will tell us what they plan to do. One more thing, green the pen is just behind Emmanuel Macron, but predicted asurvey 15 year low below the dollar if she were to win. Ofin, ecb breathing a sigh relief, for the road ahead is not exactly clear. You are in tokyo to cover the boj meeting, what is expected after governor kurodas comments last week . Getting he clarify things . Absolutely. Great interview with bloomberg television. He did say he is optimistic on inflation and did say a stronger pathuld slow down the towards a 2 inflation target, which he sees hitting 2018. Gaveoday, maybe good voter governor kuroda a gift because the yen is weakening now. What we and the boj are watching, first of all, not expected to make any change in their inflation gdp forecast year. They put up Monetary Policy report four times a year, making this meeting one where policy change will be watched. See strongerda exports, industrial production, labor markets, even though, 2 inflation target, still far below that. 7942, the national cpi yearoveryear of the top and 0. 3 percent. Take a fresh food, 0. 2 year over year, but heading towards 2 . Take out Energy Prices, once again slightly negative territory. It is about Energy Prices as well, which have it below 50 a barrel. Institute for International Economics says may governor kuroda child is getting hes. Getting easier. They have shifted from worrying about reflate the whole economy to just worrying about Inflation Expectations. Childave more limited now, so i think of and are corroded and his colleagues feel they are on to stuff they can handle as opposed to being responsible for the whole thing. A persistent worry for the boj policymakers keeping and i on trade. The japanese finance minister warning that a bilateral u. S. Trade deal may not be as good as the tpp deal would have been. Toven mnuchin urging the imf step up surveillance of exchange rates, trade imbalances. So veiledhat as a not warning towards countries like japan with large surpluses. On the other hand, donald trump and Prime Minister shinzo abe have had some good meetings. Rishaad nice one. Thank you very much indeed. Coming up, australia giving the green light to buy energy producer. We have the details. This is bloomberg. Rishaad we are counting down to the start of the trading week in hong kong. Shenzhen and shanghai coming on stream in five minutes. Hang seng reflecting what is going on with this relief rally globally after clarity from the French Election. Of. 6 to the upside. China unicom showing and 88 increase in net income in the first three months of the year, reducing this First Quarter report of the weekend, and the shanghai listed company seeing subscribers increased 5 million in the First Quarter two 266 million, diminutive when it ofes to the sign of size china mobile, the stock of 2 premarket. Some staggering numbers there. We will be watching the jewelry Business Unit that this did, trading today. This is the hong kong conglomerate that has been given approval by the regulatory board in australia for its acquisition of a gas and electricity provider, alinta, on the back of li kashing given the green light for its takeover of another aussie power supplier, duet group, very popular in up. S of assets being picked the jewelry asset business up 42 year to date on the back of better retail performance and selling more gold trinkets on the mainland. Rejecting china reformist use dollars to buy assets. Rishaad there we go. You down to the start of the trading day, day dominated by that French Election. I am Rishaad Salamat coming to you from bloombergs asia headquarters. Haidi i am haidi lun in sydney. You are right. Global Market Reaction kick started with asian markets react to with risk on as the nightmare scenario of her did in the voting in france. Shanghai and Hong Kong Set to open. Lets take a look at what mainland markets and stocks in china following these gains led by tokyo. , action on the treasury market, a with up whip for yields. Ecb, what did they do this week . Have claritycould and announced the start of the tapering program. Right, straight to the open in hong kong. Here is sophie. Stocks in hong kong adding to the regional gains. Japanese shares leading the rally come up 1. 4 , the hang , sugars and shanghai snapping the today commands, down. 4 . I want to focus on the imf session, the pboc governor saying china 6. 5 growth target is inside for 2017 and Financial Risks are under control, but imf official saying, morning around chinas dangerous debt pile and shadow banking resurgence. So some pressure in chinese stocks, but the question is whether we see a resumption of the rally earlier this year. Now for a check on what is going on, casino stocks j. P. Morgan mgm,rading four stocks, melco, but has maintained its nverweight on galaxy and wyn macau. We are anticipating macaus casino regulator to report revenue in the first three days of may. Morgan theyve will meet market estimates. Now i want to check on shares ahead of its Earnings Report 24 , Chow Tai Fook shares passing diageo. Percentuarter of a after the conglomerate got the nod from austrian regulators to buy alinta. Rishaad thank you so much. Right, first word News Headlines with paul allen. Paul the independent centrist Emmanuel Macron is through to the second round of the French Election, projection saying he won the opening round. The interior Ministry Suggests 23. 8 of the vote, with antieuro, antiimmigrant Marine Le Pen and second with 22 . Survey suggests macron will win the second round. The euro touched its highest since november. I would like to say that i really my responsibility is, and if i am full of joy, i know full well what it means and i will carry on with optimism, enthusiasm, faith in her country, and in europe. Free ourme has, to path, french people, our arrogant politicians and policies went to dictate our destiny. Rosalind saudi arabia has cut back the Austerity Program that sparked criticism from people accustomed to generous state handouts. Higher than expected revenue has reduced the budget deficit. Saudi stocks have the biggest gain on optimism and the move will boost consumer spending. Chinas diesel fuel exports surged in march as refiners trained commercial stockpiles and rushed to fill shipment quotas. China shipped almost 460,000 barrels a day, up 31 from a month earlier. Gasoline shipments were up 25 from eight year earlier. Fuel exporters have two meet a certain amount of volumes before receiving new allotments. North korea may be suffering a fuel shortage, long queues in pyongyang where supplies are restricted to diplomats or international organizations. Prices said the rising rapidly. North korea depends almost entirely on china for fuel, and beijing has cut deliveries to get pyongyang to drop its nuclear program. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Haidi thanks. The battle over the repayment db bondscomes to 1m could be coming to an end, agreeing to pay off without the 2. 5 billion. Is it almost over . Rosalind it is forever, yes, some semblance the end is near when it comes to the spat. According to a person familiar with the matter, malaysia will pay 2. 5 billion as partial debt settlement, 1. 2 billion dollars settled by the end of the year. Db plans to finance that from the proceeds from the sale of two units. Coupona will assume obligations. Know, they have been fighting over repayments since the bond default at april 2016. They have agreed not to pursue legal action before 2020. 1mdb has been plaguing malaysia for two years. It was set up to attract Foreign Investment, but accumulated billions of dollars in debt. Now, clearing this pathe, seemingly a clear to energy election. Early election. Does he brisket . Risk it . Rosalind there are anticipations, but despite the grip on poweris is at an alltime high. He has built support among the base of the ruling party, seen to be forgiving, and may have them,e 1mdb saga behind while malaysians are still angry and frustrated. Political observers said they knew nothing about it, so here purgingtains his grip, Party Members who question him, deemed disloyal. Massive infighting over policies, infighting over how to challenge najib, you would have thought they know better. Rishaad thanks for that. App ofoese bike sharing plans to expand to 20 Different Countries and 200 cities at home. The cofounder told bloomberg that local policies and laws would determine how quickly. Alibabas financial arm is helping to dilip develop the business. What we value from our cooperation with ant financial is financial expertise. We hope to boost the development with ample experience in these areas. We also hope ant financials payment systemle will facilitate the process of our overseas expansion. Can you give us an update on expansion plans . We set her target for 2017 to enter 20 Different Countries in the world and infiltrate 200 cities in china. Local laws and policies of the deciding factors in terms of how fact we can bring our bikes into a new foreign market. O was one of the first movers, but now at least 10 competitors commit billions of dollars being piled into this part of the economy, is there a risk of a bubble in the bike sharing sector . I think there are definitely bubbles in the bike sharing market. There are three phases for the players in this business to evolve. Fighting to put more bikes on the street, competing to make bikes easier to ride, and battling to have better maintenance systems. Almost all of the Bike Sharing Companies are still at the first phase of the moment. That is why we see bubbles. Are the risks of the changing Regulatory Environment for bike sharing . It seems like local governments are only catching up to the impact of that bike sharing is having on cities around china. How much of that is a risk in terms of regulation for the business Going Forward . That will killng our companys customers dont like to use our bikes anymore, not the government regulations or controls. It is inevitable to do with the government when you do business as jack ma said company want to