Transcripts For BLOOMBERG Bloomberg Markets Asia 20171124 :

Rishaad what an afternoon it was, just one gentle slope all of way down to record a loss 3 . Let us put this into context. The csi 300 benchmark in shanghai, shanghai shenzhen stocks. What happened to that beijing that is what investors in china were asking themselves after this date of largecap shares plunged, rattling the market, one which has become rishaad margin debt below the bubble peaks, has been increased seeing for six straight months. A lot of investors nursing their wounds this morning. Haidi. Haidi absolutely. Getting the Bigger Picture look. Coupon that before 2015. A 3 jump or fall in any of these chinese indices was almost a calm day. How farteresting to see it has, and how little volatility we have had from the worst in 2015 until now, so we are looking ahead to the shanghai and hong kong open, taking a look at how sentiment worsened and if it provides a little bit of support. A lot of analysts saying there is no point in them going in right now because it will make no impact. The scope of the small cap do not provide support to the broader market. Let us take a look across the rest of the asian trading session because we are seeing not a lot of hand with the u. S. On thanksgiving holidays. Sophie, japanese traders coming back to a stronger yen and weaker sentiment. Sophie we are seeing that put pressure on trading in tokyo today. When you take a look at the rest of the region, so far, there is a question whether there is a spillover effect. Showing you the opens in taipei and singapore. We have taiwanese stocks looking flat for the third quarter. The smartphone cycle and trade book has been kind to taiwan. The straight times index is gaining. 1 as we wait on factory output for october. Singapores economy has been chugging along, rising at the fastest pace. Malaysia day today in after being postponed on wednesday. Plenty of earnings to watch in kuala lumpur. This is sliding here today. We have air asia posting a quarterly loss, so keep an eye on that stock. Checking on other movers of note, we have the ringgit, perhaps looking at the first drop in six days, even as oil prices are picking up. Crude oil gaining. 6 . The offshore yuan looking softer. Movements are not typically correlated with local stock spirit we will learn more about the vagaries of the dollar and japanese stocks are sliding. The yen is holding onto gvernight gains, weighin on currency sensitive automakers. Shee materials fighting after two units falsified data and parts fell to 250 customers. The company is to hold a Media Briefing to date. It has been a day of swings so far. Stock today surging. The operator of Online Fashion deliver a bodyo suit that will make shopping easier. Rish, something for you, perhaps . Rishaad i will get to this very quickly, sophie, because we will continue this story on chinas stock selloff. That loss accelerated toward the close, the csi 300 index sinking , taking overall losses just shy of below 3 on china markets. Richard joins us now. Where was beijings put . Chinad investors in would think the state would step into. Any dramatic selloff in the wake of the 2015 crash that caused such destabilizing, destabilization to chinas markets overall. Rishaad the closures, suspension of all those thoughts afterwards, which did actually really you road the writ erode the regulatory bodies authority. Always beening there for investors, as it were, in the last 1. 5 years or so and the favorite target of these state funds have been large caps. We have seen dramatic performance of large caps related to the rest of the market. More than half the market down. Favoriterticular is a amongst investors, and there could be a sense that for beijing, i mean, we have the state media which warned the stock was rising too fast. People were starting to build up leverage in certain targets in the belief that there was a oneway bear. China grows uncomfortable about that. Rishaad Credit Suisse saying this could go on for a while. Richard on one hand, they are trying to ensure that leverage ooes not build up to dra dramatically in the stock market. There was shocked that there was such a sharp selloff. The other element that is going in the bondute market, another type of deleveraging. There is a sense of this may be getting a little bit out of control. We are seeing a sharp selloff in Corporate Bonds which will increase the cost of their financing. It might hurt their profits. Overall, jitters starting to spread across Financial Markets. Is thiseah, and there uncomfortable tension with trying to reduce moral hazard, which we know has been building up in the Financial System for years and years now and maintaining that key theme of stability. Is there a sense of may be regulators are a bit more willing to tolerate a bit more shortterm pain to try to teach a lesson to investors . Richard yeah, i mean that has always been the golden question at the heart of chinas market. How do you deleverage without losing control . Whenever they try to deleverage the market you saw 5 trillion off the market it is a difficult thing to do. What we did see is him during making itss recently very clear that china does need to do a lot more to try and cut risk in the Financial Markets, so maybe, they feel that the risk of a selloff accelerating is worth, you know, the ability to be able to reduce something worse further down the line. But whenever we start seeing these selloff, it does test regulators patience. At the end of the day, investors think the state was reggie barrel them out. Haidi just seeing on that chart, margin creeping back up again after the crackdown in 2015. Richard, is this a selloff . You see the pattern of trading. You are getting a sense of Institutional Investors may be taken profits . Is that playing out for sentiment when it comes to the retail players and they are jumping on that bandwagon . Richard i think so. The warning, you know, given it was one of the bestperforming stocks, more than doubled this know, the state very visibly coming out and saying this has gone a little bit too far. We are towards the end of the year. If you have been holding stocks, you have been doing well. There is a sense of, you know, positioning to get your yearend performance down, and Retail Investors, if they no longer see that these are one way, than the rest of the market has not really been in a great place, then maybe we could see more of an acceleration in terms of selling. All right, richard frost for us in hong kong. We will be returning back to this story and getting more analysis as to exactly what we are seeing with this selloff. Are we going to see state support coming in at some point . But in the meantime, let us get you the first word news with Haslinda Amin in singapore. Trump usepresident the things giving addressed to the military to take credit for progress in fighting abroad and to warn that americas allies could become the enemy. During the campaign, he had said u. S. Engagement in afghanistan and iran was a waste of time, but now he claims his policies have turned things around. He also told soldiers that they would come home to a good economy, new jobs, and vague, fat, beautiful tax cuts. Germany is a step closer to a Coalition Government with the biggest Opposition Party ready to begin talks. Martin schulz and the fpd were initially spd were initially wary of the grand coalition. Merkel is struggling to form a government and talks with the free democrat and the greens fell apart at the weekend. Catalan separatists are considering dropping their unilateral declaration of independence in return for a negotiated deal with spain. A senior official told bloomberg the claim could be omitted from the partys manifesto if madrid agrees to hold talks as equals. Catalunya holds new elections in december. Beijing may be planning a new crackdown on cash micro lenders as it escalate the campaign in the Financial Services sector. Countrys 157 micro lenders will be purged, leaving only stateowned firms in the Biggest Internet Companies with licenses. That could dash many lenders hopes for new york ipo. