Transcripts For BLOOMBERG Bloomberg Markets Asia 20170814

The Second Quarter gdp, soaring while corporate price also rising. Bank ceo is a highprofile victim of a Money Laundering scandal. He is set to step down next year. We are looking at china retail sales with production. On top of that, six Asset Investments. 56. We saw this huge spike up when they interviewed all that stimulus. 35 increases in the investments in china. We have been going down ever since. Looking at a number of a. 6 increase. 86 th, nonetheless increase. Growth, nonetheless still being propelled. Productiono got data, 7. 6 there. Retail spending at 11 . Is going towards a nonmac europe nonmanufacturing site. That is what we have to look forward to one hour from now. Haidi one of the missing puzzle pieces, giving that we have had trade numbers. When it comes to the chatter of economy stirring when stability is what they want for this key political year. We had better than expected numbers out of japan. Break down across the board. Except forwas a bit weakness. 30 minutes out from the opening of china and hong kong, singapore, taiwan and malaysia is just coming on. We had a rebound in wall street session on friday that is not tracking through when it comes to the asia opening. Sophie there is a little bit of a risk on mood taking place when it comes to the asian session. We have most major equity markets climbing. We have a mixture when it comes to bonds. Japanese markets are playing catchup following falling over 1 , coming up the session lows of the gdp report 6th straight quarter offsetting exports. We have deepening losses down to 10th of a percent, trading at 109. 40 two. There is a question are not it will creep that closer to that 110 level. We do have assets at old falling to 10th of a percent, and the 1. 6 basisld is up points. When it comes to the japanese market, we are seeing a fourth day of losses with toyota, mitsubishi, the biggest drag in terms of index points. We take a look at the index on the mri. We have a key driver when it comes to individual stock movers. We have bright stocks when it comes to ishikawa soaring 19 . Gaining after their First Quarter result. Surging to a record shale n c xcon surging to a record. I want to focus on what is going on with the yen, given that there is consensus consent around this war of words between the United States and north korea. We do have the yen on the back falling against the aussie dollar, also looking weaker against the swissie as well. The yen. E rise against we are seeing that up for a second straight date up 8650. This is the biggest jump since july 25. That is helping the aussie. We do have china data coming out, that might help the aussie depending on which way the data goes. That stella data stellar data we had economy is way better. Pressure on donald trump, lets get the first word news. Haslinda the driver of a car that plowed into a crowd in charlottesville, killing a woman has been charged with seconddegree murder. The 32yearold died on saturday jrollsearold james into antinazi protesters. Trump has been widely criticized for failing to condemn the White Nationalist who called the rally. His Vice President was more forthright. Sitting pants dangerous groups have no place and we condemn them in the strongest possible terms. Haslinda President Trump is preparing to turn up the heat on china over the what the u. S. Perceives as intellectual property. He is expected to sign an executive memorandum on monday, directing the u. S. Representative to consider launching an investigation. Officials say it would focus on u. S. Companies operating in china, being forced to trumps technological expertise. He will retire by the end of the 2018 fiscal year. As part of the fallout from a Money Laundering scandal. The chairman said the announcement is being made to there were 50,000 breaches of terrorism involving deposits at atms. The exact timing of his departure depends on the search for a successor. The deputy Prime Minister of australia may be forced to step down after revealing he could be a citizen of new zealand. Theas referred his case to high court after being told he may hold dual citizenship. A legible make him in for parliament, forcing a by election. Government only holds one seat. Global news, 24 hours a day powered by more than 20 700 journalists and analysts in more than 120 countries. This is bloomberg. We have domestic issues, putting President Trump under increasing pressure. Of stash Security Officials are still diffusing last weeks war of words. A neonazi march led to more criticism. Editor jodi is with me for a look at how lawmakers have been Donald Trumps comments on what happened in charlottesville. He has been getting criticism. He make a comment about violence on many sides. Not only by democrats, rishaad it was bipartisan. The congressional bipartisan came out and said there was a false a cluelessly by not coming out whites a premise, but members of his own party said his brother died fighting nazis in germany for this to happen in his own country. I think the president failing to call out the White Supremacists initially was viewed as a misstep. There might be some political consequences as a result. His political capital, yes. He has been so absorbed lately with having to deal with the investigations into the russian meddling, and his comments on north korea prevent that, now this. It is hard to see how you can move forward with the legislative agenda. Then he has been making comments the senatee like majority leader, mitch mcconnell, and blasting him for not getting through the legislative agenda. It is not going to make it easier to get to a legislative agenda on capitol hill after remarks like this. Had a additional sentiment over the weekend from the cia director, National Security adviser, what did they have to say . Was it on the finetuning of the president s own message . Were two messages from the National Security director and the cia director, who had separate appearances on top shows over the weekend. Try tosage was, lets calm down a little over north korea. This is something that is not. Oing to be a nuclear war lets calm down and try to take a step back here. At the same time, they were trying to back up what the president was saying about that the u. S. Will not tolerate Nuclear Weaponry in north korea and the u. S. Will take steps to try to do everything it can to make sure that buildup does not continue. The same time, which is an interesting dance to have to do. Ofdi and the communication working together with regional allies continues. We are looking ahead to the talks between the joint chief with an with the meeting south korean president what are the key messages we should be looking out for . Jodi that will be a very important meeting over the next day. Obviously, what they talk about in terms of what the u. S. Will do to try to support south korea anyld north korea take actions. August 15 is a very important day. The day that north and south korea celebrate the end of the Japanese Occupation of the korea peninsula. We may seeday where some things. North korea has been saying that by mid august it will take some action over guam. People dont know what will happen, but there are some key and we will be paying a lot of attention. Some of the advisors happen trying to turn down the rhetoric in the u. S. Haidi looking ahead to Communications Going on at the start of this week. Jodi for us there in hong kong. Looking ahead, Goldman Sachs is breaking down the gdp numbers out of japan. Next, attention around the Korean Peninsula could spark disruption when it comes to commodities trade. This is bloomberg. You are back with Bloomberg Markets. I am haidi lun in sydney. A quick look of the headlines. Cafes Cathay Pacific is expected to announce another loss. It needs an urgent change if to make a bigger effort to attract chinese efforts. Of moreounced a lunch than 150 million u. S. Dollars. That was for the encore of the first backtoback annual losses in its first 70 year history. Rishaad a surgeon profit in the first half. Surge in profit in the first cap. 21 billion than a year ago. The government got more than 100 million tons of coal. Officials will take more steps to deal with Zombie Companies and resettle laid off workers. Haidi they found a way to operate within china, launching a new app under a different name. It is a photo sharing device that was released in may to help in 2009. Enter a market Mark Zuckerberg has made repeated attempts to plead facebooks case, including promoting a book on governance us beside president xi. Now commodities shippers are among many other people who are closely watching the war of words between the u. S. And north korea. Escalating tensions may affect commodity flows and beat ford disruption route changes. To port and lead disruption route changes. Is with us in the studio. Is that what its called . Tell us about your essential thinking here with this rhetoric and these tensions. Not just tensions, for us, looking at a shippings point of timely at thery moment. It is not war, but the concerns. Ave a potential loss of life for shipping, north korea is still kind of tiny. For what is traded internationally, china going through land, it is not affecting. Rishaad but they have a disproportionate amount of ships and building capacity. Johnson true. Is a country of about 30 shipbuilding capacity. Within the shipping volumes for south korea are about 35 . It is about 7 of traffic for oil. Rishaad is the feeling overall that this is just rhetoric for the time being and that there is no real change, it is business as usual . Yes. On free shipping, a majority of traffic has not changed. So far in shippings, we are not seeing anything yet. Shipping this year is having a teasing year, at least for containment. Rishaad what about the collapse of hentgen. . Will we see more consolidation . Johnson i think there will be more. We have seen some already. Now some 15 large container eight large container liners only. The number will shrink going forward. One thing change, the whole industry is a bit more disciplined. We will see more in new orders of ships. That has been a problem for shipping industries. Too much new buildings. Think the capacity and balances being addressed . Addressed, is being it is still some order. New ships are coming in this year and next year. At least it is for almost a year. The liner stopped ordering new ships. I suppose what you were getting into earlier was the set of geopolitical uncertainties. They are uncertainties at the moment. Nothing has eventuated. It comes at a crucial moment for the shipping industry. Seen this global trade recovery, global trade story play out in terms of higher rates . Volume yes, we see the rebounding, Fourth Quarter last year. So far, the global trade for container liners probably see a 5 . Growth of five last year was less than 3 . Beginning last year he was an active shrinkage. It is good news for the industry. Haidi what do you see as the biggest risk . As we keep saying, this binary situation where one option is a serious conflict on the current peninsula, or are we still pricing the possibility of a trade war involving the u. S. And china . Not seen thatve coming. There is a lot of talk, especially since President Trump to power and what he talked during his campaign. So far, in terms of volume, between china, asia and the u. S. , we have not seen any signs of having a trade war. Rishaad lets get to your business now, using this Block Chain Technology that bitcoin has. Why . What does it stand for . It is a Standard Unit of a container box. A coin is we issue a bitcoin for shipping. It is a container unit, we issue it. It is money for themselves. Rishaad does each coin represent a container . Johnson it depends on the valuation of the coin. A heavy container costs about 700800 u. S. Dollars. It also values that a hundred coin. One is equal to rishaad what is it used for . Johnson at the beginning, i suggest the liners. You will give it to the customers. For them to use as a booking deposit. It is for shipping, liner shipping. The customers do not have to put down a deposit when they think the booking. If they do not show up, there is no consequence. Now they have been thinking about spending millions of dollars to try to fix it, they think about bank guarantees, cash deposits, are askingt they customers to put cash on the table. They are just tokens. The creation of it is very cheap. We can give it to the liner and customer to use as a deposit. Thebackup of the value is secondary market. We will take it on ico it next week. We sell it during secondary market. Rishaad why would people use this when they are not the coin or other the other currencies out there at the moment . Johnson to use pick you have to buy it. This one you have a secondary market. I can give it to them, they can use it. Argument they are given to us for free. If i give you 10,000 you dont want to lose it. If you make looking, you will be more careful. The beauty of it is it creates value. Capital from the crypto world to is to theorld, it global ledger. Rishaad it makes it more seamless. Yes. On that would be more visible. Is the advantage of the technologies. Creating a container shipping firm. Jumpg up, expecting a big in problems. Lets watch how the stock will be in free markets. This is bloomberg. Here in trading week hong kong is 10 minutes away. As stake a look at the markets in hong kong, it is essentially looking at some gains here for the index in hong kong shares. 21 thata look at the we have seen on the hang seng so far this year. . 10. Talking lets have a look at the chart. Theent up to date in market. Lets have a look at it against alibaba. The two, theys found themselves amongst the Worlds Technology companies. We have some lofty evaluations. Something that will have to deliver on some of the riskiest bets replaced on year. We have a 66 surge so far when it comes to tencent which is that in white. That is alibaba which is in turquoise. Lots to look forward to, haidi. Haidi battle of the tech titans there. Huge component when it comes to the hang seng index. Taking a look at china because they do expect profit to break 4 billion u. N. After lower cost. Revenue down one and a half percent. Second half performance will face increasing pressure. Trading in the shanghai list of shares have suspended since april ahead of mixed ownership. It is one of six and so easy have been tapped for this pilot private investor into sop programs by the government. To sales up 26 . The stocks that have outperformed hang seng index. This is bloomberg. Got you outnumbered. The dinosaurs extinction. Dont listen to them. Not appropriate. Now im mashing these potatoes with my stick of butter. Why dont you sit over here. Find your awesome with the Xfinity Stream app. Included with xfinity tv. More to stream to every screen. 9 29 at the moment right here as we come to the start of the session. To the like a good start day. We are anticipating gains at the start of the session. Loss is a bit of concern. Tensions between the United States and north korea. Volatility gauges soaring losses and the market jolted by the sudden increase in the rhetoric between pyongyang and washington. Attention turning to Economic Data in china. We have retail sales, earnings on the internet tieins, tencent and alibaba. Some very strong Growth Numbers coming out of japan. That is essentially what we are looking at at the moment, haidi. Haidi very strong Growth Numbers. Not reflective at this point for the japanese equity market, but they are playing catchup from the fall off on friday. Shanghai and Hong Kong Market out there ahead of that data after beijing. Here is sophie. Sophie Chinese Markets are looking mix. When you look at the benchmark, we are seeing it rise to 10th of a percent, snapping a threeday drop. This as shares in shenzhen are offsetting the drop we are seeing in the shanghai market are at the hung saying is adding a 10th of a percent, this after three days of losses. We are seeing equity markets is down for 10th of a percent to join the nikkei 225 lower in the region. Take a look at what is going on in the currency space. We have the onshore yuan falling to 10th of a percent, trading at 36 a dollar fed slightly stronger reference rate from the pboc this morning. We have the offshore rate swinging to losses. Aussie is up two cents ahead of the china data we have at the top of the hour. We have factory production, retail sales on the radar, expected to come under pressure as credit expansion slows bit take a look at the commodity complex. Shanghai, goldn is falling 6 10 of a percent. Rebar is back at 2013 levels, bc of Global Markets are calling a bubble when it calls to the field market. Bill Come International said t they are dumbfounded speculation is driving what we are seeing in the future market. Take a look at the hang seng up a 10th of it 8 a 10th of a percent. Tencent up over to their descents a day. The biggest gainer in terms of index contribution four points. Keep an eye on the property space real estate up about 4 10 of a percent. We have local media reporting the government may speed up homebuilding approval. I just want to check on chinese estates. A warningper flagged for firsthalf revenue and profit as rental income takes a dive. Operating from hong kong and on the chinese mainland. It is the second ignition hold her in china ever grande. This is the biggest Real Estate Developer in china. Lets get you up to speed with one of the first word news headlines. Joining us is haslinda. Economy drewans for a six straight quarter, that is the longest expansion and more than a decade. In exports to boost gdp by an annualized 4 in the Second Quarter. 9 10 of 1 ,jumped business spending them ands expanding 2. 4 from the last few months. Officials have tried to get away from war from north korea after days of rhetoric from President Trump. Cia and National Security said there was no indication hostilitys will break out. The chairman of the u. S. Joint chiefs of staff will make will meet south korean president on monday. They are trying to keep terrorist off the agenda. Mexico is approaching wednesdays meeting as an opportunity to the deal and is determined to block any attempt to reintroduce terrorist. They are expected to be rules of origin. Any related to and property. There are a new and a house investigation of Deutsche Bank and housing healthy russians moving money to the west. They want to House Financial Services committee to force the bank to disclose the internal review of more than 200 million in loans to President Trump years before he ran for office. A daynews, 24 hours powered by more than 27 hundred journalists and analysts in more than 120 countries. This is bloomberg. Thank you for that. As we saw earlier, japans gdp the Second Quarter extending. This prolonged period of expansion. Is chief japan equity strategist at Goldman Sachs. A weakness coming through from experts. Very positive. Y i think this is probably a very decisive confirmation of , or longlasting transition away from relying solely on external demand and really a transition that i think is hopefully more sustainable to domestic demand. I think a lot of of people forget that domestic demand make over two thirds of japanese gdp. It is supercritical but the largest part of the economy starts to gain traction. We are seeing evidence that it finally is. Aidi i want to throw up quick chart that break some the different components of the gdp. If 240 on new bloomberg. We obviously have the headlines. 