be an of romantic relationship with the government instead of marrying the government. We are actually happy to work with the authorities together to set regulations for the longterm Healthy Development of the bike sharing industry. That was the cofounder of speaking to tom mackenzie. Coming up, is opec running a slick operation . The effect of the production cuts and whether u. S. Output is really undermining those effects. This is bloomberg. Rishaad this is Bloomberg Markets asia. In honghaad salamat kong. Haidi i am haidi lun in sydney. Oil heading north after a committee of opec and its allies said to back prolonging supply cuts passed to june. Our next guest please 50 to 60 is the right range for the next several years. Adviser tomer energy irans Prime Minister. He joins us now from singapore. Great to have you. Whether they extend six months or a year, is the risk coming through from u. S. Shale production . The answer is yes. There are several areas in the u. S. Shale production, one is the bernie and the permian basin, but there are other basins which are struggling at these prices, so we do get an uptick, but not for the whole u. S. Shale, only a portion of it , 400,000 to 500,000 barrels a day increase. Say 50 to 60 for the next several years. Where does that pricing fundamental come from for you . Was no opec, the prices would have gone down to 30, 40 dollars, gone up to 70 or 80, then come back to 50 60. Opec is putting a band of 50 to theis defendable given compliance of opec, which is more than 100 , and compliance of nonopec, very high, russians theing back cutting back last portion of their commitment in the next 30 days. Is very strong, 1. 5 to 1. 6 Million Barrels growth. Without demand growth, this would not be possible, but the demand growth is manageable. Haidi just stepping aside from u. S. Pec wrangling and schaeuble, in australia, we have at this highly publicized, politicized energy crisis. We were speaking during the break and use of this at the start of a global crisis. Yes, it is, because the world is counting on australian supplies for the east coast, and oversubscribedis , and the domestic market his paying three times to four times the International Spot price. This is a disaster. Industrial users in australia are suffering very much, and that has to be taken into account. The government will have to intervene and put a limit. How is the demand side of things looking, and particular china . They have a policy mix, talking about consumption taxes for more oil products. Who do you see that impact . Actually demand growth worldwide is all about gasoline. If economy slowed down in the price of oil is little, gasoline demand still grows fast. In china, the demand growth is very strong, 350,000 barrels a falling 200,000 200,000 barrels a day. So china is the biggest supporter of the global market. Worldwide which you say shale is effectively the swing producer . Is shale the thing which is capped the oil price . The swing producer is now shared with saudi arabia and the shale producers. They are committed to this price band. There is no realistic scenario that the price will suddenly sink. Scenariono realistic the price will spike. Opec intends to keep it within this band. If it goes about 60, new competition comes and demand dies. You have to keep it within the fanned. Will bealf of the year closer to 60 a barrel. Rishaad what about elections in iran in four weeks . Does this percent different scenarios for iran as an oilproducing nation. Im sure it will be steady as you go, but depending on who wins, perhaps mr. Rouhani will be elected. Iranian politics and often as are unpredictable as u. S. Elections. 70 chance he wins, but not for certain. The iranians are producing as much oil as they can, so there is no scenario picking it up. The only way they can produce less is mr. Trump puts in new sanctions. We believe the u. S. Senate has readied legislation to present to add additional sanctions on iran and to try to make sure the iranians dont get any new equipment to increase production , so it is pretty important, and they told us they after the election would produce this in the senate. Rishaad could i ran the facing a new round of sanctions, and taking it back to square one is we had a couple of years ago . I dont think so. The nuclear accord, nobody will touch. The new sanctions would be put on Ballistic Missiles, so the u. S. Would go this alone. The u. S. Government and the u. S. Treasury, often stronger than the pentagon in terms of doing things for the u. S. Government, tells them to interfere with financial transfers with iran and keep financial pressure on iran, which means the iranians would be struggling to get their money back, but i dont think it will have a Material Impact in terms of the reduction of supplies from iran. Here,d tell me something now, what about the oil market itself . Not much is really happen since we talked a few months ago. Is there anything you can see rocking the boat in the future . There are several scenarios. The biggest problem is if there is a global recession and the oil demand goes down, if opec loses control and lets the price go to the mid 60, that could result in a significant drop in production. In libya, that is picking up and could have an impact, but the saudis tell us they are willing to go up and down as needed to make sure the market stays in balance. This 50 commitment of to 60 range in the next three years is likely, well over 70 . With the saudis and opec saying they are willing to go up and down to maintain that level, isnt the actual effect of that they are relinquishing market share . Well, yes and no. In a way, you have to you have already lost market share significantly, so from their point of view, if they can stabilize prices in that range, they can make investments, plan their budgets properly. If you can keep volatility within a band in the market believes you can keep it within a band, then people can make investments upstream, downstream. At the moment, the market is not sure whether this can work, but gradually i think the market will get the confidence that you can plan around it. Please remember that five years burges budget0, surpluses and governments were happy. And the prices came down, everyone was unhappy because they are still in the process of adjusting. Haidi it is a good reminder of perspective. Always a pleasure. Giant step for countries look to our space for new opportunities. This is bloomberg. Rishaad this is Bloomberg Markets asia. I him haidi lun in sydney. The middle east has dominated the Energy Reserves for years now. United arab emirates on saudi arabia developing programs to mine water and metals off planet. How far out in the future are we looking before we see companies go into how to space to mine for energy and metals isis pose . I suppose . It sounds like science fiction, but a lot of people on , Companies Launching prototype satellites that could see what theys to have on thin. I spoke to one consultant, tom whos, here in singapore expects that within five years we will launch a commercial satellite to go to an ashtray girl to look for metals, and within eight years, we will have our first satellite extracting resources from asteroids. Haidi four kind of resources are we talking about here to abstract through space mining . Metals hishe big platinum, which is very 50 and used as a component in chips and stuff. Readily available on some asteroids. M. I. T. Did a study where they found one asteroid might have this much is 145 times the entire annual production of platinum on earth, so you could bring back an asteroid worth 25 billion to 50 billion, although as soon as you do it crashes the platinum market on earth. The real reason is water, which in addition to being one of the Building Blocks of life can be ,sed as a propellant in space using it to fuel interstellar Space Missions cost of thats what people think the eventual goal will be. Rishaad right, we did not get about how energy chines could play a role in developing resources and how they get it back there as well, but thank you. You a uae story about and saudi looking to space to extract metals and energy in the future. Frenchcoming up, how the election is playing out when it comes to the markets. We will of course be focusing on some of the biggest reaction on the fx markets. That and more is on the way. Rishaad almost 10 00 in hong kong and singapore. Im Rishaad Salamat. Haidi this is Bloomberg Markets asia. Rishaad france kicking out the establishment with mark on and le pen winning the first round. Haidi that result marks a shift in policy, the runoff office, opposing visions of france and the european union. Rishaad the one nbd saga could be coming to an end with a deal with abu dhabi. Jihadists society has to , the to automation robustness only do the jobs that people cannot. Story we really great will be getting to throughout this hour. The story today is that remarkable response to the euro that we sell reacting to the first round of the president ial voting and france. We now have a runoff going into may 7 and manual mark on an Marine Le Pen. This beforeerg and after feel for the market. We have gone from exceeding those brexit vote levels when it comes to risk reversals coming all the way back your following the vote. Markets are feeling better now that the nightmarish scenario as it was sort of shaped going into the weekend has been avoided by this asn is, is we were talking about earlier is this back to a more mutual position or is it a strong . Atalyst for risk rishaad [indiscernible] comments last week from the u. S. Treasury secretary and Steve Mnuchin. More comments that we have tax reform coming along in the United States. Provide what is going on equitywise, as well. Risky given what we are seeing in asian markets. Apanese shares up 1. 4 we are seeing the japanese yen weakening around the 0. 