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am haslinda amen. This is Haslinda Amin. This is bloomberg. Rishaad staying bullish. A guest joins us next. Haidi still in china, the scramble to adopt the clean energy vision. Why the ecb sees a driving consolidation in the country. That is coming up, later. This is bloomberg. Haidi quick check of the latest business flash headlines. A company has applied for approval to open stores in india to further raise the global presence. It is expected to grow 29 by 2021. , they predicted International Sales would exceed those of japan. It talked those back at home two years ago. We can certainly look at what is going on with the share prices. This is the Hong Kongbased Company Trading in singapore, and changed after creditors agree it prefers debt restructuring. They held talks in london earlier this week about a Revolving Credit Facility that matters next year, and about three bonds, which are due in 2018, 2020, and 2022. Noble having to Exchange Debt for new securities without taking a haircut on face value. Haidi southeast asias most valuable company. It now has a market cap just shy of 27 billion, around 25 billion. It has rallied 42 this year after adopting a digital to the core strategy and a focus on customers generating a high return on equities. A lot of navelgazing this morning with the severity of thursdays a slump and chinese shares catching many traders offguard. The biggestpping oneday loss since june of 2016. What can we expect when the trading day gets going again . I think it is in just about 15 minutes. Jeffries chief Global Equities hadtegist you must have a tough one this afternoon. The phones must have been ringing off the hook or indeed, messages coming through these days. Ultimately, where was the state . The reality is, we have been waiting for this to happen because it is going to happen in bond, normalization yields. The reality is that you have had real rates negative. Haidi is that what spooked people, do you think . Curve has been shifting upwards, and slowly been doing so over the last six months. Yesterday was perhaps the final blow off of that, and also, you had measures introduced over the last few days, which has stopped margin financing of bonds. We had an enormous bond rally, by the way, over the last 3. 5 years in china on the whole it ision backdrop, and not to unsurprising that we have had the reverse of that, the reflation story in china which has been ongoing for a good 18 months, and the yield curve is finally responding to it. Rishaad just looking at this headline coming through, they are seeing chinese bank and growth decelerating in 2018, but i guess that is what they would say after what happened. I want to bring up Corporate Bonds and how this is the other risk out there. Tv, this rampup in terms of the yield, and that has split people as well. Sean if you look back to where we were three or four years ago when china was in the economy which was doing well, it is not and overshoot in terms of the credit spreads. Again, i would say we have this in developed markets at some credit that the markets will normalize as rates tighten even further. China has been the sort of Early Warning signal for the rest of the world. It was the first one to reflate from 2016, and that expansion by alsoboc is in one sense being reversed as yields start to shift upwards. Sean, i mean, is this a market or regulators that are showing renewed readiness to tolerate more shortterm pain . We talk about this in the context of the Deleveraging Campaign weeding out these wmps and cracking down, and there is the sense that they have built up moral hazards. Is this going to be something we see a lot more of or we not seen the Protection Team come in and save the day . Sean that is possible. I think, in reality, investors came late to the recovery in china and they seem to have come very late to what the banking regulators have been doing over the last nine months. There has been a number of issued circulars trying to get the bank to enforce various measures, whether it is to restrain lending in certain with and or indeed dealing the World Management products, but things are working on a number of different levels. At the same time, you had significant capacity closures which ironically has forced prices up. Nots not a very it is just one variable. It has been a whole set of variables that played themselves out at the moment. You have had a very good profit cycle in china. It is not unthinkable that bond yields should have moved up much earlier than perhaps we have seen over the last couple of trading days. Haidi it is so also not unthinkable that we are getting to the end of the year and traders are closing out their books, taking profit off the table, and maybe, you are seeing the retail component jumping on top of that. Sean that is possible. Again, i think we have had one or two shares that have dominated some of the market breadth over the last couple of weeks, which again has created a momentum trade in the markets. It has not been a broadbased rally, but i actually think what we have been seeing is quite healthy. We should be seeing financials leading indices. We should be seeing steeper yield curves. What has been going on in the background since the new banking regulators came and is very healthy. You have to keep in mind they have loosened credit to the Smallmedium Enterprises in china. They are tightening for certain other aspects of the credit cycle in china as we are seeing now. Haidi would this whole, you know, shift towards a theme of quality over quantity be better for the environment, pollution, industrial consolidation . Has that dramatically shifted how you allocate going into 2018 . Sean one of the ironies at the moment is that we were actually quite bullish and still remain quite bullish on the whole change in the texture of the shares, theh announcement that the vast majority of shares will be companies in china which become tradable through a pilot program. Signal very, to very big signals of m a capital injections and privatization. We have to look at this on a number of levels. Very bullish for chinas inclusion into msci. Bear in mind they had the restriction on the free float, which is curved has curved their exposure in the msci. Msci and the number of these in it providers are going to probably revisit that and brought in the ownership of china was in their benchmarks. Rishaad as Global Equity strategist, what do you tell what do you advise investors to do . Northwe have been long asia. The corporate sector came out of the 2015 recession pretty healthy. And again, it is a very strong global upswing. We think people are underestimating the vibrancy of how bad things were in 2015, and we have seen very good European Data over the last 24 to 48 hours. The paradox of course is the Central Banks remain very, very loose. I do not imagine that data points are going to weaken probably until at least the first half of 2018. We are probably in for a pretty good run going into the early part of next year as well. North asia should do very well in that context. Rishaad get their seatbelts on . Sean we will get a few more of these type of hiccups. You can keep up with all the market action, and i do recommend it. It is on the bloomberg terminal at mliv. That is an analysis from bloombergs expert editors. Find out what affecting your investments, your money, right now. Just a look at the free market, coming up. That is next. This is bloomberg. Rishaad the sudden slump in chinese stocks is rattling a market that has grown accustomed to state support, thus calling into question the socalled beijing put. What are people saying . Will this selling stampede continue . It is not good in hong kong at the moment. With market liquidity remaining until yearend, the correction could sustain. Taking a look at the futures, you could see some of the slide being recovered, but it could be pragmatic to brace for more losses as the government may be intent on cooling overheated sentiment. Check this out. B btv 2414. A trendline has been in place since may. We could see more losses. Given