5240 on new bloomberg. We obviously have the headlines. A little bit of weakness when it comes to exports. The question is, so far what we have not seen as this translate into inflation, that is what the bank of japan is desperately looking at. Kathy absolutely. We have just begun to see more convincing evidence that domestic demand is finally picking up. I dont think consumption would have been the strong had we not seen wages pick up to some degree. As we have seen, the spring Wage Negotiations for at least three consecutive years have printed base wage gains. We are seeing overall employee risee also gradually because of Labor Participation in japan being at an alltime record. The extent not only women working more than ever before, but older japanese entering the workplace in numbers we have never seen. Willtransition phase transfer into robust evidence of which growth and income raised her we are still in the beginning phases. Inflation is still subdued. Japan is not the only man out in this regard. We will expect to see some inflation, better numbers as the quarters pass alongside wage gains an overall better demand in the broader economy. Haidi the other missing puzzle piece is whether we have seen this continued run of corporate profitability, the health of japan is not in question anymore. Will that translate into animal spirit . Kathy sure. In the what we have seen spending, on capital on the private sector, as well as the Public Sector side. I think the fact that corporate profits have essentially doubled corporates have the cash. I think we are finally beginning to see some of the confidence being translated into some growth and animal spirits triggering some ability to spend , and noty on keflex just spending it on shared returns like dividends. I think it is one healthy sign. Not to get too excited, too quickly, we are still in the early phases of this emergence of animal spirit. It will take a few more quarters to see this become more evident in a broader way. It is probably something that shinzo abe cannot wait to happen. Is this data good enough it is still little at the moment, get out ofhelp them the political mess he is finding himself in at the moment, kathy . Kathy is it certainly helpful to underpin his support rate, which has enjoyed a little bit of a bounce post the Cabinet Reshuffle that occurred over a week ago. But these numbers i do not think will be enough to get it back to the lofty levels it once stood at at 60 . Talk of a need for additional fiscal stimulus measures if the support rate stays in the low 40s range. That may not happen immediately, but there seems to be a political need to do that later on this year, i would not rule that out. It is helpful but not sufficient to lives the support rate back to where it used to be. What in your view . A combination of better news for the broader economy. Wages have more broadbase, more participants in the economy feel better about the future. I think also, i think the support rate hit the other cabinet has suffered is a message and signal from society saying, we do not really want you to be said please distracted or focused on the constitutional issue. We really need to focus on the economy, jobs, wages, and i think this wakeup call is the necessary wakeup call that was needed to get the government to refocus on issues that japanese people are more focused on. If there is a focus on the economic policy, that may help raise the support rate down the road. For the market we have been neutral in the second half of this year. Is stuck in market a tugofwar between political, geopolitical concern, but pretty solid. Intoe other hand, headed 2018, we are still looking for topics to reach 1700 because we think that fundamental is Pretty Healthy and sound. Rishaad i think part of your research has to do with this tugofwar between politics and fundamentals. You are quite defensive, arent you . Term, we are near more focused on companies that have stable growth, have visible topline, have strong market shares. Though theen domestic fundamentals i mentioned are pretty solid, the overseas environment is still rather uncertain. We have seen the currency appreciate over the last week or so, that obviously leads to some concern or pressure on exports. Overall, we want to stick with companies that have delivered stable growth overseas over a d of time. Perio we are not thing go crazy, look for relatively cheap valued growth. That is the place to be for the time being. Haidi would you agree that you have seen over the past few months, the macro fundamentals get stronger, there have been a weakening fundamental between the yen and the strength of the equities rally . How long do you think that can be sustained . That wehat is the point have been mentioning for quite some time now, which is, the key to decoupling between the stock market in japan and the yen ultimately comes down to when the engine of growth shifts from exports to the domestic side. We are beginning to see evidence of that coming through. Aongside that, we have seen reduction in the correlation between these two macro factors. For example, in u. S. Dollar 13 orthe topics is up so year to date, which is outpacing the rise in the s p 500 in the United States. This is very critical for a u. S. Based investors who do not hedge their yen and exposure. Their japanese stocks relative to their benchmarks. What you have seen is pretty strong evidence that the yen can decouple, the stock market can decouple from the currency, and that is what i think might draw foreign interest back into the market. Somewhereately, but down towards the end of the year towards the beginning of 2018. That is a critical factor to watch. Does todays and data change anything for bank of japan . Does it change anything . I dont think necessarily. The bank of japan is encouraged we will need to see what happens to the inflation prints in the next several months ahead. Adds a it probably little emboldening that inflation will be forthcoming down the road. As we have seen in the United States, strong growth does not always translate to better data on inflation. Were may be a lag here as have seen in the United States. It may take more patience for the bank of japan. Haidi japan has been waiting for inflation for a long time. Hank you as always equity strategist at Goldman Sachs joining us from tokyo. Mgm resorts ceo is doing investments, rather than trying to invest high rollers. Our exclusive interview, next. This is bloomberg. Haidi the chief executive of australias largest bank is set to retire. Pauls got the latest on this developing story here in sydney. Is there in indication that he has fallen on his sword . The rhetoric that they have supported him. Paul even on a conference call, to say ifoman refuse his retirement was brought on by this investigation. There was no direct mention of that current scandal in the statement out in the statement either. We will have to lay it out for everybody. This is the investigation of more than 50,000 interest. A huge element. We go, we will let people draw their own conclusions. Breaches of Money Laundering and counterterrorism being investigated. The regulator is investigating, even the reserve bank has relayed in on this. Of this is over a period years of depositing 500 million of cash in banks. They failed to monitor this, even after being told by the police. It is difficult to escape the conclusion that he did not fall on his sword. Haidi mix messaging there. Price, isf share there downsizing since the scandal broke . Paul yes. You can see the significant drop off since last week since the scandal broke. Shares are up about two thirds of 1 . If nothing else, at least this has provided a bit of certainty. People were always thing, here in the newsroom and in the business, somebodys head was going to have to roll over this. And it looks like it is his. If you look at this record over is very 60 years, it good. He has the livered consecutive record profits for each of the six years. The one this one, but over the insurance payment, the Financial Service scandals. He will be gone sometime in fiscal year 2018. Paul allen there in sydney. Casino revenue remaining on the macau. High rollers add momentum to a yearlong recovery. Gross gain in july for a 12th straight month. Vip revenue up from a year ago. We have an exclusive interview with mgm chairman. He told me that is not all about massmarket. Is mostly en masse and coach i. We are in a beautiful resort here at mgm macau. This is a very high in, luxurious property. Thesurprising recovery in vfp process. Our Business Model is predicated on growing the massmarket business. Cotie. Do that and obviously we benefit from the vip business is doing well. I do not view that as a way to build a strategic plan. Rishaad are you concerned all with the comeback of vip, you might because wrongfooted with cotie . I think we certainly were by the recovery of the vip business when it did come back. Much ofnot benefited as our competitors did because we do not have a cotie product. When will gaming and nongaming revenue in macau make the same revenue for you . I would bet that within 10 our nongaming revenue will be greater than our gaming revenue. Rishaad i will hold you to that. Lets move on to elsewhere in asia. Where else are you looking . For instance, japan, they have a proposal at the moment. I think you are interested, and you have said you were you will build. Would you invest in that investment, if you still go through with it . Isthe opportunity in japan the government is working on what they call the implementation act. They are writing legislation at the bureaucratic level. The way up the way it currently looks is that they will limit if the past the implementation act. Integrated resorts and a handful of places. Two of three initially at the most. Within that, they are going to restrict the amount of gaming floor space rishaad but they may well change. But you are committed . Absolutely, the markle the market potential is tremendous. The one guidance they have not given, which is the tax rate. We have learned a lot of this, but if they adopt a singapore like model, which is one of the models i think the world does admire, with other constraints, you will see a very Competitive Bidding for japan. Ceo of mgm there. Coming debt, a. L. Of two cities. Singapore and hong kong are facing a very different future. This is bloomberg. Starks may bekong cheaper than singapore, but that does not make them more attractive. Hong kong real estate is teetering. They show signs of bottoming out. Lets get more on all this. Asia investigator is with us now. Hong kong top property shares are trading at a discount versus singapore. Is this reason primarily the one which is outlined . That is right. What we are expecting in hong kong is that after years and years of increasing prices, prices have bring you a record level, everything sees price for a perfection. Rishaad they have had no plans to ease these properties they have in place for the time being. Sree yes. If you look at the housing prices, they are up, the more than doubled over the past rishaad in spite of the property measures. Sree in spite of the property measures. Since the latest round of measures in november, they are up against up about 25 . There has been a pattern of hong kong property prices rising. Now you are in an environment where Interest Rates are poised to rise. The fed follows Interest Rates. High Interest Rates, hong kong is sure to follow. Singapore versus hong kong for fundamentals. Sree for now, singapore shows the fundamentals are stronger. , the demand supply dynamics are healthier. Singapore has had 15 straight quarters of decline, that is thinks largely due to the governments very disciplined in cooling any signs of housing bubbles. At this, definitely with what is happening in the broader macroeconomy, it seems like singapores developer stocks might be a better bet. Watching those, thank you so much for that. Australias largest rail freight operator has delivered a four set of fouryear results. On whathear his outlook it comes to whats next. This is bloomberg. Track your pack. Set a curfew, or two. Make dinnertime device free. [ music stops ] [ music plays again ] a smarter way to wifi is awesome. Introducing xfinity xfi. Amazing speed, coverage and control. Change the way you wifi. Xfinity. The future of awesome. Violence in virginia, a man is charged with murder. The white house tries to deflect criticism. Rish, as the domestic political turmoil continues to worsen in the u. S. , japan beat expectations with the gdp print, now it is time to take a look at china numbers. Retail sales for the month of july, weaker than expected, 10. 