1 level. Chinese stocks declining over 1 following the most in three months and a small gauge for china, on route to the lowest close since 2015. Take a look at what is happening. Consumer and Health Care Stocks dragging on the shanghai composite. Those sectors with the best forming groups, three hundred through friday but today all segments in the red. Now we are turning to the gmm function. I want to look at it from the g20 perspective to see what is going on with the euro. 1 . S training gains up it rose about 2 against the dollar. This, we are seeing that coming off a little better than on the back of that. Looking at the bosporus, twoyear yields. Yields move across the curve when it comes to treasuries. I want to pull up the board showing equity movers. Jumping as much as 13 , rising over three days. Last wednesday, honda provided details about an accident in march. The driver sustained a serious injury from a takata airbag, revealing gaps in the recall system. The company says it will not cut jobs until they share sales deal is approved. Lastly, it was reported that they would cut about 10 of its headcount. I want to end with toshiba. We are getting some new flags on what aminal regarding japanese lawmakers are saying regarding Security Risk involved in technology transfer. The nikkei reporting budget [indiscernible] maybe on them those putting in dates for toshibas chip business. This is a concern for the japanese government. We have shares rising for a fourth day. Haidi never far from the headlines, toshiba. Lets get the first world news in sydney. The pboc governor has adopted a reassuring tone saying china is expecting growth of around 6. 5 in the Financial Risks are under control. Officials website, are set to maintain what they call prudent Monetary Policy and we are confident of eliminating any threat. Says it willse offer an outline of the tax reform plans this week. The specifics may not be ready until june. President told his twitter followers big tax reform and tax reduction will be announced on wednesday. Budget director nick for many says they expect the principles but admitted that the plan will not be ready for a couple of months. U. S. Treasury secretary Steven Mnuchin says the imf outlook is of little conservative as he repeated the administrations goal of 3 or more. Last week at the imf reiterated that there u. S. Would grow 2. 3 . The u. S. Is wellpositioned to expand faster and that will help the Global Economy. Sustained u. S. Economic growth is good for Global Growth good so if we can grow the United States economy that is not just good for the United States worker, that is good for International Growth as well and creates opportunities. So, that is what we are focused on and i think if we do a good job it will carry over into spillover. Willing the ecb may be to move faster than thought. No policy changes are expected on thursday. Survey respondents say mario in june. Ll revise at the beginning of march he said tapering was not on the agenda for strengthening the euro zone is seen as changing his strategy. Global news 24 hours a day. Bloomberg. Going back to what sophie was talking about. Risk is back on the table after the French Election. Lets get this and more. [no audio] i think it is important to note this is a scene that started last week. We saw assets rally ahead of the election. That will continue in the weeks ahead. In the shortterm, we might see a pullback. Equities are coming back from the highest way they opened. The euro is pulling back. I think that will continue for the next 48 hours. Risker major geopolitical has passed successfully and the markets are taking that positively and looking ahead to a year where not much risk is left. Parties populist feared in germany are pulling back in popularity as well. European Political Risk may be behind us for 2017. Rishaad that is it. We have our guest. People thinking this is a done deal. Think very much so that is going to be the expectation. Marine le pen doesnt have a chance against Emmanuel Macron in the second round. This is why going into the weekend, the real risk worrying trading was that metal shone melenchon may have reached the second round. Yes, the second round has not been decided. There is a chance that Marine Le Pen may become president. That chance is considered very unlikely at this stage. I mean, it feels like the markets have a little bit more breathing space to focus on other things this week. Also, yet again, we are decently from another government showdown. Implications for the bond market. Definitely i think the market will quickly move on to what is the next kind of thing. Will focus on next . One of the things will be the boj. The japanese yen could become in focus Going Forward. We return the focus on the boj inflation conundrum. The u. S. Will come back into focus again. Donald trump has promised tax reform proposals this week. Exhortations are though for his potential policy suggestions. It is easy for a positive surprise. That is a definite risk. Negativeons are pretty. That is going to keep a bit of volatility this week. We are more skewed to a positive surprise. That is definitely the volatility issue. Haidi what about the Chinese Space . This is usually its own universe. When it comes to them in the markets, are we expecting a slump . Slump inthink the chinese equities is the anomaly at the moment. That is definitely the case at the moment. It is starting to concern people that chinese equities are trading so poorly today after last week. This is part of government policy to tighten liquidity a little bit. People are worried that they are trading badly. Iron ore bottomed out last week. He are seeing global risk sentiment picking up. That is going to weigh on sentiment in asia. The Global Sentiment continues to improve chinese equities will follow. [speaking simultaneously] [laughter] issue. You can follow more on the story. That is on the bloomberg. Rundown anda market ongoing commentary and analysis. You can find out exactly what is affecting your investments right now. More on the French Election in a moment, the how the vote is affecting Foreign Exchanges. Haidi we come back to a more balanced view that that the rise of populism. There is a change that has been demanded from the electorate. I think that is good for the markets. It is progrowth. Slanta less protectionist to continue to make its mark in the global order. This was the outcome most people had been positioned for. Unwound. Ges i think if you are in the market, you are expecting a comfortable win in the second round. Bumpye at will always be and this was a bump in the road. It was not something that had an outcome that was an existential crisis. I think we will now see the european political story fading into the background. Haidi those are views from some of our guests today. Lets look at how the fs markets are reacting. Tony, i want to start with this chart. It is a trend we have seen it on the these risk reversal markets. We have this one which is the japanese yen and the australian dollar. We have come back up a little bit from the extremes going into the weekend. We are freshly traumatized by how the polls can get it wrong. The markets are underpricing the potential for an upset. Uest that is the risk in the French Election, it is a two horse race. We saw what happened with trump and brexit. At the moment, you have this 60 40 variation between Emmanuel Macron and Marine Le Pen. We could see a change in terms of the risk sentiment and you are talking about. Overall, sentiment is following that risk sentiment. The expectation is that we had circles thatical the French Economy has been sluggish. It absorbst 57 of gdp. Youth unemployment is above 25 . Voters areeration of not afraid to vote for change. I think the market is underpricing the risk of that happening. Vote, an antipopulist and both of them antiestablishment parties. This is a rarity for modern french politics. How does this informed what position you take going into may 7 . Resultshe first round from the French Election was close. Because it was expected surged 2 straight away. Seen it come off another 1 . I think it is a little bit overdone. I think the market is saying, it is going to consolidate around this level. This week, in particular. The market will now focus on the thursday ecb meeting. If we look at some of the expectations, when you expect keeping Interest Rates unchanged and to reiterate a cautious tone because if you look at the march figure of cpi, it looks like there will be no change, at least. But, it,yeah, tony, you know he has got a bit more wiggle room, hasnt he, now . Duly we actually see the normalization of Monetary Policy coming along in this atmosphere where we have a normalizing Global Economy as well . Guest very true. I think you will probably wait until september to be honest. You will want to see the outcome of the german election. Seen is a surge now for europe to move toward a previous level. Remainediment supportive. France has embraced globalization and immigration. Lead to more ambitious reforms in europe and for the French Economy. There could be a compromise with germany to overhaul the troubled eurozone area. Haad the other this is japanese consumer inflation. We have a target of 2 . Saying governor kuroda that it will be achieved in 2018. What has he been smoking . [laughter] guest i am not sure. We saw the dollar and yen jump this morning. It is on the back of the overall risk sentiment. We believe the japanese yen will by what the boj meeting tells us by what the boj meeting tells us on thursday. More importantly, what the march cpi figures reveal. If we look at the forecast, we are not expecting the boj governor to announce anymore policy. This is his final year as governor. We do not believe the inflation risks are high enough to warrant any change. Has gotten to be said policy still could be tilted. Haidi we may be getting tax reform details from donald trump this week and another u. S. Government shutdown. More dollarpect weakness shortterm. What you said is correct because the dollar is range bound to be a little bit on the weaker side of the range. The news that the donald trump will introduce a tax reform plan on wednesday is positive for the u. S. It comes down to the timing. We saw it when Ronald Reagan was president. It took 10 months. Steven mnuchin came out and said august is ambitious and unrealistic to implement these packages. Given the Federal Reserve penchant for graduates asian, it is off thejune table. If we have to wait until september, it means there is more room for the u. S. Dollar to fall because that is five months away. We have to wait for approval. They still have to agree with other republican members as well. Haidi if health care was any litmus test that doesnt look like smooth sailing. Great to have those insights. , a resolution on a story we have been covering for a long time, a settlement may mbde been reached between 1 and the abu dhabi state investment fund. Haidi this is Bloomberg Markets asia. Rishaad im Rishaad Salamat in hong kong. 1mbd could ber coming to an end. The deal could be announced later today on the london stock exchange. Lets go to our Southeast Asia correspondent, haslinda amin. This seems like it has been an eon. Are we there yet . Reporter according to people familiar with the matter, 1mbd pay a partial sentiment because the squabble is over 3. 