the yeartodate rise in large cap shares, they may be too pricey for state backed funds to intervene, which could be a reason why we are seeing the government take aim at and of course, they are wanting to rein in leverage. Rishaad it is really at the center of this. What has been going wrong with them and why . Not only that stock but other consumer stocks. We are watching financial shares with chinese banks and continued scrutiny. Chinese regulators may not stand on the sidelines for too long because they want Financial Market stability. Rishaad thank you very much indeed for that. That is sophie kamaruddin. Looking at the purge of microlenders. Rishaad 9 29. The Christmas Tree there as we count you down to the china open. It is about the Chinese Markets after that sudden selloff. The equities plunging thursday. Meanwhile, japanese traders were not at their desks yesterday. It was the labor thanksgiving in tokyo. Declining. U. S. Markets are closed. Some american investors after that things getting holiday, we have a mixed bag out there. Free market, we saw the hang seng here in hong kong, which added a 1 fall back in the session on thursday. Reminder to investors out and about, global investors, turbulence for mainland Chinese Markets that is what we have toured this is framing what is going on. It is that sentiment largely, haidi. Haidi the ghost of that 2015 selloff very much fresh in the minds of anyone who were watching Bigger Picture<\/a> look. Coupon that before 2015. A 3 jump or fall in any of these chinese indices was almost a calm day. How farteresting to see it has, and how little volatility we have had from the worst in 2015 until now, so we are looking ahead to the shanghai and hong kong open, taking a look at how sentiment worsened and if it provides a little bit of support. A lot of analysts saying there is no point in them going in right now because it will make no impact. The scope of the small cap do not provide support to the broader market. Let us take a look across the rest of the asian trading session because we are seeing not a lot of hand with the u. S. On thanksgiving holidays. Sophie, japanese traders coming back to a stronger yen and weaker sentiment. Sophie we are seeing that put pressure on trading in tokyo today. When you take a look at the rest of the region, so far, there is a question whether there is a spillover effect. Showing you the opens in taipei and singapore. We have taiwanese stocks looking flat for the third quarter. The smartphone cycle and trade book has been kind to taiwan. The straight times index is gaining. 1 as we wait on factory output for october. Singapores economy has been chugging along, rising at the fastest pace. Malaysia day today in after being postponed on wednesday. Plenty of earnings to watch in kuala lumpur. This is sliding here today. We have air asia posting a quarterly loss, so keep an eye on that stock. Checking on other movers of note, we have the ringgit, perhaps looking at the first drop in six days, even as oil prices are picking up. Crude oil gaining. 6 . The offshore yuan looking softer. Movements are not typically correlated with local stock spirit we will learn more about the vagaries of the dollar and japanese stocks are sliding. The yen is holding onto gvernight gains, weighin on currency sensitive automakers. Shee materials fighting after two units falsified data and parts fell to 250 customers. The company is to hold a Media Briefing<\/a> to date. It has been a day of swings so far. Stock today surging. The operator of Online Fashion<\/a> deliver a bodyo suit that will make shopping easier. Rish, something for you, perhaps . Rishaad i will get to this very quickly, sophie, because we will continue this story on chinas stock selloff. That loss accelerated toward the close, the csi 300 index sinking , taking overall losses just shy of below 3 on china markets. Richard joins us now. Where was beijings put . Chinad investors in would think the state would step into. Any dramatic selloff in the wake of the 2015 crash that caused such destabilizing, destabilization to chinas markets overall. Rishaad the closures, suspension of all those thoughts afterwards, which did actually really you road the writ erode the regulatory bodies authority. Always beening there for investors, as it were, in the last 1. 5 years or so and the favorite target of these state funds have been large caps. We have seen dramatic performance of large caps related to the rest of the market. More than half the market down. Favoriterticular is a amongst investors, and there could be a sense that for beijing, i mean, we have the state media which warned the stock was rising too fast. People were starting to build up leverage in certain targets in the belief that there was a oneway bear. China grows uncomfortable about that. Rishaad Credit Suisse<\/a> saying this could go on for a while. Richard on one hand, they are trying to ensure that leverage ooes not build up to dra dramatically in the stock market. There was shocked that there was such a sharp selloff. The other element that is going in the bondute market, another type of deleveraging. There is a sense of this may be getting a little bit out of control. We are seeing a sharp selloff in Corporate Bonds<\/a> which will increase the cost of their financing. It might hurt their profits. Overall, jitters starting to spread across Financial Market<\/a>s. Is thiseah, and there uncomfortable tension with trying to reduce moral hazard, which we know has been building up in the Financial System<\/a> for years and years now and maintaining that key theme of stability. Is there a sense of may be regulators are a bit more willing to tolerate a bit more shortterm pain to try to teach a lesson to investors . Richard yeah, i mean that has always been the golden question at the heart of chinas market. How do you deleverage without losing control . Whenever they try to deleverage the market you saw 5 trillion off the market it is a difficult thing to do. What we did see is him during making itss recently very clear that china does need to do a lot more to try and cut risk in the Financial Market<\/a>s, so maybe, they feel that the risk of a selloff accelerating is worth, you know, the ability to be able to reduce something worse further down the line. But whenever we start seeing these selloff, it does test regulators patience. At the end of the day, investors think the state was reggie barrel them out. Haidi just seeing on that chart, margin creeping back up again after the crackdown in 2015. Richard, is this a selloff . You see the pattern of trading. You are getting a sense of Institutional Investors<\/a> may be taken profits . Is that playing out for sentiment when it comes to the retail players and they are jumping on that bandwagon . Richard i think so. The warning, you know, given it was one of the bestperforming stocks, more than doubled this know, the state very visibly coming out and saying this has gone a little bit too far. We are towards the end of the year. If you have been holding stocks, you have been doing well. There is a sense of, you know, positioning to get your yearend performance down, and Retail Investors<\/a>, if they no longer see that these are one way, than the rest of the market has not really been in a great place, then maybe we could see more of an acceleration in terms of selling. All right, richard frost for us in hong kong. We will be returning back to this story and getting more analysis as to exactly what we are seeing with this selloff. Are we going to see state support coming in at some point . But in the meantime, let us get you the first word news with Haslinda Amin<\/a> in singapore. Trump usepresident the things giving addressed to the military to take credit for progress in fighting abroad and to warn that americas allies could become the enemy. During the campaign, he had said u. S. Engagement in afghanistan and iran was a waste of time, but now he claims his policies have turned things around. He also told soldiers that they would come home to a good economy, new jobs, and vague, fat, beautiful tax cuts. Germany is a step closer to a Coalition Government<\/a> with the biggest Opposition Party<\/a> ready to begin talks. Martin schulz and the fpd were initially spd were initially wary of the grand coalition. Merkel is struggling to form a government and talks with the free democrat and the greens fell apart at the weekend. Catalan separatists are considering dropping their unilateral declaration of independence in return for a negotiated deal with spain. A senior official told bloomberg the claim could be omitted from the partys manifesto if madrid agrees to hold talks as equals. Catalunya holds new elections in december. Beijing may be planning a new crackdown on cash micro lenders as it escalate the campaign in the Financial Services<\/a> sector. Countrys 157 micro lenders will be purged, leaving only stateowned firms in the Biggest Internet Companies<\/a> with licenses. That could dash many lenders hopes for new york ipo. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am haslinda amen. This is Haslinda Amin<\/a>. This is bloomberg. Rishaad staying bullish. A guest joins us next. Haidi still in china, the scramble to adopt the clean energy vision. Why the ecb sees a driving consolidation in the country. That is coming up, later. This is bloomberg. Haidi quick check of the latest business flash headlines. A company has applied for approval to open stores in india to further raise the global presence. It is expected to grow 29 by 2021. , they predicted International Sales<\/a> would exceed those of japan. It talked those back at home two years ago. We can certainly look at what is going on with the share prices. This is the Hong Kongbased<\/a> Company Trading<\/a> in singapore, and changed after creditors agree it prefers debt restructuring. They held talks in london earlier this week about a Revolving Credit Facility<\/a> that matters next year, and about three bonds, which are due in 2018, 2020, and 2022. Noble having to Exchange Debt<\/a> for new securities without taking a haircut on face value. Haidi southeast asias most valuable company. It now has a market cap just shy of 27 billion, around 25 billion. It has rallied 42 this year after adopting a digital to the core strategy and a focus on customers generating a high return on equities. A lot of navelgazing this morning with the severity of thursdays a slump and chinese shares catching many traders offguard. The biggestpping oneday loss since june of 2016. What can we expect when the trading day gets going again . I think it is in just about 15 minutes. Jeffries chief Global Equities<\/a> hadtegist you must have a tough one this afternoon. The phones must have been ringing off the hook or indeed, messages coming through these days. Ultimately, where was the state . The reality is, we have been waiting for this to happen because it is going to happen in bond, normalization yields. The reality is that you have had real rates negative. Haidi is that what spooked people, do you think . Curve has been shifting upwards, and slowly been doing so over the last six months. Yesterday was perhaps the final blow off of that, and also, you had measures introduced over the last few days, which has stopped margin financing of bonds. We had an enormous bond rally, by the way, over the last 3. 5 years in china on the whole it ision backdrop, and not to unsurprising that we have had the reverse of that, the reflation story in china which has been ongoing for a good 18 months, and the yield curve is finally responding to it. Rishaad just looking at this headline coming through, they are seeing chinese bank and growth decelerating in 2018, but i guess that is what they would say after what happened. I want to bring up Corporate Bonds<\/a> and how this is the other risk out there. Tv, this rampup in terms of the yield, and that has split people as well. Sean if you look back to where we were three or four years ago when china was in the economy which was doing well, it is not and overshoot in terms of the credit spreads. Again, i would say we have this in developed markets at some credit that the markets will normalize as rates tighten even further. China has been the sort of Early Warning<\/a> signal for the rest of the world. It was the first one to reflate from 2016, and that expansion by alsoboc is in one sense being reversed as yields start to shift upwards. Sean, i mean, is this a market or regulators that are showing renewed readiness to tolerate more shortterm pain . We talk about this in the context of the Deleveraging Campaign<\/a> weeding out these wmps and cracking down, and there is the sense that they have built up moral hazards. Is this going to be something we see a lot more of or we not seen the Protection Team<\/a> come in and save the day . Sean that is possible. I think, in reality, investors came late to the recovery in china and they seem to have come very late to what the banking regulators have been doing over the last nine months. There has been a number of issued circulars trying to get the bank to enforce various measures, whether it is to restrain lending in certain with and or indeed dealing the World Management<\/a> products, but things are working on a number of different levels. At the same time, you had significant capacity closures which ironically has forced prices up. Nots not a very it is just one variable. It has been a whole set of variables that played themselves out at the moment. You have had a very good profit cycle in china. It is not unthinkable that bond yields should have moved up much earlier than perhaps we have seen over the last couple of trading days. Haidi it is so also not unthinkable that we are getting to the end of the year and traders are closing out their books, taking profit off the table, and maybe, you are seeing the retail component jumping on top of that. Sean that is possible. Again, i think we have had one or two shares that have dominated some of the market breadth over the last couple of weeks, which again has created a momentum trade in the markets. It has not been a broadbased rally, but i actually think what we have been seeing is quite healthy. We should be seeing financials leading indices. We should be seeing steeper yield curves. What has been going on in the background since the new banking regulators came and is very healthy. You have to keep in mind they have loosened credit to the Smallmedium Enterprises<\/a> in china. They are tightening for certain other aspects of the credit cycle in china as we are seeing now. Haidi would this whole, you know, shift towards a theme of quality over quantity be better for the environment, pollution, industrial consolidation . Has that dramatically shifted how you allocate going into 2018 . Sean one of the ironies at the moment is that we were actually quite bullish and still remain quite bullish on the whole change in the texture of the shares, theh announcement that the vast majority of shares will be companies in china which become tradable through a pilot program. Signal very, to very big signals of m a capital injections and privatization. We have to look at this on a number of levels. Very bullish for chinas inclusion into msci. Bear in mind they had the restriction on the free float, which is curved has curved their exposure in the msci. Msci and the number of these in it providers are going to probably revisit that and brought in the ownership of china was in their benchmarks. Rishaad as Global Equity<\/a> strategist, what do you tell what do you advise investors to do . Northwe have been long asia. The corporate sector came out of the 2015 recession pretty healthy. And again, it is a very strong global upswing. We think people are underestimating the vibrancy of how bad things were in 2015, and we have seen very good European Data<\/a> over the last 24 to 48 hours. The paradox of course is the Central Banks<\/a> remain very, very loose. I do not imagine that data points are going to weaken probably until at least the first half of 2018. We are probably in for a pretty good run going into the early part of next year as well. North asia should do very well in that context. Rishaad get