4 . We were looking for a number of 10. 8 percent, which was already a moderation of the previous month, 11 clip. This is always just a year to ate number coming through at. 3 percent, also weaker than the 86 estimate, which would have been unchanged from the previous month. Rounding out the picture when it comes to the domestic activity indicator. Industrial production number four july. Market lee weaker at six before percent, we were looking for a number of 7. 1 . All of these numbers weakening from the previous month. Rishaad lets get to managing editor. Other linee crossing, chinas structural problems and hidden risks in the economy. We have come to this data, which is weaker than anticipated. There is something to be said here. The spokespeople have flagged it the economist have flagged it for quite a while. Judging by these numbers, it seems some of that strength is coming up the boil. We got a hint of this towards the latter part of last week. We saw fiscal numbers, not closely watched but there was a pullback in fiscal in july. Authorities have been ramping up their rhetoric over trying to rein in some of the financial successes. It is now hitting the real economy. Rishaad july home cell values of 15 . This is a visual country wide margin. Country prices in the for the region. Nearly 16 . Malcolm i think that is coming up a little. Some of the curves on the Property Side are probably coming through. Some economist always zero in on property. It is all about the property cycle in china. These curbs have been ratcheting up. It seems that maybe the brakes are being put on there, just a little bit. Coming up the boil from that. Speaking of the hidden risks they are talking about, i wonder what they are. They are hidden. Malcolm we have seen the structural problems. Rishaad we know about those with the economy. Malcolm the but authorities are talking about it more. E had that gray rhinos in view it is known that we should be able to see coming in, we should take steps. We have seen the wings clipped of those big companies. It all seems to be coming together. The imf has been warning about it for a long time. Authorities are taking things more seriously. The data has not dropped yet. Judging by what we have seen here with the three misses on retail Industrial Production and investment, we will probably see moderation there as well. Welcome, i was just going to say these money supplies will give us a point in this Deleveraging Campaign we are in and whether it is working. Wecolm in recent months have seen the overall numbers hold of fairly well because big banks arent lending to be companies. We have seen pullback in the shadow banking areas. We would expect that that would continue. It doesnt seem so by the rhetoric of policymakers that re will be any loosening there. The smaller ands or feeling the squeeze, they do not get access to the big banks or the big fundings like the us so ease do. Of bigontinuation fundings like the big banks do. We see a continuation of that. Perhaps unexpectedly at this point, the strength of the yuan would give conflict of policymakers. That on the reimposition of capital curves. That is at least one risk. That big money that we were seeing in the latter part of last year. That story has gone away. More benign fed outlook has helped on one part. It has lived up to expectations. At least the external sector is looking better. The external demand sector is looking better. Exports have been stronger than people had anticipated last year. That allows policymakers to dial back there is support for the economy. To dial back on Infrastructure Investment and on the financial risks. , thank you so much for us thank you so much for that. We have slowed data china retail , and factory out all coming in weaker than expected. We will turn it over to sophie. Sophie despite that miss when it came to the retail Sales Numbers and the output data, we are seeing that way on markets in china and hong kong. They are maintaining gains up 6 10 of a percent. Hung saying is up 8 10 of a percent. At 6583,eing the yuan the aussie holding a gain above the 79 usn u. S. Sent level. Steel see a lumen him and the pinning losses ahead of its steel aluminum and losing ahead of its chinese data. Findingve chinese bonds favor here. We do have the fiveyear bond gaining with the yield falling 1. 2 basis points. Checking on the reaction in shanghai, gaining 2 10 of a percent. Watch what is going on with industrial stocks on this benchmark. We have that segment gaining a third of a percent. This segment is the second biggest sector on the index after banks. It has an 18 waiting on the shanghai, we do have financials, down, thet segment peoples daily underscoring that the peoples Financial Sector needs to serve a real economy. We are seeing banks leave the drop, check out what is going for shares in hong kong. Financials among the biggest gain there. Gaining over 2 this morning. They are leading construction 1. 8 ials higher up about this morning. Is up for tenths of a percent. Taking a look at the hung saying saying hang seng, link leading gainers on this insect index. A threeday dropped despite the light volumes we are seeing a part of the hung thing hang seng. We are seeing a little bit of fluctuation. We do have the hong kong Financial Sector tell reporters this morning that there are no plans to ease ruling measures. Now i want to take a look at what is going on with what is happening in taipei. We do have han high there dragging the most after its friday earnings after estimates. Global smartphone shipments are ahead. Up above for tenths of a percent joining the nikkei 225 on the back foot this monday. Racially charged weekend taking its toll and putting the pressure on donald trump. Go to first word news. Haslinda the driver of a car that plowed into a car a crowd in charlottesville, killing a woman has been charged with seconddegree woman. She died on saturday when the drove into a crowd of antiprotesters. President trump has been criticized for failing to condemn the White Nationalists who called the rally. Vice president pence these extremist groups that need to be shut out of the public debate entirely, and discredited for the hate groups and dangerous Fringe Groups that they are. President trump is theing to tie up over what u. S. Has said is the fast of intellectual property. He is expect she is expected to sign an executive memorandum on monday to consider launching an investigation. Officials say it would focus on u. S. Companies upgrading in china and being forced to transfer technological expertise. Sixns economy grew for a straight quarter, expending the longest expansion in more than a decade. Had gdp by anmand annualized 4 in the Second Quarter. Private consumption jumped 9 10 of 1 while business spending double x estimates from the previous three months. Officials have tried to lower scare is with north korea after days of rhetoric from President Trump. Cia boss and National Security no just say there is no indication war will break out. Meet chief of staff will the president on monday. Global news, 24 hours a day colored by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Still to come this difficulties on edge. We will look at the north korean risk with kapstream capital. Mind ofp next, from the australias major, commodities transporter arrives. This is bloomberg. Rishaad at one stage on friday was up four point 5 . We are building on that. One hotel surging as much as 30 . We are at the highest level since june 2015. Just up 26 at the moment. The monthly billionaire owner and his plans return. It will be changed into a manager operator theme parks and hotels. This company seeing that share price surge, now 26 to date. With have a look at whats going on with the business headlines. Ins have a look at shares net song. Nexon they are trading at two under ¥51 so far. The revenue jumped 27 . And fighter more than a decade open due to perform well as a new platform, including mold mobiles. We talked earlier but the Strong Performance. Games are an art form. You have to a cultural competitive compatibility the between your company and the company you are thinking about joining up with. We often say there is no role in the games business. You have to have a similar viewpoint onto how your grow your company and the individual game. We take a very putin in episode, but we keep a lot of paths around. If the right we take a very rude opportunity, but we keep a lot of paths around. Privatizations valued at more than 350 billion over the next five years. It is set to become the first japanese lender for the worlds biggest exporter after paining approval from the kingdom central bank. Japans biggest lender plans to open one in riyadh next year. Rishaad one of the Worlds Largest food traders has a profit jump. They cut