5 billion. They say the plan is to pay using proceeds from a couple of units. Assumeey will also do is obligations for bonds. But theyed these bonds defaulted in april 2016. Here we are with a semblance of a reservation. No legal action will be taken before 2020. Both sides will explore ways to negotiate. 1mbd has been a scandal for two years now. Setup to attract Foreign Investments but accumulated billions of dollars in debt. It is probably the biggest scandal this government has seen since he took office. It keeps getting more extraordinary. The path is cleared for him to call an election. Will he do so . Or not, his grip on power remain strong. Some say it is at an alltime high. Not surprising that chances are he will call an early election. He has always built on the support among rural malay voters. Will to you that these people are forgiving. They would have put the 1mbd saga behind them. Dissatisfaction may come from urban malaysians that they are not likely to do anything. So, he remains very powerful. Expect the early election. Haidi thank you for that. Strengthening euro zone and a market from the leader in the French Election. One in manual jockeying highend paul allen with first word headlines. The independent centrist Emmanuel Macron is through to the next round, planning in the opening round. The interior ministry suggest he won 23. 8 of the vote. Marine le pen in second with 22 . Surveys suggest that macron will win the second round. The euro jumped, touching its high since november. Say i relieske to what my responsibility is come and if i am full of joy, i know well what it means and i will carry on with optimism, enthusiasm, faith in our country and europe. The time has come to free , conference people french people, of arrogant politicians. The outlook for Global Growth continues to brighton, though concerns remain about the u. S. Trade policy. While it is still unclear what hath President Trump will take, the risk is not completely dissipated. On the domestic front, as inflation is within the target range, there is no need to adjust Monetary Policy. Chinas diesel fuel exports surged in march as refiners trained commercial stock piles and rushed to fill quotas. China shipped almost 460,000 barrels a day, up 31 from a month earlier. Gasoline shipments were up 25 from a year earlier. Feel exporters have to meet a certain amount of points before receiving two allotments. North korea may be suffering a shortage, where supplies have been restricted to diplomats were international organizations. Prices said to be rising rapidly. North korea relies almost completely on china for fuel, and beijing has cut deliveries aimed at persuading pyongyang to drop its nuclear program. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Haidi thanks for that. Haitian markets reacting asian markets reacting to that first round of the president ial voting in france, bringing up ,wo contenders, the centrist independent, progrowth, proglobalization emmanuel to go and marine the pen into the runoff on may 7. When you look at the reaction in the markets, not a staggering risk, a leg higher for but certainly relief and freeze up investors to get into the right mindset to look to the rest of the week filled with centralbank action. Rishaad that should allow mario draghi more wiggle room with pressure to start normalizing Monetary Policy. 5548, and this is policy diversions taking place as we see the fed in yellow with these Interest Rate hikes, two more expected this year according to plot. Called dot the blue line is the doe, and there we go, zero at the moment,. 1 for the benchmark rate for the ecb, so does he start hinting about normalization of Monetary Policy . We should find out thursday, but the purpletokyo line also reflects that the og, in negative terrain. We do have policy meetings taking place this week. Market reaction, the fallout from the french polls. Rattling inks tokyo, seoul, korea, and sydney, the topix rising over 1 . The nikkei 225 up 1. 3 . We are seeing volatility tumble the most since march 6. We are seeing nikkei futures reach a pivot point. Away afterbe backing a good week for japanese economic data. The boj policy this thursday, as mentioned. Chinese stocks slumping today, the most in three months as regulators crackdown on Financial Risks. Defensive shares joining the route with last weeks bad mojo spilling over into this monday, expecting the worst weekly drop in four months, and the benchmark has fallen below its 200 Day Moving Average as it has had supports in september, so this could mean the correction is not over just yet. Monetary conditions also mean it could be sometime before a meaningful rebound, but the outlook for the yuan has been improving, helped by the pickup in the economy and the return of capital flows as you can see on the chart. The pboc strengthening the yuan daily fix. Cyclical and structural Growth Drivers in china can support the yuan, which is positive for the asian region as a whole. Much forthank you so that. The first round of French Elections done with. Round two in a couple weeks. What does it mean . Discussing the ecb and merry of draghi. Kathleen hays it is in tokyo because we also have the boj as well. Lets start off with the ecb. Talking about this freeing up mario draghi. Is that his reaction to this race . We shall see, risk. Mario draghi and his colleagues at the European Central bank, the factors they have to consider in front of them when they decide if it is time to get ready to put together that exit strategy and moved to normalize policy as the Federal Reserve is currently doing. Thats what they call when they start tightening policy from an easy stance. Handed there been an extreme reaction in the euro, in currency markets today, obviously that is something they would step back and let everything down, but that is not happening. No actual change was expected at any rate this thursday, but yes, the question is, a strong reaction to the election is off the table, so what will they decide . Could they decide to start dropping those hence . This is 1131. Gdp is growing, a staircase pattern, but steadily up for the last three quarters, even before that. To the 2 nearly target of the ecb. It was briefly there, now pulling back a bit. That is another reason why they could consider this. They are pretty sure inflation will get there even if it is not there at the moment. To more thing they have consider on thursday is the second round of the election coming. Is leadingmacron Marine Le Pen, but no one trump would win, and he did. Maybe it is best to not say anything at all this thursday, but mario draghi will face lots of questions from reporters. Maybe thats when we look at some things dragged out from him then. You are in tokyo to cover the boj meeting. What is likely to happen . It is interesting. Voters may have given governor kuroda a little present, the yen weakening today , so certainly something they would like to see because they want inflation move higher and they have a long way to go. Lets look at their checklist. This monetary report is much more focused. Bloomberg intelligence in tokyo saying dont look for any changes in the conflation or gdp forecast, although some thought they might adduce the inflation forecast of it. Exports,flation, industrial output, stronger labor market, but not enough to get to 2 . This is 7942 on the bloomberg,he three main measures national cpi up to her. 3 , take up fresh food, the main measure for the boj to watch, plus. 2, but if you put in Energy Prices, you are down. 1 year over year. Governor kurodas job is definitely getting a little bit easier. Are moreeservedly confident because they have shifted from whirring about having to reflate the whole economy, to just reified Inflation Expectations. They have a more limited job now, so governor kuroda and his colleagues feel like they are on the stuff they can handle is supposed to be responsible for the whole thing. He was speaking to Francine Lacqua when he made those remarks. For the bank of japan, a cloud over what will happen on trade. The japanese finance minister said in washington but last week , over the weekend, that japan cant necessarily can nt guarantee they will get the same bilateral trade that they would have gotten from the tpp. Encouraging trade imbalance surveillance, and some feel japan is one of the nations that that kind of urging is aimed at. Haidi the big question in the u. S. This week is not for once how many rate hikes from the fed, but this again, we are here again, this potential Government Shutdown. It is deja vu all over again. It could happen. Have its team does not tax plan fully on the table, mikeugh mr. Moke any mulvaney said it is possible. Arrangements, make the compromises, if the money to of for a shutdown, it can become very politicized. Paul ryan thinks they can get a spending bill passed in time to avert the shutdown. Take a look at 7997, and you can see this is great fodder for a further rally in bonds, at least one strategist saying of the weekend that if this does not turn out well, this could push the 10 year yield to 2 or lower, so watching that Government Shutdown slowly. Headlines will be from the likes of speaking tomorrow. Kashkari speaking tomorrow. Haidi thank you for that. Rain, why decades of jack massis 30 years of hardship as the internet and automation disrupt the global labor market. This is bloomberg. Rishaad a quick check of the business flash headlines with the chinese Bike Sharing Service ofo planning to expand to 200 cities across the country. He sees bubbles and this fast expanding industry, it thinks his business has the scale to survive. Has 3 million bicycles and has raised 630 Million Dollars since its inception saying the industry is still in its infancy. Panahome jumping after panasonic sweetened its offer. 