their seatbelts on . Sean we will get a few more of these type of hiccups. You can keep up with all the market action, and i do recommend it. It is on the bloomberg terminal at mliv. That is an analysis from bloombergs expert editors. Find out what affecting your investments, your money, right now. Just a look at the free market, coming up. That is next. This is bloomberg. Rishaad the sudden slump in chinese stocks is rattling a market that has grown accustomed to state support, thus calling into question the socalled beijing put. What are people saying . Will this selling stampede continue . It is not good in hong kong at the moment. With market liquidity remaining until yearend, the correction could sustain. Taking a look at the futures, you could see some of the slide being recovered, but it could be pragmatic to brace for more losses as the government may be intent on cooling overheated sentiment. Check this out. B btv 2414. A trendline has been in place since may. We could see more losses. Given the yeartodate rise in large cap shares, they may be too pricey for state backed funds to intervene, which could be a reason why we are seeing the government take aim at and of course, they are wanting to rein in leverage. Rishaad it is really at the center of this. What has been going wrong with them and why . Not only that stock but other consumer stocks. We are watching financial shares with chinese banks and continued scrutiny. Chinese regulators may not stand on the sidelines for too long because they want Financial Market<\/a> stability. Rishaad thank you very much indeed for that. That is sophie kamaruddin. Looking at the purge of microlenders. Rishaad 9 29. The Christmas Tree<\/a> there as we count you down to the china open. It is about the Chinese Markets<\/a> after that sudden selloff. The equities plunging thursday. Meanwhile, japanese traders were not at their desks yesterday. It was the labor thanksgiving in tokyo. Declining. U. S. Markets are closed. Some american investors after that things getting holiday, we have a mixed bag out there. Free market, we saw the hang seng here in hong kong, which added a 1 fall back in the session on thursday. Reminder to investors out and about, global investors, turbulence for mainland Chinese Markets<\/a> that is what we have toured this is framing what is going on. It is that sentiment largely, haidi. Haidi the ghost of that 2015 selloff very much fresh in the minds of anyone who were watching Chinese Markets<\/a> at that time. Take a look at shanghai and hong kong just opening. We are seeing already some modest the client when it comes to mainland markets. We are seeing red when it comes to shares on the mainland. A closer look at what is happening for the shares in shanghai, shenzhen, as well as the small cap chinese index, which is losing. 25 in cash trading. In hong kong, more optimism. 3 . Ang seng gaining other shares are on the up as well. We do have a little bit of divergence following the hang seng being flipping the board to show you some stock movers, we have on the radar, it air asia x radar, air asia x, falling the most since may after its thirdquarter lost. Switching the board to show you what is going on in hong kong as well, we have want a hotel rising wanda hotel as it denies the property project, a 5 billion sale report. International on the rise, upgraded to outperform after its earnings we got on thursday. Rishaad thank you very much indeed for that, sophie kamaruddin. Over to claims being made against one of south koreas largest companies. That story and the rest of the first word news, Haslinda Amin<\/a>. Haslinda samsung has rejected claims that workers have been abused at two factories in vietnam. A study by a hanoibased researcher documents a series of alleged health and labor violations. They say some workers, including pregnant women, were required to stand for their entire shift. The report claims to have interviewed 45 female staff at the two factories. The u. K. Is said to have tried to accelerate exit negotiations by suggesting brexit negotiations by suggesting ireland could hold fire on its veto, avoiding a hard border with northern ireland, which is a key issue requiring progress before that you will move to the future relationship the e. U. Will move to a future relationship. Warned it iseing on course for the longest fall in Living Standards<\/a> since records began 60 years ago. Analyzing the budget, britains fiscal watchdog says the economy will be 42 billion pounds or 56 billion a smaller in 2022 than the government predicted in march. Its has wages will not return to prefinancial crisis levels until at least 2025, once inflation is taken into account. The oecd warning household in advance and developing countries poses an increasing threat to korea, canada, and the u. K. , which lead the world in private borrowing. They say that this does not indebtedness does not increase vulnerability. Not increase vulnerability. It says credit quality is among issues that could trigger a downturn. Local news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am Haslinda Amin<\/a>. This is bloomberg. China cracking down on cash microlenders as authorities worked to reduce risks. A look at whath is going on here. Steve there has been a crackdown over the summer of more regulation on these cash microlenders, which often times, well, the speculation is that they can be quite predatory with these high lending rates, and they also strike in the more poor regions. 201province is microlenders, twice as much outstanding loans than a more affluent areas like beijing. When they call in those loans they can offer loans legally to 36 annual interest rate. Oftentimes, in these porter areas of china, poorer areas of china, they cannot pay it back. It is about reducing Systemic Risk<\/a> in the Financial System<\/a>. We are getting one report from a statelinked newspaper saying that china plans to purge the currently 157 licensed cash michael lenders, ok, and leave it to the state owned enterprises that have licenses as well as the big internet of alibaba,ke and start restructuring the industry, right . We are hearing or are 8600 micro lenders in china, most of which are not legally licensed by the regulators. Often times, they are given the goahead by local governments should ok, the local governments will give by local governments. The local governments will give cash lending coast they are reported to be tied to the state owned enterprise or they have ties to the local government. This is a widespread crackdown that could have ramifications. Rishaad what about the ramifications to the micro lenders that are already in the pipeline for ipos . Steve yeah, well, we have already seen the damage on the nyse, and new york listed microlenders on these stocks in the last couple of days have been absolutely pummeled. 60 , 41 any was down down since november 10, because a lot of the rumors in the market and also the crackdown on the issuance of new licenses for microlending. Down 37 this week alone. It is extreme bad timing for others in the pipeline. Simtech and another, three companies in particular that at least have been saying they were weighing an ipo in the works. Christopher balding, an professor, it would seem, christopher says, it would seem to be an enormous risk to try and ipo with all of this an ipo with all of this hanging over your head. Much change and fastpaced change when it comes to the regulatory and policy landscape in china, the demand for research on Chinese Companies<\/a> has been on the rise. Just last week, Credit Suisse<\/a> said it has hired nearly a dozen chinese Equity Research<\/a> analysts in recent months. Jpmorgan made similar plans for next year. Our bloomberg columnist with us now. Why is it a good time for investor firms to be upping . Their chinese coverage chinas asian market firms to be hiking up there chinese coverage . We see this year, it is this that is doing well. For westernand investment banks research, and also chinas ashares are going to be included in the msci willed indices next to them, actually, so the Western Banks<\/a> have to expand