they climb to 109 million while revenue raised. Sales particularly good in the food staples. Tax up by 41 . Theyre up nearly a tenths of 1 . Haidi australias largest ralph to sell its underperforming business and buyback shares worth around 240 million. Joining us here in sydney is the director and ceo. Great to have you here with us at bloomberg. Big deals to offload the assets. Regulatory prices for the actual businesses that are being sold. We are estimating the end of the financial year. For the business is going to be closed, we are looking towards the end of the calendar year. There is the underperforming assets. When you look at the risk of the business, it is back to our core activity, which is heavy and infrastructure management. Haidi we have talked about the rick covering about the recovery. Andrew what we are seeing in customersre seeing committing to extension of costs costumes for higher volumes in a particular time. Six monthsved from ago where people are talking about doing it, then they bring the money down. A take that as a pretty strong sign. Haidi we spoke to you and you indicated some optimism and positivity. Is that still the view you hold now . Six month ago i was slightly confident on much more confident than that. Growthseeing stronger than we would have expected. Haidi do have a forecast . Andrew i am not into forecast prices. Rishaad are you seeing a recovery over all that . What are you seeing in the commodity space . Are they out of the woods in your view . Andrew what i am seeing is what pricesld expect with that are holding out long enough and people gaining additional confidence. That is starting to transfer into financial commitments for contracts. You have a net loss at the moment, how did you become profitable down the road . The net loss is really a result of the underperforming business and bulk business, which is the noncall bowl commodity movement. Accountanty specific region. Managementok at the and the coal business, they are going very strongly. The secret with success for the future is getting back to those coal businesses, and what has generated the need and desire. Rishaad the thing is, how are you going with all that, and what will you get rid of down the line . Plans in the model business, we have a greater transaction, which has an becaused execution time it is subject to approval. For the business that we will close, which is the mobile business outside, we are looking at the haidi what went wrong. . Is thatlessons learned it is quite different, even though there is component. It is quite different to bulk, or grains. You need very good Logistics Systems and you need we had attempted to struggle and build that back about 10 years. We never managed to do that. There is a point in time where you go, we have tried long enough. Low transport in australia, policy settings in australia failure relative and. Those have not change for a long of time. It is extremely difficult to do. Expecting that to change magically is hard decisions are made. Haidi are you in talks . Andrew we continue to be and in supporting any customers that want to start. Ofhave put forward a number proposals. We had a proposal this year to become involved. Is a process of consideration. We are seeing how to get through that process. Haidi when do you anticipate a response . Andrew the challenges i am not in control of them. There is no indication when it is finished. We continue to be part of it. Haidi thank you for coming on today. Lets get you a look at what is coming up. We will take a look at what was writing on the big that when it comes to tencent and alibaba reporting this week. This is bloomberg. Rishaad alibaba and tencent may be the worlds costliest Tech Companies but valuations dont come without risk. Are at with the earnings. Alibaba and tencent traded about twice the amount of the likes of facebook and google. Reason behind that is that any sense of getting a pullback. We have already seen a pullback in the past couple of trading sessions. The thing driving these is that astronomical trading growth. That are notpanies print new. They have been around for decades. They push in Revenue Growth close to 50 for the june quarter. That is what a lot of the bears out there are saying. They have been saying that for the past couple of years for these companies. Both have very dominant positions in their respective industries. Probably bomb for alibaba it is ecommerce. When it comes to tencent, they are unparalleled when it comes to the dominance to everyday life in china. People count on them and revenue to keep growing. Unsustainable, particularly numbers getting bigger every quarter. That is what people are counting on. Between the two of them they have invested 55 billion this year. What with the biggest bets and the strategies behind them . Is to staketegy now their claim in new areas. For alibaba, it involves taking stakes in sharing within the craze that has taken over many chinese cities. There has also been a bet in sifys asia southeast asia. What they want to do is reproduce that success of Business Model in southeast asia, where you are talking about a region of half a billion people. When it comes to tencent, their biggest deal was the super soul deal. That gave them in oversee studio, it was in many peoples smartphones outside of china. Been popularlso inside of china, north america people have been playing these games for years. It made a big bet and gave a big opportunity. Our asia tech editor there in hong kong. Coming up, japan gets a tdp jolt. Well take a look at what is behind the economys longest expansion in more than a decade. When it will translate into wage growth and inflation. This is bloomberg. Got you outnumbered. The dinosaurs extinction. Dont listen to them. Not appropriate. Now im mashing these potatoes with my stick of butter. Why dont you sit over here. Find your awesome with the Xfinity Stream app. Included with xfinity tv. More to stream to every screen. I am Haslinda Amin but the first word headlines. Chinas expansion dialtone and not. Styles down a notch. Dials down a notch. Industrial output rose from a year earlier. Fixed Asset Investment rose 8. 3 , short of estimates. Willk in australias ceo retire. Is the result of a followed of a moneylaundering scandal. Is accused of breaches involving deposits at atms. U. K. Aims sluggish breakfast brexit negotiations. The slow pace of talks have led the gv the chief e. U. Negotiator that an agreement might not be possible by the next leadership summit in october. Second to avoid any political fallout from the diesel emissions scandal, two liters put the the two leaders put the blame elsewhere. The Prime Minister of australia may be forced to step down after revealing he could be a citizen of new zealand. He has referred his case to the high court after being told he may hold dual citizenship. Ineligible. Ake him his government led by Malcolm Turnbull only holds a one seat majority. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am Haslinda Amin. This is bloomberg. Thank you for that. What are we seeing in terms of this start of a new trading week in asia . Singing risk off sentiment that engulfed Global Markets at the end of last week. We are seeing nice gains in japan. It catch up when it comes to the china numbers. Across the board miss when it comes to retail sales. Themu were pointing at curious comments about structural problems and hidden risks looming in the economy. We have the japanese economy in focus. It is a situation where china cannot with retail sales and fixed Asset Investment there is well. There is more mobile of the economists thinking. Japan as well, the economy revving up to 4 annual growth, marking the largest gains in 11 years. Lets got lets get more on this. James, what was behind all of this . James that is right. The initial data that cannot is very strong. Spending from households was up more than expected and so is business spending. Government stimulus had an effect. Those things combined meant much stronger than expected. Is this a sign that this is working . We were talking to a guest earlier from Goldman Sachs. She is getting the sense there is more optimism. This is probably a decisive confirmation of final or longlasting transition away from reliance on external demand and a transition that is more sustainable to domestic demand. A lot of people forget that domestic demand, consumption, makes over two thirds of japanese gdp. Supercritical that this are just part of the economy starts to the traction, which i think we are seeing evidence it finally is. Remains,the question is it finally working . I think she is right when she says it shows that the economy is moving away from relying on external demand. It was a drag in this quarter. Quarters of six growth, the best in 10 years. We should take todays number with a grain of salt. If you look at the data for the last 10 years, the first printed gdp is generally revised up or down, you see a 1. 9 percentage point of revision to the final point, so 4 is probably not going to stay 4 forever. At the same time, youre seeing , stroke orowth domestic growth, and that is organically coming from the economy. The Economic Program over the last years has had affect has had an effect in stimulating domestic demand and a desire to spend from japanese consumers. Whereion is nowhere near the government or bank of japan wanted to be. Their aim for stable domestic growth and inflation, they have achieved half of that. Maybe some inflation coming, but it is nowhere near what they wanted to be. What it to be. It is a bit early to say it is working. Haidi it is like the boy who cried wolf with inflation. Our guest says it was encouraging to her. Private consumption has been positive when it comes to this gdp print. Is this going to translate into wage gains and inflation, and when are we likely to know more about that . James you are seeing wage gains on the margins. Parttime workers are seeing higher wages. The aim is that will make its way through two fulltime workers and the whole workforce. People have been saying that for four or five years. That japan is slow in reactivity . I dont know. We will see more data on inflation and wages at the end of the month, and you are seeing haveal, as you see we growth. This is a good sign. It still requires better wages growth to transfer translate into inflation. Difficult tos shake be deflationary mindset. James, thank you so much for that. It was a great gdp print out of japan, but that hasnt translated to the market. Sophie, things are looking better than we were headed at the end of last week. Onhie it looks like risk when you look at other major benchmarks. Something rising as much as 1 . Chinese stocks are not giving up todays games. Ins. Odays gaui gains. Ys weakness we are seeing in the yen, which is falling against the dollar. We have another data point coming out of japan. We had Industrial Orders for june. That came in weaker by 7 on year. That is the sixth monthly drop in 2017. Looking elsewhere when it comes to what is happening in the market, u. S. Futures indicating a higher open. That could enable that responsive trickle to the session when they open on monday. I went to highlight what is going on with the yuan. That is bouncing back. We had the pboc said that reference rate stronger for a fifth straight day. Best currencyias to lead the region higher. This we have earnings driving the individual market movers. This is our breakdown of the safety index. 