54 andc already owns will offer the equivalent of 109 a share for the rest of million. T at 850 oasis had argued the original offer undervalued the homebuilder by more than 50 . Rishaad the u. S. Is accusing indian i. T. Companies of dominating h1b thesis by entering extra tickets in the lottery. The white house says a small number of outsourcing Companies Flood the government with applications. They are being named by the administration as the top three recipients of these h1b workpieces. Haidi the head to of Chinese Investment china citi capital says Chinese Companies looking for overseas acquisition are turning to offshore dollar funds as capital controls hamper their ability to finance deals. For many chinese players come and they are having issues now that the Foreign Exchange controls are more stringent. I think the government is doing because for all the whyonales i mentioned about Chinese Companys want to buy international companies, and the see farear or two, you more acquisitions based not on that, but on Capital Markets arbitrage. That is why you see people bidding up the prices in the international markets. That ae paying prices local investor will not pay. It is not a strong rationale for wasting foreignexchange reserves. European elections, brexit, u. K. Come French Elections, german elections, how much of that is factored into your strategy, how much is impacting the choices of chinese investors . Seen hugent really backlash against Foreign Investment. Notexample, even brexit has made much of a dent in terms of Foreign Investment. The British Government still welcomes Foreign Investment as well. Thatme ways, i dont see will happen in france or germany, so we are looking at those opportunities. What is of concern is probably the u. S. , although in the last that concern has been eased somewhat. War isential of a trade deeply concerning. What do you see as the key risks this year for chinas economy . The pace of deleveraging. Financial risks are the main risks in the system. That partially explains the rationale why china is not opening up the Capital Markets as quickly as International Investors would like to see come up the system is just not ready. The overall leverage ratio is very high, probably over 250 gdp. Now china at this point given the huge amount of domestic can clearly deal with it in the shortterm, but the leverage and not be increasing anymore. Of the banks are pulling back there funding or products they have been giving to external managers to manage, that that is being reduced to now. Are you seeing any impact the re . Any risks of volatility . Pulled backis being into the Banking System and the banks themselves, the bond ,arket is clearly coming down and so is the stock market, so i do see an impact. It might be that impact is healthy, but there are many other Wealth Management products nonstandardin a esoteric product. Day of reckoning comes for some of those products come in the impact can be potentially even bigger, so i think that remains to be seen. One of your companies in china is mcdonalds. Are you looking for more opportunities in the food and beverage space . Store numbers, we like behind come up in terms of perception by consumers, mcdonalds is feud has a very strong brand, if not even the number one brand. We just need to increase our presence. Effort andubling our third tear and fourth tier cities, said the prefectural city level, the county city level, those of the focus. Citic capital chairman speaking to tom mackenzie. Alibaba chairman jack ma has a stark warning for society, a warning that there is longterm pain has the internet and automation of in the labor market. Muchid we will face more pain than happiness over the next 30 years. Lets get over to our managing tech editor peter elstrom. Ma speaking and works the point he was making . Is interesting. His comments came at the China Entrepreneurs club. We have been showing a number of these clips. Even in this crowd, jack ma is truly a start. Alibaba had the largest ipo of all time. As he took the stage, the crowd taking selfies of the stage in the background. He is truly a rock star. Speechs quite an unusual could he tends to be optimistic and visionary come up at this time at a stark warning of a saint the internet will cause more pain than happiness over the next three decades and that there are a lot of people in Traditional Industries displaced. He did this he said because in the early days of alibaba, he warned that would displace Traditional Industries, particularly traditional retail come and nobody listen to him. Now as alibaba expands into many areas, he is trying to signal rough times ahead for the competition if you dont understand how the internet and other technologies will change government,iness, education, all sorts of sectors in society. Haidi why is he making these comments now . It is interesting. Alibaba has had quite a strong year. Obao has been doing well. Now they are trying to expand, and this seemed a warning as alibaba moves into other areas, particularly finance, that there will be unsettling times ahead for the players in this business. ,rtificial intelligence Information Technologies will change industries in fundamental ways, and the chinese economy need to be ready for displacement, both in terms of employees, possesses, etc. Haidi thank you so much for that. Peter elstrom there for us. Why many look at choose to sit on their savings instead of taking a chance. This is bloomberg. Rishaad asian savers are sitting on healthy sums and being told they could be making more of their cash. Only 18 of socalled emerging affluent are investing in equities, while in some countries they shun the banks to keep their money at home. It seems like under the mattress is the place to be. For some markets. We are talking about markets and there are faring degrees of financial education. Appreciation for risk is a more important thing. One of the points the report makes is that the surf air hardworking people who are time poor. A lot have families, and what you want to do . You want to spend time on the internet talking to a bank trying to figure out how i can make more money. Its in the bank, surely it must be earning some returns. Apparently not according to the report. Not to talk about how much of this money could the better deployed, but it is part of this conservative mindset. It definitely is. If you look at the numbers and , there was the diversions if you like between the more developed markets that were hong kongg upon and singapore, and pakistan one hand. If you look at pakistan, in the survey, Something Like 50 of put their money literally under the mattress and keep it at home, whereas hong kong and singapore, there is a greater appreciation for other Asset Classes like equities and fixed income. It is a function of market experience, Market Development if you like. Thank you so much for that. Our asia finance editor that there. That is just about it for Bloomberg Markets asia from rish and me, but we do have a nice rally shaping up in asian markets. China falling behind. This is bloomberg. 11 00 in hong kong, 1 00 p. M. In sydney. Welcome to Bloomberg Markets asia. France votes for change, the Establishment Party defeated. The result marks a shift in politics, may 7 will offer opposing visions of europe and frances place in it. Indiamoving up, overtaking germany as the worlds fourthlargest economy. We are life in mumbai. Is the first elections dominating and the asiapacific. The risk on moves in the euro, a pullback. This could be a green light when it comes to em currencies. You see them tracking here, potential upside for em fx. The singaporean dollar, taiwanese dollar, all bid. One of our editors on that team saying enjoy the party while it lasts because we could be heading into a hangover with plenty of things looming, north korea celebrating the creation of their military. They could be flexing military muscle potentially with the launching of some Ballistic Missiles and a potential u. S. Government shutdown happening. Trump claiming he will have a tax proposal wednesday. We will see how things go. Plenty of headwinds. Lets get you caught up with first word news. The pboc governor has adopted a reassuring tone, saying china is expected growth target of 6. 5 percent is within reach and that Financial Risks are well under control. Website,n the imf officials will maintain what he called prudent and neutral policy and a confident of preventing and disseminating threats. Chinas diesel fuel exports surged to of record in march as refiners trained commercial stock house and rush to fill ship is. China shipped on us 460,000 barrels a day, up 31 from a month earlier. Gasoline shipments were up 25 from a year earlier. Fuel exporters have to meet a certain amount of fines before receiving new of ands. The white house says it will offer an outline of its tax reform plan this week them up a specifics may not be ready until june. President trump told his 28 million twitter followers, big tax reform and tax reduction will be announced on wednesday. Expectlvaney said they to lay out the administrations principles, but admitted the full plan would not be ready for a couple of months. You treasury secretary steve outlooksays the imfs for the economy is conservative as he repeated the administrations goal of 3 growth or more. The fund reiterated its forecast that the u. S. Would grow at 2. 