their coverage to include them, because all the institutional money will be flowing in. Rishaad the biggest obstacles here . It is a call for the equity analysts to stay objective. Exchangestock questioning the objectivity of their research reports. I mean, this one happened to be a bullish one. Doingf the market is not so great and the western bank comes up with a negative report . They can get caught out by a news agency or the stock exchange, the regulators. And we looked at 700 companies that have at least five analyst we are talking about almost 7000 ratings, and only 300 had a sell rating. It is very difficult for that. Rishaad it is, isnt it . Manufacturercohol really got into the net, didnt it . Shuli but what if it was done at 30 and there is a negative report coming out . You will also you might hear state media talking about foreigners wanting to short sell enterprises. Rishaad thank you so much, shuli ren. Let us tell you what we have coming on the way. Moderate ppi, create Price Inflation<\/a> and push consumer Price Inflation<\/a> higher. Haidi a quick check of the latest business flash headlines for you, and the Company Behind<\/a> a rebirth lost almost a quarter of its value after earning described as a brutal disappointment. Oodeo entertainment ro it hurt profitability. A percentage of revenue halved to 6 . Rishaad an online lender working on an ipo a week after closing up a private funding round. Banks advise on a listing in hong kong that could raise. 5 billion u. S. Dollars. As soonhe backing of as next year. The Hong Kongbased<\/a> company raising some 220 million u. S. Dollars in the private funding early this morning. Haidi chinese online lender plummeted in new york on claims that Mainland Police<\/a> and regulators are investigating a data leak. Bloomberg has told officials looking into allegations that the details of more than one million student client of the beijingbased company were lost and possibly sold. Outsource is also say the investigation may not lead to action against the company. Lets check in on Chinese Markets<\/a> this friday after the thursday selloff, looking at the yuan which was down. There we go. It is recovering, just up. 1 , but it is in the green eyes indeed, is the shanghai composite as well. Hang seng did not suffer nearly as badly as the other two. That 130 points below 30,000 level. The chief now is economist and head of macro research. Thank you so much for coming in. I know you are a macro fundamentalist here, but it is strange how these jitters came look aten we economies whose fundamentals seem to be relatively sound. Guest thats right. I think after the Strong Performance<\/a> in the stock market, theres probably going to be a bit off selling pressure because people want to take profit, but as you said, profit is doing quite well. Nominal gdp and industrial profit figures are looking pretty strong as well. Guest exactly. A lot of this is driven by the underlying improvement of the industrial consolidation, helping the profit margin of a lot of companies, but i think at the moment, some people are looking a little bit nervous about the rising bond yield in china. To us, the bond yield would be rising because inflation pressure is building up. It is not very big, but bond yields are going to rise. By historical standards, the bond yield is still fairly low and also, importantly, indexing for inflation, real interest sector,r the corporate still fairly accommodative. We dont think it will have a fundamental impact on the margin. Impact what will have a fin is the environmental drive, cleaning up chinas soil and chinas air, ultimately, which will not happen overnight. Cui it will not. It has been a drive of policy for a few years, but what we have seen in recent last few years is really the government has accelerated that effort. Why is the pressure building if you have this in some of the big cities, the air quality there which is not good . And another thing is the government has actually put more priority over the quality of life than the pace of growth. I think that is an important change. What we are looking at is some pollutingpanies, companies have been shut down, so nearterm, that means some negative impact on growth and also prices in the commodity sectors, which have risen. Does this lead to better allocation of resources, or does this just create bubbles in the sectors . Rishaad i have a problem with your mic. Let us carry on the conversation for the time being. Is it about the quality and quantity . But has this in any way been priced in, in your view . Cui i think people are slowly adjusting to it. I think, because the policy has been there for a few years, and the implementation of the local level has not been very strong for a few years, so people are slowly adjusting to the new regime, if you will. Some people, i think, still feel doubtful. For instance, if the growth takes a hit, whether the government, is going to relax some of the policies. But our viewers they are not going to do that view is that they are not going to do that. Rishaad why . Cui just of the because income level is higher. Expectations are higher and people feel that it is probably more important to breathe better air, than say, some shortterm growth. Rishaad are they serious about it this time around . I remember one of the summer china, being stressed that it was quality over quantity, and that was five years ago. So what gives . Cui i think this time rishaad they mean it . Cui i do think they mean it, as you heard from the 19th Party Congress<\/a> report. They actually stress this very clearly, and they actually have theemented this at implementation level. You see some companies are being shut down. The polluters and the inefficient ones, reaching across many sectors. Not only the heavy industrials, but some of the material sectors, and even some downstream sectors, so i think they are quite serious. Rishaad ok. The thing is, the beneficiaries the usual suspects, the beneficiaries, the manufacturers have you cold, that sort of thing, right . Cui yes. And, youy sectors know, some of the new material the,rs, and also, some of you know, front runners in these sectors, that actually managed to operate and survive. Dont forget, you know, these sectors, for instance the steel sector, paper sector, they are still important, but if the inefficient ones are shut down, the surviving ones, the stronger ones, will have better margins when they are going forward, so that is on the winning side. Certainly, the polluters will be on the losing side, and also, the growth will take a hit. But i dont think the impact is that huge. Rishaad exactly. I was going to ask you what the readthrough was from the macroeconomic data. Should it the one that is serious and one that has a lot of efficacy . Cui it is not that huge as people probably have feared. One, a lot of these sectors have been consolidating. They are not a big driver of growth in the first place. Thealso, if you look at jobs in those factors, they are actually a very small percent of the overall economy. In the meantime, a lot of other sectors are growing fairly fast, so that may cut for the slack. Rishaad more consolidation may follow to make this work with economies of scale very quickly. Cui yes. Rishaad cant get quicker than that. Li, head of macro research. Just ahead, being bold and beautiful. An Athletics Company<\/a> setting itself up as a global player. That is on the way. This is bloomberg. Maybe 145 years old, but tradition has not stopped the japanese cause medics at giant from moving forward. Globally, the company grew 15 last year, and it is eyeing or takeover targets after buying some of the worlds bestknown brand. Haslinda amin spoke to the president about the push to become truly global. Change, tod a transform the company to accelerate our growth, so we went through a definition of vision 2020, which is in fact the longterm strategy, and a transference strategy to become a global company. Haslinda is it enough . It is an increasingly competitive market. They are all clamoring for a bigger slice of the market. Can you see ahead with this