11 ave nexon jumping almost after its earnings report. Companyan industrial coming to an 11 month high after its result. A Technology Company gaining have a percent, jumping the most since august 2. It is leading gains along with regional tech shares, which are leading the advance in asia. That is not the case when it comes to taipei. We have Korea Aerospace falling 4. 5 . L, slighting its earnings are anticipated today or later this week. Allegations of accounting fraud. It is not trading at its lowest since august 2014. It is now trading at its lowest since tony 14. It is now trading at its lowest since august 2014. Rishaad unbelievable performance for wanda hotels. Leaders in washington dc trying to cool be rhetoric around north korea. The war of words is unnerving investors. The north has been isolated for so long we tend to think of it is not affecting the financial world. Has ebbed. S you can see that in gold. We could still be we could still cns question. What is the impact . Guest north koreas is isolated, but its neighbors or not. China, japan, and south korea are Major Players in the world economy. Look at commodities. Oil, more than a third. They cap for near than half of coal imports. The account for much of iron ore exports. China, in particular, which is the worlds Biggest Energy user, northern districts account for a large portion of oil and coal imports. You can see how the situation with north korea escalating could have a Ripple Effect on a key part of the Global Commodities trade. A lot of this is uncertain. We dont want to be speculative, but how do these tensions potentially play out in terms of real Market Impact . Great point. S a we havent seen any actual real market effect yet. What would happen though, the first place we would see this is in shipping. Exploit ontinue to escalate and insurers might more risk premium, they could raise a means for shippers. That could increase costs of some of these shipping routes for key commodities, and eventually you could have blockade, foreclosures, which could cause shippers to be rerouted, adding expensive routes. Thee could ripple down into profits these companies that are shipping them in the commodities themselves as they are traded around the world. Haidi thank you so much for that. Coming up, provocation and escalation. Were going to speak with about the north korea issue. Real yield is next. This is bloomberg. Fears of military conflict between the north korea and United States have rattled most asset sectors over the last week, driving treasury yields to the lowest since june. Guest is a portfolio manager. Great to have you on. Context, treasuries have it reacted as much. Is that surprising to you . Not really. If you look at treasuries, it is trading on the lower range. That is partly because of the north korea escalation, in my view. For it to trade tighter, you are going to have to see and escalation. Haidi does that like behind the more escalated levels of risk off you would expect . Past, marketse have looked through this north korea crisis. This is not the first time it has come up. It comes up every year. This time, it is slightly different because trump is more unpredictable as a president. You have seen a little bit of a to 17 ,and risk kick up but not a massive broad selloff. Haidi the soft inflation rate , that gives aay bit to the story for lower inflations for longer, a tightening trajectory. Have the inflation print on friday. It was ok, but below expectations slightly. The fed wants it to be at 2 . Supposedly we will get there next year. Wage inflation is around 2. 5 . Haidi does that mean the greenback is a oneway bet . Markets are still looking at , but the Central Banks arent. Is that still the case . When you look at the can cut ratesthey and have the time to do it. Trump doesnt have the power to enact policy through congress. Doesnt have the power to policy. He has to do it through congress. He hasnt been able to get stuff through. He has another 16 months or so before the elections. Rishaad how does that fit into your strategy . What is your top conviction . It seems like you are playing it safe. Raymond in terms of the overall strategy, what we are doing is still going on corporate assets. Particularly in australia. Much positioning in , because it is lower. You are going to get some kerry were holding on to those bonds. When will we get juice in the treasury market, given the possibility we may not get a even later . Rhaps not growing as fast as janet yellen others would like. Raymond it depends. Remember, the fed has been hinting they are going to do Balance Sheet reduction potentially in december. Hike an delayed the rate little bit longer. The inflation print is going to be important. They could potentially do the rate reduction and height hike rates again in december. I noticed you have been selling korean bonds, picking up default insurances. Perhaps you are anticipating things to heat up more than your suggesting. Raymond we are bond investors, so we are always looking at the downside. From a portfolios portfolio perspective, what we have done is trim some of those bonds. The other way you can protect self i look at the tail risk event. It is a small part of the output portfolio. Sprint have been coming in. You want to be long risk assets. There withymond lee us. Lets have a look at what we have coming up. Rishaad you are walk with Bloomberg Markets. You are back with Bloomberg Markets. We are talking with geely motors. It has risen since they have bought volvo. Our guest jaundice now from mumbai. What lessons can be withdrawn from the experiences here of investors inrs these two iconic western brands . These acquisitions were made during an economic recession. That is a great learning for any management student. They never thought about cost canngs so that they manufacture things in india. In the case of geely, italys invested more in factories it always invested more in factories. They started making small cars. The key is synergy and the technology transfer. Haidi . What comes next . Guest the company is thinking that the alliance is not yielding now they will bes now they will be scouting for a new partner. They are trying to establish a meaningful presence in india, so they will have to find a new partner. Rishaad august joining us there from mumbai. Our test joining us there from mumbai. The big stories go far. Data strong and weak. David we are going to put the numbers into perspective. The bloomberg headline suggested it does read in the best shape since the early 1990s. When you look at the nominal figure, it is true. Are we getting Wage Inflation . Rishaad how extraordinary. The move was quite something we in terms of blowing away the economists regulations. David even the most bullish, when you look at the quarter to quarter, seasonal number. The other thing is 2018. You have the term of mr. Corona coming up and the elections. Mr. Koruda coming up and the elections. About, whatk economics is this . You have seen a pickup in Public Investment. The fiscal put is there pushes there. I think it was kathy mitsui, she basically said when you look at consumption, at least we did get some weight inflation, otherwise the consumption numbers dont come in and cooperate. Property and stocks. It when you look at what analysts are favoring, a lot more coming up. Track your pack. Set a curfew, or two. Make dinnertime device free. [ music stops ] [ music plays again ] a smarter way to wifi is awesome. Introducing xfinity xfi. Amazing speed, coverage and control. Change the way you wifi. Xfinity. The future of awesome. David it is almost 11 00 in hong kong. We are in the middle of the first trading of the week. Welcome to Bloomberg Markets asia. David kenneth recent Economic Resilience dialed back a notch. Gdp soaring. Corporate and private spending also supporting the outlook for the economy. Gold halting as worries about wars with north korea begin to wane. On that note, are we back to normal . We are piecing together what is happening across markets today. We are getting a bit on equity. Are we back to normal . Have a look at my bloomberg chart. There is your spike on friday. We are a little bit lower right now. Just easing back, but not all the way. Keep in mind, your averages 1250. It is better than friday, but not out of the picture. Sophie kamaruddin is here with a look at the markets. It is mostly good, but it might be to cook to really too early to call it normal. We have gdp data out of japan beating substantially, but stocks in tokyo are falling. We are seeing momentum continuing to come to chinese stocks on the mainland as well as those listed in hong kong. We have the shenzhen of 1. 