3 this year. However first elimination said the u. S. Is wellpositioned to expand faster and that would help the wider Global Economy. Sustained u. S. Economic growth is good for Global Growth. Economy, grow the u. S. That is not just good for the u. S. Worker. That is good for International Growth as well and creates opportunities. Is what we are focused on, and i think if we do a good job, it will carry over into spillover. The ecb may be willing to fasterwards a qe exit than we thought. Most respondents to a Bloomberg Survey said mario draghi will revise fightings guidance in june. In march he said tapering was not on the agenda, but the strengthening eurozone economy is seen as changing his strategy. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Yvonne breaking news. Itsiba reinforcing organizational management, splitting off businesses. The infrastructure and other companies, and four inhouse companies into separate units. This is a first step in this Restructuring Program under toshiba after that westinghouse unit suffered billions of losses. 11 andter filing chapter that sale of its chip unit business as well, one thing to watch, but toshiba combining Energy Solutions with their Nuclear Operations there. We are learning about the split, fromve four Sub Companies the fifth of november, so something to watch your. Or not seeing shares reacting, but we will see have they trade at the bottom of the hour. Shares of. 4 leading to that break. Story,ove on to our top france set for a fundamental change with establishment in the firstted round of the president ial election. The independent centrist , theuel macron won interior ministry sing he got 23. 9 of the vote, and antieuro , antiimmigrant leader Marine Le Pen second with 22 . Suggested to win them a runoff. I would like to say i relies what my responsibility is and if i am full of joy, i know woelfel what it means and well carry on with optimism, enthusiasm, and faith in our country and europe. Upthe time has come to free our french people of arrogant politicians and policies that one to dictate our destiny. Yvonne lets discuss that further with mark cudmore live from singapore. Good to see you. We saw that initial kneejerk reaction on this relief rally given the polls were right this could thisow long rally last . Could it be shortlived . I think the rally was specifically because the polls were right. People had become nervous about the polls, but essentially the outcome was as the polls predicted. The euro jumped, equities up quite a bit, and global yields rallying, but we are seeing that fate off and that pullback could continue into the european session as we see profit taking, risk positive theme started earlier last week before the weekend, risk trading well, and we will see that theme continue as another big geoPolitical Risk event is behind us. Generally the whole concept of european Political Risk is starting to fade into the background of little bit, which will increase Investor Confidence globally. Lets stick to the u. S. There are plenty of big hurdles there, not just north korea, that is still looming, but the Government Shutdown. Would some kind of impasse be the nail in the coffin for trumps agenda . We have had these Government Shutdowns before, so i dont think specifically a Government Shutdown will be a major panic event. Butill have bad headlines, ultimately we will get beyond it again. It is more of volatility event as a longterm decider. It probably slightly undermines trump at the margin. Think an announcement of tax reform would dominate the news in the shortterm if he announces clear proposals for important tax reform. Both those events will provide some kind of volatility in contradictory manner. Yvonne what about treasuries . Some are saying this could be a case for the bulls if we see a Government Shutdown. Could they still rally . We are seeing yield to jump up, treasury selloff, and that is a global theme in bond markets on the basis of this positive risk mood. There are still reasons to be cautious. Expectation for firstquarter gdp is at one point 1 , a little negative, but more important is the fact that global Commodity Prices are falling quite heavily , mainly oil driven, but iron ore trading poorly after appearing to baltimore last week, so we might look more at commodities. The was hope that Industrial Metals had autumn doubt, but there is no sign of that today, and that may be a quicker driver this week if it does not turn around soon. Yvonne still looking for the floor for Industrial Metals. Thank you. You can follow more on the French Election reaction and all todays trading on our markets live blog. That is on the bloomberg at mliv , where you can get a market run down in one click, commentary, analysis, including mark cudmore, finding out what is affecting your investments right now. Lets check in on the markets with sophie. Mark was saying the initial kneejerk reactions are pulling back, but what are you focusing on right now . Sophie the asian Market Reaction. Asian stocks climbing towards the threeweek high as the euro and assets getting decent bids, but it is monday blues for haven play such as the yen. The dollaryen coming off session highs as the focus shifts to what will happen in the u. S. Aroundave anticipation potential u. S. Tax reforms that trump has pledged to share, but for now im of the softer yen boosting shares in tokyo. The nikkei 225 gained the most murae february, and no says it could push the benchmark to 19,000. Chinese shares not joining the party today, and steel player sliding in china. China sent to impose more restrictions are browned for some steel companies. Profit margins have dropped for a lot of these players, iron ore prices. Lets take a look at the commodities space. Futures continuing to decline has steel prices fall. Going back to the big picture, the French Market has callmed some fears come a goal dropping and bonds falling. Take a look at the u. S. To hear twoyear rate, up by the most since december. We just 10 year yield, spoke with mark cudmore whether this rally can continue. Its10 year yield is set for biggest oneday drop in three months. Yields have been falling recently given geoPolitical Risks. With markets pricing in that potential macron victory in may and u. S. Gdp and other event risks, there are still other factors to consider, and westpac says treasury yields could see a prize of 58 basis points this week should the positive momentum continued. Yvonne thank you. Still ahead, malaysia to sell part of its 1mdb debt, so is the soccer approaching an end . Should back, so investors reduce exposure to asian . We would discuss with ubs head of asia out asian asset allocations. This is bloomberg. Yvonne this is Bloomberg Markets asia. It is 11 14 a. M. In hong kong. The latest business flash headlines. Tosubishi motors planning build an engine plant in china. The nikkei news says facilities will be a joint venture. The engines will supply locally built outlander suvs and construction of the 90 million plant is expected by the end of the year with production to start by 2018. Korean mobile Gaming Company has price its ipo at the top of the targeted range, meaning it should range 2. 3 billion. It will be south koreas largest listing since 2010. The stock is expected to start trading on may 12. Alibaba chairman chuck moss society will have to compare for decades of pain as the internet disrupts the economy. He held a conference and said the world must change Education Systems and establish how to work with robots in order to deal with automation in the internet economy. He hit at the traditional banking segmenting must be made available to more people. On the days top story, dramatic election in france, what the runoff means for europe and frances place. Pollsters tell us Emmanuel Macron will beat Marine Le Pen on may 7, and our next guest agrees. Great to see you. If polls are right, markets celebrating, unless fully pricing in a macron victory. This that seem to optimistic . A snap poll after the election puts macron in the lead. Is assessment is this basically 70 chance. Yvonne i want to throw up a chart here. Are looking at the risk reversals in the euro, that white line showing that. Pound, in blue, you do see we were nowhere near those levels we saw during the brexit vote, so after the shorts are squeezed and the hedges unwound, is this relief rally, . Ould it be limited there is a risk on rally, the euro 1 higher. The u. S. Dollar should start to weaken, the euro looks attractive, undervalued, so we see significant upside. There was uncertainty priced into the French Election, but now the base case has come true, it should be a risk on market in the next few weeks, but you still have an election on may 7, so there could be surprises coming up, so maybe the rally is not too strong. The ecb could bring us a few surprises, so it is a small risk on we expect, positive for risky assets, but not bring the euro significantly higher. Yvonne you increased your allocation of eurozone equities, a modest rotation into the sector given economic signs building some momentum. What are you focused on, the high beta stocks like financials . Is an interesting story, not just tactically. It is a longterm story, macroEconomic Growth picking up, domestic demand picking up, lagging the u. S. By 10 percentage points, and now it is the biggest growth driver for europe. Inflation coming back, finally fiscal stimulus coming back. That is the good thing of his populism in the markets. We are focusing on financials and we think financials in europe look extremely attractive, undervalued, pricetobook is below one and higher roe, and the pickup in credit is a sign of confidence less probablenpl come along provisions can come down, so that is a sector we focus on. Yvonne idc events happening