strategy . After three years, we are ahead, accelerating our growth. Aregroup results exceptional, and the group has announced a plus 15 growth globally, and in asia, we are doing the first 12 at the end of september, so everything is proving we are on track. Haslinda shiseido has been acquiring other companies purified to these brands make sense to your overall strategy . First, you know, we are trying to make a strategy which is, you know, diversified with different cultures behind our brands. Some brands are from japan. Some brands are from the u. S. Some brands are from europe. And you know, we try also to makeup categories. The makeup category in asia is booming. The acquisition of loreal last year was really a good move for us because it is a brand born in the u. S. With a french taste, and fitting perfectly our portfolio. Haslinda Goldman Sachs<\/a> has been pretty upbeat about the prospects at shiseido. Upgraded shiseido. There have been other concerns, though. When you think about the essentials, the company has had to take a writedown in excess of 600 million. Was that a mistake . There is a history between barry central bare essentials. We believe we can still make these bands better than today. I think we have not grasped all of the potential of this brand, and that is what the group is trying to do to revive it and make it better. Haslinda shiseido is now constructing a manufacturing plant in japan, something it has not done in decades. What is the thinking behind that, and where is demand coming from . Demand comes from many market. We are above expectation. We have three factories in japan, and it is not enough to follow the capacity, and we needed to have another factory. So it is a very good sign that, you know, we are expanding. Haslinda talk to us about your digital strategy, because currently, brands across sectors need to look at Digital Asset<\/a> strategy is no longer enough to have brick and mortar business models. How are you approaching it for a company that is deep in tradition . Jeanpierre you know, we look at consumers and how they shop. There have been big changes. There are some data showing that some 67 of them millionaires are shopping online, and that is a very big number. In china already, the ecommerce business is very big. In southeast asia, ecommerce is going to be very big in the future, so we need to adapt. We have created a Digital Center<\/a> of excellence in the u. S. To help the Group Progress<\/a> in this area, and we have people even in asia, here in singapore, to help develop ecommerce parts, and i feel very big potential for that. And it is going to be, you know, increasing in the future. We calculated that we want to triple our in ecommerce we want to triple our constitution in ecommerce. That was John Philippe<\/a> jeanphillipe. Haidi we are seeing a slightly more modest picture today. Hang seng seeing gains of. 4 . Shanghai still lower by about. 25 . Plenty more to come. This is bloomberg. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed<\/a> across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. Chinese market swings, manyrection, we ask how will stick or twist. Is taking to the skies, a special report on drum taxis. I am Rishaad Salamat<\/a> in hong kong. Protectionism, postamerica tpp, the geopolitical risks threatening global growth. This is Bloomberg Markets<\/a> asia. Haidi the ghost of that 2015 china selloff looming large. , evenors more jittery though that 3 decline with the csi yesterday was nothing back in the days of a 10 swing in chinese stocks. Otherwise, a remarkable lack of volatility. This is chart 1065 that paints up the picture of the selloff, the spreading from bond markets to equities. The 10 year creeping above that 4 level. You see that decline when it comes to the shanghai composite. Questions being raised, why havent the plunge Protection Team<\/a>s stepped in to intervene . Some say there is no point because large cap is so overvalued and small cap wont provide much support when it comes to markets. Fluctuations some when it comes to Chinese Markets<\/a> as traders work out at what point do we get state support and is the selloff going to be extended. That is whatink Credit Suisse<\/a> is saying, beware, be careful. It could carry on into correction terrain. It is about where was that beijing put. Perhaps teaching investors the lesson it is not a oneway bet. Up as well asgo down, so there we go, or down as well as up. Asian stocks mostly lower. Japan one ofks, the biggest drags on the benchmark. The nikkei 225 losing. 5 . This as the yen holds gains. Oil, set forhlight rises, of seven weekly helping Energy Stocks<\/a> in asia. In hong kong and Chinese Markets<\/a>, the hang seng shrugging it off. Chinese stocks looking at a day of swings as investors wonder about that beijing put. It could be the largest slum for large caps since lots summer. , still early in the session. China merchant changing gears after sliding yesterday. It is rising the most, chinese lenders in shanghai and hong kong. Gaining. 5 you see financials gaining. 5 in hong kong. A quick roundup of some other movers across the region. The Malaysian Ringgit<\/a> set for its first drop in six days. X x is falling. You are seeing chinese bond yield slipped two basis points, just below 4 . The bond rout has been at the heart of what we are seeing with concerns and chinese stock markets. Right, well, lets look at chinese stocks extending losses come but not nearly as bad. Our chief north asia correspondent is with this with the latest developments. I will bring up this chart in a second. Shenzhen has recovered, but it was sing more losses than seeing more losses than shanghai. Decipher the to longterm effects of that 3 selloff on the csi 300 yesterday. Do we have the chart somewhere . There it is. We are seeing china markets are all down. The last one i cant read it. Maybe we can bring it up on the bigger monitor. That is hshares. There they are. Have the chart for the one day for the shenzhen. Arket, now down point 5 we started with a decent run up, then straight down. That was. 6 or thereabouts. We have been hearing about whether the National Team<\/a> will step into crop the market if the sentiment panic has taken over. Those will get a popup, less so with rishaad this is the shenzhen market. Now going down further than that as i speak. To keep awe have lookout on the margin lending in china because we keep on comparing what happened yesterday great to what happened in 2015. It is a bit apples and oranges because the margin lending is not that great this time. There was 300 64 billion in margin in midjune, 2. 6 trillion yuan. This month, six straight months up and margins in the market has been going up, but it is just at one trillion yuan. That is as authority try to take up the risk from the market. Act dropagainst this of various things going on. You are telling me about this. Here are so many of them there are reports they will be purged and the only ones remaining in the shakeout, report and a statement in his paper in china, the only ones are thein with licenses big state owned enterprises come the banks, the brokerages, and the big online layers like alibaba players and others like alibaba. The other players would be purged. Getting another report that new rules and guidelines will come out within a month on the micro lending space. More than a thousand micro lenders across china that we know of, and often times they are set up or given approval by local governments, not necessarily the federal regulators, the Central Government<\/a> regulators. Six hundredhousand 10 micro lenders set up on pledges or promises they are linked to Stateowned Enterprises<\/a> come often times not come but maybe the regulatory crackdown should go down on the local governments as well. A lot of these unlicensed micro lenders can be quite predatory in their lending practices. Haidi some of them are lined up for ipos, right . Thats right. Probably getting a lot tighter because of the crackdown we have seen and the regulations and the uncertainty. , one listed in new york down 16 before the thanksgiving break. 