4 . Statistics, the shanghai, is steadily on the rise. Industrial shares are shirking off the weakness we saw. Industrials getting half a percent. Keep in mind, this segment makes up about 18 of this benchmark. That is second after financials when it comes to how big they weigh on the benchmark. The rally in industrials as well as tech shares are supporting that gains we are seeing in chinese stocks. They should hang the shanghai, is in white. This is tencent. Today, it is adding the most points to the hang seng, which is looking to shrug off the retreat we saw last week. Best worst that is the worst we saw this year. Becausetencent a focus, they are due to report earnings this wednesday. Alibaba also this week. Tencent reports wednesday. Alibaba the day after. Crazy growth, the estimates as well. Sophie, thank you for that update. On the weekend, we did get these events in the u. S. Lets start with that. Charlottesville happened. The driver of a car that plowed into a crowd, killing a woman, has been charged with seconddegree murder. Heather heyer died on saturday when alex fields drove into antinzi protesters. Sident trump has been can been criticized for preventing to condemn them. Groups needremist to be pushed out of the public debate entirely. For the hateed groups and dangerous Fringe Groups they are. President trump is preparing to turn up the heat on china over what the u. S. Perceived as theft of intellectual property. He is expected to sign an executive memorandum on monday, dragging directing the launch of an investigation. U. S. Companies in china are said to be enforced to transfer technological expertise. Next monthn for german election begins. The two german leaders put the blame elsewhere. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. And you. More on our top story now. Do. Nationals are trying to camping down an imminent more with imminent war with north korea. As americas top general prepares to meet the president of south korea. We are joined by stephen engle. He has the complete story on this. There are some effect its. It starts with what is being said, the easing of the rhetoric. Reporter we have a lot of rhetoric coming from the white house late last week, talking about fire and fury against north korea. Also he talked about the north korea the u. S. Military being locked and loaded to strike the north. These are worrisome words coming from the white house. That, according to a chief advisor to the south korean president saying we are not used to getting these kinds of comments from the president of the United States. China has echoed similar sentiment. I will talk about that in a second. Also, to members of the white on sundayf appearing morning talk shows in the u. S. Are camping down that rhetoric. Sayingthe cia director he is seeing no intelligence that would indicate we are on because of a nuclear war. I paraphrase. Also, h. R. Mcmaster says we are not closer to war than a week ago, but we are closer to war than we were a decade ago. The evidence does not suggest we are any closer. The United States has not advised u. S. Citizens and south korea to evacuate. Troops have not been put on any special movement alert. This, august 15, is the anniversary of the independence of the Korean Peninsula from the Japanese Occupation. There is perhaps some opportunity for escalation of tension from the north, also on the 21st is the south korean, u. S. Drills for liberty annual japan, u. S. Lee terry drills. You have the opportunity from the white house to dampen down the rhetoric. David it is times like that when we typically see the north come out and perhaps do something. You mentioned a phone call that happened friday. Stephen thats right. You alluded to the fact that Joseph Dunford is in south korea today. He will be meeting with president moon today. Not sure what his message will be, but there is lots to talk about. President she and President Trump spoke on the phone. Xi expressed all parties need to remain calm. David a report is that in case something does happen, china must remain neutral. It speaks to the fact that it is not in chinas interest. Remain china would neutral if north korea struck first. If the United States and south the sameuck first, editorial said china would come to the eight. To the aid. David thank you so much for that. Have korea and what we seen so far from the weekend. Still ahead singapore stocks. Why are those names weeding here in hong kong . Leading here in hong kong . Coming up, we have data out of japan. We are going to be talking to the chief economist. This is bloomberg. David this is Bloomberg Markets asia pickup lets get you caught up on the next business flash headlines. Lets start off with mitsubishi ufg financial group. The bank is looking to hire in saudi arabia. That is over the next five years. The bank is set to become the first japanese hundred to start full operations after obtaining approval from the kingdom central bank. The bank of japan looking to open a japan in riyadh. One of the Worlds Largest food traders secondquarter profit jumped. Revenue rising 31 to a due to a Strong Performance in all of its units. Ales were good upm trading in singapore,. 1 . A company is accused of illegally promoting gambling. Was last of the crown employees to be freed after serving a jail sentence. Inenue remains on the rise macau. Growth, look at increasing for it 12 straight month. In an exclusive interview, the ceo says it is all about the mass market now. On mass. D is mostly we are a beautiful resort in mgm macau. This is a luxurious property. It has benefited from the surprising recovery in the vip business. Our Business Model is not predicated on the vip business. Our Business Model is dedicated on growing the math market business. Mass market business. Obviously, we benefit when the vip business is doing well, but i dont view that as a way to build a strategic plan. You might be caught wrongfooted. I think we were certainly recovery ofout the the vip business when it did come back this year. We have not benefited as much as competitors have good competitors have. Rishaad wendell gaming make this a money for you . When it will gaming make the same money for you . Are nongaming revenue will be greater than our gaming revenue. Rishaad lets move onto elsewhere in asia. Where else are you looking . For instance, japan has a proposal out there. You have said you would build. The opportunity in japan is unclear at this moment. The government is working on what they call the limitation act. Thee writing implementation act. They are writing legislation of the bureaucratic level. , if they passed the act, integrated resort in a handful of places. Within that, they are going to restrict the amount of gaming floor space, and they mays rishaad they may change. You are committed . Absolutely. Market potential is tremendous, and it is going to boil down. The one guidance they have not even, the tax rate. Adopt a singapore like model, which is one of the models i think the world you are going to see a Competitive Bidding for japan. Ceo speakingas the of closely to us. Speaking exclusively to us. When we look at markets now, we into thenutes lunchmeat. Into the lunch break. When you consider what happened down. Day, we are still we are getting some big earnings coming through this week. Will those numbers support is valuations for tencent . Lets hope so. We see more upset in the stock. We also had china data come through. Retail sales missing estimates. Does this support that view we are past of the peak in china . When you look at the data from june, it was really good. It was fairly good. When you look at the data that came through this morning, we are also getting lines through on the bureau of statistics. They try to rationalize the capacity and the in the overbloated sectors. When you look at the net effect on job creation from those efforts by beijing, it is positive. The amount of jobs that are being as a result of the performs is being offset by Jobs Creation elsewhere in the economy. Property investment continues to slow at a gradual pace. The Property Market still operating in a steady way. When it becomes steadier, the diversions among cities remains in the Property Market. A lot of lines coming through on china. We have japan coming out with some data. More next. This is bloomberg. David this is Bloomberg Markets asia pickup that erg has been told altice is said to be looking for possible suitors. The Regulatory Filings showed an offload of the government position. Of the dollar position. The snap still involved two and a quarter shares. Kong, another lost this week. Analysts say the Company Needs another urgent changing course. They need to make a bigger effort to attract chinese travelers. It would put it on course for another backtoback loss. Maybe cheapers when you compare names in hong kong to singapore. That doesnt necessarily make them more attractive. When we look at hong kong real estate teetering on a slump, singapore on the other hand has been showing signs of promise. Sree, measuresthe specific to tell us when you look at the property space in hong kong compared to singapore that they are trading at a discount . Sree there are a few measures we look at on the real estate side. One is priced to book pricetobook and the other is priced in net asset value. The discounts in hong kong are greater than did than the discounts in singapore. They are cheap for a reason. When you look at the fed on a pass to increase Interest Rates, hong kong Property Markets is more vulnerable. It is not an outright crash, but at least a slowdown. One of the other indicators is that prices are hovering near a record. There is not a lot more room to climb if Interest Rates start to increase. We had comments earlier and from the financial secretary money market opened. Hopes of usg any gasing our foot off the when it comes to the curves is wishful banking. Sree it is off the table. It is not only politically untenable at this point, it is it isthing that hard for regulators to take their foot off the gas. If you look at singapore by contrast, you had a determined leaders to get it off the market. Prices have fallen. For percent from a peak. 12 from a peak. Effortsg is up despite despite these market prices. They are up more than 20 . David in hong kong, we dont know, but when we compared the two markets, what are they looking at as far as comparing the fundamentals of both . Sense that thea Singapore Developers look attractive. Despite the fact that they are not very cheap, their prospects seem more promising at this point. David it is like chicken in the eggs, right . I was looking behind those i was looking at the hang seng property index. Some would say that is distressed. Sree, and you so much. You can get the story on the website. The outlook for most stocks, not the market itself. Out. Ve gdp numbers numbers,look at the the state of the economy and the makeup of what we are seeing, growth and the economy is coming from an area that not a lot of people expected, domestic consumption. As for the external picture is concerned, japan might be ok. When it comes to inflation, the gdp deflator is now close to breaking even. We are still negative, but the trend has been broken that we have seen. Below zero. Picked up a little bit. We have the chief economist joining us next. This is bloomberg. It is 1229. I they are trying to ease the tensions in korea. Mcmaster said there is no indication that there is hostility setting to break out. The south korean president later on monday. The ceo will retire by the end of 2018. The chairman said that the announcement has been made to provide certainty. They are accused of more than 30,000 breaches of financing laws. The timing of the departure depends on a search for a successor. The sluggish brexit negotiations this week with the first line of positions. They will issue payments ahead of talks and set a proposal for northern ireland. Has f negotiator i am haslinda almond will stop this is bloomberg. Market asian the stock. And this is the korean stock. They are rebounding from the worst week since june 2016. Higher. About 1. 