this week, north korea how do you see offense this week, north korea, their celebration, trump and some possible tax reforms on wednesday, but we have this looming Government Shutdown the could happen this week as well. If we get some kind of shutdown or in past, does that mean deregulation and tax reform gets pushed further down . Somehow they will find a solution. Tweetedeted trump there will be reforms for taxes on wednesday, and given he has no legislative victories year to date, he definitely wants to bring a tax reform, so we expect taxes around 25 , sinnott 15 as he first said, but there should be risk on. The Government Shutdown is one of the risks we should focus on. History tells us we should not bet on that. Usually they will find a solution and that should be positive for risky assets. Yvonne some breaking news from the Vice President s asia trip. It was supposed to be an white harbor, he has skipped that and said he will head to washington to focus on domestic policy. You see that as a positive sign that we could be seeing some type of regulation or tax reforms on the table . Trumps cabinet is very yearsenced in terms of than the obama cabinet at the beginning when obama took over the presidency. There is a block within the cabinet of the Trump Administration that is fairy progrowth, probusiness. They focus on the right things. We havent central claim china is a currency manipulator, protective trade policy so far. Yvonne he once the weaker dollar and lower rates. Weaker dollar we would agree and should be helpful. He wants lower rates, rates yields have but probably taken too much, so tenure lds and tenyear treasuries to yield 2. 5 . Yvonne plenty more coming up on bloomberg television. Amsterdam live from on daybreak europe. Yorkenergy ceo live in new at 10 40 this evening. After that, we hear from the italian finance minister. Stay tuned. This is bloomberg. Of tcl has head urged President Trump to make acquisitions in the u. S. Said he was in the final stages of investment in tech firm that could be worth 300 million. Government has not approved the deal come but they have not formally rejected it either. We signed an agreement with the u. S. Company six months ago and have submitted this deal to the regulatory body. When the deal was about to approved, trump got elected. In ordertrump issues to suspend all the acquisitions in the Technology Sector that were waiting for approval right after he took office. The project we are working on is a completely civilian project that does not touch upon any military or sensitive areas. I dont inc. It is reasonable that it is so difficult to get an approval for this kind of project. The hurdles he faced with this deal, dissipates you reassess your appetite for potential acquisitions in the u. S. . I believe that ultimately the u. S. Government will support the deals and defending both countries benefiting both countries, so we will continue u. S. Vest in the in fact, we are looking at a new material project with the value of 200 million to 300 million in the u. S. At the moment. They are relevant to what tcl does. If we decide to make this investment, i truly hope the u. S. Government will not reject it. , i will take my team to israel again. In previous trips, we have already seen a few potential acquisition targets and have had a few rounds of discussion, so i really hope we can make some decisions this time. Have you had discussions with apple about providing oled panels for their iphones . As far as i know, couple holds high standards on suppliers. Ordersll only commit any with the Company Successfully making the product for 23 years. We will be patient and wait. We are confident the quality of our products will meet the standard of all our clients come including apple. Tcl germant was the speaking to tom mackenzie. We will have more later in the show on the inland day him and a m a landscape. Up 1. 3 on the nikkei 225, dollaryen of of 110. This is bloomberg. I am paul allen with the latest first word news. The independent centrist Emmanuel Macron his through to the second round of the French Election with projection saying he won the opening round. The interior ministry suggest 23. 8 of the vote with the antieuro, antiimmigrant leader le pen and second 22 . Survey suggest that macron will win the second round. The euro touched the highest since november. Toshiba is spending off four inhouse companies into separate units that will involve infrastructure and other operations and combined Energy Operations with its nuclear unit. Toshiba is looking to sell off its profitable flash memory chip business to recover for multibilliondollar losses at its westinghouse unit. Has cut back the Austerity Program that cut bonuses and allowances for state employees and sparked criticism from people accustomed to gender state handouts. The government said the perks because theyled have produced the budget deficit. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Sophie asian stocks are set for a threeweek high as japanese shares lead. The nikkei continuing to rise over 1 , and the topix set for gain in at weekly month. Materials and industrials falling along with defensive shares in shanghai. Climbingok at the euro over 1 , although paring earlier gains, and the yen off session highs, but still around that 110 mark. Take a look at the gold price, down. 7 , falling the most in seven weeks given that haven plays are not seeing appetite today, and iron ore futures resuming the decline given that commodities complex pressure. Theing at the bond space, two year treasury yield out of the u. S. Falling over six basis points, the most since march. I want to look at what is going on when it comes to the commodities space. We cannot ignore a big theme as another threat to the reflation trade looms. The index for commodities tracked by bloomberg broke the upward trend line. The 2017 low,elow that could pave the way for a further drop of 2 on a technical basis, so we have to keep an eye on how the index playing out. Yvonne this is Bloomberg Markets asia. Of battle over the repayment 1mdb bonds may be coming to an end. Malaysia said to pay up a dobby 2. 5 billion abu dhabi in a deal worth 2. 5 billion. Have Southeast Asian correspondent who has the background on all of this and has been covering this 1mdb soccer for sometime time now. Is it almost over . Hopefully the end is near. People familiar say 1mdb will pay 2. 5 billion to apple dobby abu dhabisdobby sovereign wealth fund. The plan is to use proceeds from the sale of a couple of units. 1mdb will assume coupon obligations. Soy default in april 2016 both sides coming to some sort of deal. That announcement do today, 1mdb a scandal that has gone on for two years now. It was supposed to help malaysia attract Foreign Investment. Instead it piled on losses, billions of dollars in debt. It is an ongoing saga. Hopefully an end to that is coming. Could the path be more clear to call for an early election now . But his grip on power remains strong. Some say it is at an alltime high. Chances are he will call that early election. Look on hiss support among the rural voters. They are the very vehicle that form the base support of the ruling party. Analysts will tell you these are the people who are very forgiving. Hey will put 1mdb aside in fact, they are saying the saga is behind them. They are not likely to do more than complain. So he remains powerful and has consolidated power removing all dissenting voices, plus no opposition to speak of from policy to how to challenge n ajib, and even though the former Prime Minister has formed a new struggling to get that support. An election will be called soon. Yvonne we will look out for that deal on the london stock exchange. Thank you. Meet,an, central bankers but they could give hints on their next steps. Fromeen hays joins us now tokyo head of that boj decision. Since you are in tokyo, lets start off with the boj. We got a hand last week when governor kuroda said very strong accommodation moving forward for the boj. As strong as it has been, not any stronger. The boj is not buying more bonds are making its negative rates more negative, but it will sustain that because it needs to give inflation time to pick up and grow. Expected,licy change one of the reasons there is more focused on this meeting just because it issues a Monetary Policy report, so everyone once to get the logic of the arguments. Are goingsay they full speed ahead on being patient, and standing still. Lets take a look at the main points on their list. Theyre saying dont expect any changes in forecast for inflation or gdp coming even some thought they could shave that inflation forecast a bit. Exports, industrial production,obs aiding the reflation fight the reflation rate up towards 2 , but still far away from it. Of the Peterson Institute says the boj governor kurodas job is getting easier now. Arehey deservedly overconfident because they have shifted from wearing about how to reflate the whole economy to just warming about Inflation Expectations. They actually have a more limited job now commence i think governor kuroda and his colleagues feel they are on the stuff they can handle, has opposed to being responsible for the whole thing. Since he mentioned Inflation Expectations, lets 8007. What you see is the core cpi, the national cpi gear over year minus fresh food prices, the main inflation gauge. It is 0. 2 . On the lower portion of the with the bond market is betting is that Inflation Expectations have peaked and got to lower. Maybe that has something to do with the yen strengthening after getting quite weak. Maybe it is Energy Prices falling. , notore issue for the boj something they directly control, but trade. Japans finance minister on friday saying japan cannot guarantee a bilateral deal with the u. S. Would happen as good as tpp. Steven mnuchin urging the imf to step up its surveillance of tradege rates and imbalances come of failed reference to japans what some people are saying, and others as well. We have to talk about europe as well after emmanuel willn and Marine Le Pen contest the french runoff in two weeks. Ubs expecting some surprises out of mario draghi this week. Will this affect what he could be saying this week . It, he will suddenly get a lot of questions at the press conference after the policy decision on thursday morning. There was a sense that if there were shockwaves from the first round that wrote the markets, we can dohe euro, germanic week, maybe the ecp would be extra careful, but the question is with the economy in recovery, will mario draghi say it is time to get hence we are ready to formulate the sexes strategy this year . Lets illustrate this with 1131. Chart in the top part of this chart, gdp is steadily rising. Area hit in the euro two percent briefly, roughly the ecb target, but has now pulled back, so maybe that takes pressure off the tcp to make any remarks. There is one more round of French Elections in two weeks, and if Marine Le Pen were to win, recent Bloomberg Survey said the euro could trap 15 to below parity versus the dollar, whatever the ecb does on thursday, they will probably still have a big cloud of caution hanging over them as well. Yvonne a lot of the uncertainty has been reduced today after the first round, but the big u. S. Question this week is not how whethere hikes, but President Trump can get his budget passed to prevent a Government Shutdown. They at least have to get the spending part decided, and it is deja vu all over again. It is a political football. Dont like it when the government gets shut down. It can be bad for either party if this happens. Congress has too pass a stop gap bill by friday. Saying we will get the principles of Donald Trumps tax plan by wednesday, but no details till june. A lot of this is getting caught up in the question of building the wall, a locking the funds. Democrats dont want to do it, donald trump insisting on it. With that prevent a bill being signed in time . Lets jump into the bloomberg and look at how bond market bull s are responding. They like this. You can see that 10 year yield according to some analysts. Some still thinking we could hit 2 lower before we bounce back. Joining us live from tokyo to one feature we like to bring you his our interactive tv function. You can find it at tv on live,loomberg, watch us see previous interviews, or dive into the functions and securities we talk about. You can send this instant messages during our shows. This is for bloomberg subscribers only. Make sure to check it out at tv. How to make deals in the face of Chinese Capital controls. We hear from citic capital chairman. This is bloomberg. Yvonne this is Bloomberg Markets asia. It is a living 44 in hong kong. 11 44 and hong kong. Oasis management pushing panasonic to sweeten its offer for panahome. It will now offer the equivalent of 109 a share for the rest, vying the offer at 850 million. Original argued the offer undervalued to homebuilder by more than 50 . Top indian accusing i. T. Companies of unfairly dominating h1b visas by entering extra tickets in the lottery. The white house has a small number of outsourcing Companies Flood them with applications. Named by the administration has the top three recipients of h1b work visas. Ofoese Bike Sharing Service plans to expand to 200 cities this year. The founder said he sees bubbles in the industry, but thanks his distance has the scale to survive. Has 3 million bicycles and has raised 633 billion since its inception. He says the industry is still in its emphases. I think there are bubbles in the bike sharing market. There are three phases for the players in this business to evolve, fighting to put more bikes on the street, competing to make bikes easier to ride, and battling to have better maintenance systems. Almost all of the Bike Sharing Companies are still at the first phase. That is why we see bubbles. Speaking at the China Entrepreneurs club annual summit capital. Ead of citic he says Chinese Company is looking for overseas acquisitions are turning to offshore dollar funds as capital controls hamper their ability to finance deals. Exclusively to our china correspondent tom mackenzie. For many of the chinese players, they certainly are having issues now that the Foreign Exchange control is a lot more stringent. I think the government is doing the right thing though. For all the rationales i mentioned about my Companies Want to buy international recent year orhe two coming to see far more acquisitions not so much based on that aired it was more a multipleital markets arbitrage. Bad us why you see people bidding up the prices in the international markets. That ae paying prices local investor will not pay. It is not a strong rationale for wasting the Foreign Exchange reserves. Tom european elections on the way, brexit, French Elections, german elections. How much of that is factored into your strategy . How much of that is impacting the choices of chinese investors . Seen hugent really backlash against Foreign Investment. Not made much of a dent in terms of Foreign Investment. The British Government still welcomes Foreign Investment as well. In some ways, i dont see that will happen in france were germany, so we are looking at those opportunities. I think what is of concern to us is in the u. S. Although in the last month or so , that concern has been east somewhat. Ed somewhat. Tom what do you see as the key risks this year for chinas economy . The pace of deleveraging. I do feel Financial Risks are the main risks in the system. Explains they rationale by china as not opening up the Capital Markets as quickly as International Investors would like to see, because fundamentally the system is not ready. Overall leverage ratio is very high. Or talking about over 250 gdp. Now china at this point, given the huge amount of domestic , china can clearly deal with it in the shortterm, but the inventory should not be increasing anymore. Tom some of the banks are pulling back funding our products they have been getting to external managers to manage, that that has been reduced now. Are you seeing any impact their am a risks of volatility . E, any risks of volatility . Intos money is pulled back the banks themselves, the bond market is clearly coming down, and so is the stock market, so i do see an impact. It might be that impact is probably healthy, but there are many other Wealth Management inducts that invest nonstandard a satiric products. Esoteric products. When the day of reckoning comes for those products, the impact can be potentially even thicker, so i think bigger, so i think that remains to be seen. Paul one of your companies in china is mcdonalds. Tom are you looking for more opportunities in the domestic space . In terms of perception by viewedrs, mcdonalds is as a very strong brand come if not the number one brand. I think we just need to increase our presence. We are redoubling our efforts in third tear and forth to your third tear cities and forth to your cities. County and prefect for level are the focus. Aiming to turn its fast economy into a single market, we go live to mumbai for an update. This is bloomberg. Yvonne converting an economy of one billion consumers, 29 states, and 22 official cooling which is into one Common Market is not easy, but that is the challenge that lies ahead for attactake whento under it good to see you. July 1, not a long way to go, will the government make this deadline was so many logistic hurdles . Yes, thats right. It has been a nightmare challenge for the government from a 10 years in the government looks finally ready to go on stream july 1. There are huge challenges for 61 government to take, thousand tax people fanning the countryside to train Small Businesses did to be ready for the july 1 target. Like thel, it looks government does seem on track for the july 1 target having missed the earlier deadlines of april 1 and one in 2010 they had set up before. Yvonne once they go through the tweaks, what impact will this have on the economy and could this put pressure on these goods that could be taxed . Yes, thats right. What we have seen in other countries like australia and new zealand, there will be a shortterm spike in inflation, but most economists say that will be short term. The finance minister said only 50 of the retail goods will not the taxed at a high rate. Most of the stuff of everyday goods will be at a very low or 5 rate, so all in all it looks like the inflation rate will see a spike, but the central bank has assured they are likely to see through that impact and it will not change Monetary Policy. The imf was quite optimistic about indias economy, saying india will overtake germanys economy and the next couple of years. Do you think this tax overhaul will help them rise even further up the ranks . Like the finance minister pointed out in washington at the weekend, this is definitely a reform, the biggest overhaul since independence. It should help india achieve a bigger than 8 growth over the next few years, seeing it. Vertake germany by 2022 moreover, what should help and will be bolstered is the ease of doing business in india, the is very low, and hopefully that should see india move up the rankings in the next few years. Yvonne great to have you there. Ons do a quick check markets trading in the asiapacific after that French Election result. Headinge pen and macron into that runoff. Equities quite positive, the upkei 225 up 1. 25 , asx 200 12 points at the moment. The date move you should continue to watch is dollaryen. It is up. 8 . We broke above the 110 level, and the kospi up. 5 , and the won saw moves higher. Taking a look at hong kong, Chinese Markets are seeing pressure, down about 42 points on the hang seng. The china csi 300, down 1. 25 with concern about the e. M. Rebound given that Industrial Metals are still trying to find that bottom, iron ore falling 2. 5 . Emmanuel macrons victory in friends, facing Marine Le Pen next month to saudi stocks advancing after king solomon reviewed austerity measures and restored some estate perks. Saudi arabia and egypt putting disagreements aside as president sisi visits riyadh