2 expectedsofter than they are worrying about losing 9 10 of a percent even after beating data. Alumina is sliding 1. 4 today. Level. S traded at the 88 we have had bitcoin enjoy a rally in recent days here, especially over the weekend. Was this past week and when we saw bitcoin breach this level now double 20. We thank you for that. Out in hongme data kong and lets put that into context. Here, we lookal at this chart every time we get the data in line with expectations and it is the bottom panel you want to watch. This is driven by the things see, this as you can showed up in a panel late last and and it speaks to those were seeing them squeezing out excess leverage in the system and it has rolled over. When that goes up, the monetary conditions are easing and they are not near the levels of the Second Quarter. Letss the context and editorn our economics into the studio. Missed estimates, but was not that bad. The big picture is the key indicator of retail and industrial output. They came in with the worst showing of the year. Something is going on. It looks like something we dont have to worry about. Some detail say that this could all come down to the end of the incentives to buy mobile phones in china. Growth accounts for the miss. Bad on the is not industrial output side. , andu look at the tables the interesting thing is what happens on the investment side and it seems like we are seeing the property curves and this is an engineered slow down and we had an official try to put the brakes on and there was a spread of demand and they started rallying and authorities are trying to get some of the successes and it looks like a homes health scrub when it these those pays it about two years. It does account for a chunk of the economy. An importantthis theor of the universe and drives consumption and you also get the washing machine and it and, if that is coming off, it means a lot for the chinese economy. Coming off is not falling off of the cliff. This is a more moderate pace of expansion. If i am not mistaken, this is the demand. Some say that there could be a possible switch later in the is policy on hold and there is a curb on some of the financial excesses. On the fiscal side, it looks like the economy will get less we will get. Is still very much in that range. Through for 7 and these are not terrible numbers. It was mixed on three counts. It is one data point. Now, staying on theme here, these valuations do not come with that risk. Focused this week are with our editor on the story. Multiple of google and facebook will stop we probably looking up in the 50s. Talk to us. What do you see, in light of these valuations . We have companies that have been around from within a decade. It is 47 or 40 and responsible growth. Is going to generate Earnings Growth and that is what is going to happen. If you want to get anything online, you have to go on amazon. People spend their lives in china and you cannot do anything. It is a massive social networking aspect. The top wind is growing strong and there are some who say there is no way that a company that generates multibilliondollar , butue continue to grow they have been saying that for a year. We have the emerging middle games on there are services. That is when i got to the stage. With china, doing this economic growth, you have this multiplier arect and knows what people looking for. Ow canook at this and him these Companies Grow . A lot of it comes back to the with the organic and where is it going . As we discussed, it was dominant and this is one the biggest deals done in the last year. s is of more that have a billion people. They spent 1 billion to get it in. And they put and it outside of china is also invested in the article sharing craze. Everyone of those bikes him. S connected with the internet ted in mobilees games that have been played in regions outside of china. This is beyond the core and china. There was news last week that they are under investigation. What is that about . When you clean up the news, peopleeyre saying is putting unauthorized content and it could be pornography or anything that doesnt meet the senses. What they are committed to do is clean up. This will be a risk over companies. A myth. Kind of if you are not obeying the massive riskis a hanging over for a foreign investor. Thank you. That was our tech editor here for bloomberg. Back with the betterthanexpected reports. The chief economist for the country joins us next. This is bloomberg. From major developments revealed that dual citizenship and is now being hasrted that the minister confirmed that he holds citizenship in new zealand and he may be forced to step down as the member of the parliament. Holding thist is majority and we will bring you more updates when they cross the terminal. Lets have a look at the data this morning. The strongest growth in two years. Say he wont last. Chiefthem is the economist joining us right now. Nice to see you. That . You say there are basic reasons why we have this highgrowth. Economic the global cycle has hit a peak and exports will gradually decelerate into the future. Why ity, the reason stays strong with the robust demand is consumption and we dont think that this highgrowth in consumption is sustainable in the future growth goes so far theit is supported by are ratherng and we cautious about wages in japanese households. Isnt that a sign of confidence that households are spending more . I dont think so. There are basically two reasons behind to this sharp decline. Them is the stable inflationary situation. , there is the seeund in the dollar and we the excel earning inflation and this with the confidence among japanese households. Rebound, thanks to the in the equity price, the confidence among japanese and that also improved will help the decline in savings rates. The current unstable market situation includes a currency stop thed it would implement of confidence in the near future. What about the pickup of investment in japan . We have seen fiscal spending. What is the Government Spending on . There is a Public Investment and there is the enforcement of and it iswth projects this is thed highgrowth with the investment the sustainable in the future. Ok. Back and the economy has been growing above the potential. Growth. A potential there . H further is how many more years are we talking about . Is the issue of the difference of the view with they suspectnd we expect the economy thed slow to the level with. Rowth rate and the improvement wasuffice it to say, this on the current path for the next four or five years. Would you agree with that . Very much depressed and it would be likely to depress the actual inflation trend. Itthere are changes and comes up for mr. Abe. Would you both stay on . He will not be renominated and it would be in april of next year. As far as the market is concerned, take this for us all stop who is more important to stay on. The Prime Minister would september this beyond benext year and he will renominated. Thank you for joining us on this program. Nice to see you breaking down these numbers over in japan. You may have just seen the peak for this year. Coming up in the program, you look at this and it is blazing a trail for china. Will flesh out the story for you next. Getting underway right now and we see the asiapacific. There you go. Not bad. 63. 9 is the Exchange Rate at the moment. Have a look at the start. Here andhe carmakers lets have a look at the stoxx performing here. And they aremotors up and the thoughtful though border is10 and the in the rearview mirror. The supporter joined us. Question that pops out to me is lessons that can be drawn from these emerging car brands. Thank you. They point over here is this is aecision and, distinct entity and it always treated this is a Financial Investment and did not bother to get the technology or to the other parts. Companylly embraced the and exchanged the technology and started manufacturing. Key point here is the synergy. Synergies and they didnt bother to do that and just did Financial Investment. What is next . . An they make up the law i would imagine its not too late to make up that knowledge he. This of good First Quarter for them and they would not want a new partner. They want to get the new technology adopted and they would want to look for a new partner. They were trying to establish a meaningful presence in india. This has now fallen through and they would want to look for a new partner. That is a key takeaway here. Thank you for joining us. You give us the few differences between the carmakers. At the top of the hour, we will be live with all the latest and we will speak to a senior strategist next. This is bloomberg. The following is a presentation. There ande out driving up insurance rates. About theshow personal Security Camera or your car. This