24 in one session, down 37 this week alone, and there are three that we can single out that are in the pipeline or said they want to list in new york. Reassessingbably their ipo plans right now. Professore University Say<\/a> it would seem to be an enormous risk to try to ipo with all of this hanging over their heads. Haidi absolutely. Thank you so much for that. Lets get you caught up with first word news. President trump gave a thanksgiving address to the military to take credit for progress fighting abroad and warned americas allies could become the enemy. Insaid u. S. Engagement afghanistan and iraq was a waste of time, that now lames his policies have turn things around. He also told soldiers they would come home to a good economy, new jobs come and big,fat tax cuts. Germany is closer to a Coalition Government<\/a> with the biggest Opposition Party<\/a> ready to begin talks. The fpd were initially wary of renewing the grand coalition with chancellor merkel after voters punish them at the inconclusive election. Angela merkel is struggling to form a government and talks with the free democrats and greens fell apart over the weekend. S arean separatist considering dropping their unilateral declaration of independence in return for a negotiated deal with spain. The ousted president said the claim could be omitted from the manifesto if madrid agrees to hold talks as equals. Catalonia holds new elections in december imposed by spain. Samsung has rejected claims workers have been abused the two factories in vietnam. A hanoibased researcher and a global group of ngos document a series of alleged violations. They say some workers including pregnant women were required to stand for their entire shift or face a pay cut. The report claims they interviewed 45 female staff at the two factories. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Rishaad right, still ahead, is the price right . Valuations at christies upcoming auction with this asia deputy chairman. Haidi including that da vinci piece, the most expensive piece it, hard. Next, is too much of the worlds view in china shadow . We get the few. This is bloomberg. Rishaad we are back. This is Bloomberg Markets<\/a> asia. I am Rishaad Salamat<\/a> in hong kong. Decision to. S. Withdraw from the tpp has left asian governments questioning the trumps administrations commitment to the region. Australia is keen for the u. S. To remain involved. Haslinda amin has more on this. Malcolm government expressing some concerns. China. A it is china wants to be a superpower. The question is whether we are already seeing the shift in power. Is caught between a rock and hard place because china is its largest trading partner. Lets get some insight. Good to have you with us. This concern about china is real. It is very real. What we are seeing in asia is the new geopolitical world order being consigned by these changes taking place in asia. China is becoming a de facto superpower in asia. Through its economic relationships, the interest and dependency in emerging nations billion china 900 has at its disposal through one , it, one road, through aiib is asserting its presence. Can it be when it is reluctant to take a stand in places like afghan and syria . We saw it in south africa, zimbabwe. We are seeing china at the center of the global debate. Trade is also there are two models clearly emerging. When xi jinping spoke back in january, we were also price to see him become the voice of of alateralism, the face rulesbased trading system. What we are seeing now is that they are asserting that again and the right lateral dealmaking context in which the u. S. Is engaging with the world is a very different model. Is the u. S. Retreating from asia . Is the withdrawal from tpp a reflection of that . The United States<\/a> has the political foundations, deep economic foundations, and asia. A Strong Security<\/a> commitment to asia. I dont see that changing rapidly. I see a couple of things that suggest we may see the u. S. Have a sustained role. Andrelationship with india japan on new Infrastructure Investment<\/a> in the region is a sign it is coming together with strong,ners to have a sustained economic relationship in asia. Reestablishment of conversations that ended in 2007 with japan, india, the u. S. , and all striking together getting together suggest they are community that will protect their interests and asia. Haslinda cant these countries navigate this new normal without having to choose either one or the other . I think they are in a time them up. They are close to and defined by haslinda will they have to make a choice . They will have to accommodate both. If the business relationships come economic impetus, and funding and support from china will have to navigate difficult waters. Haslinda i mentioned tpp earlier. The former u. S. Defense secretary ash carter did say that tpp is more important to the u. S. Strategic the than another aircraft carrier. What does it mean now for the u. S. . I think the u. S. Remains close to and may ultimately once again under different leadership become part of tpp. It is moving for with 11 countries. Canada is staying in, which is a good sign. The model of dealing with Economic Issues<\/a> globally does not accommodate regional trade pacts and does not allow for commitment to a wto, rulesbased trading system. It is a different model. That relationship i think is the one the u. S. May come back to again. Haslinda the other flash point in the region is korea. North korea has not tested any missiles for the last 78 months. Is that a reflection that sanctions are working . How do you read into this . Interestedmendously in the quiet diplomacy from beijing. They are avoiding escalation, maintaining stability in terms of the relationship with pyongyang. We have seen diplomats go in for several days and have quite conversations. Beijing is under a norm is under enormous pressure to respond to ,he u. S. Increasing the stakes reasserting korea as a sponsor yet theyterror, and are remaining calm. Haslinda what is china doing differently questioning differently . Maintaining a calm hand on the situation and not allowing this to become inflamed. That is a positive thing. This is the greatest threat to world peace and stability without any question. China ties are very important because it has to do with north korea as well. Out . O you see that panning when we saw trump visit china, the two leaders seem to be friendly. Now that that meeting is over, could trump still take a hard stance when it comes to trade . I think they are both moving cautiously. In those conversations we saw between xi jinping and president trump, the issues that define the relationship and caused real challenges were not on the agenda. Chinese of access for investors to the tech sector in the u. S. , the lack of Market Access<\/a> for u. S. Companies into ,hina, those tough trade issues they were not talking about those issues. They respect one another and are moving cautiously as they go forward. Seeinda what moves do you trump taking in relation to china . I think he will remain aggressive in terms of posturing and cautious in terms of action. We have there a relationship that is so important to the United States<\/a>. They will not act in a precipitous way that causes unnecessary stress on that relationship. I actually think right now the way he is forging a relationship with shinzo abe and working with Narendra Modi<\/a> and looking at relationships australia, that is a sign that maybe new stability is emerging. Haslinda we thank you for your insights today. Thank you very much. Up next, the china solution to gridlock. It is take to the skies. Taxisartup planning drone from the United States<\/a> to do by. This is bloomberg. Is it a bird . Is it a plane . Or is it a drone . Company is accelerating plans to roll out drones from the u. S. To the uae. Company. Cess to its the drudgery of your daily commute could be the things of the past if the makers of this drone taxis get the way. Plans to build a Network Across<\/a> the world. The Company Founder<\/a> says that mission will soon be a reality. We are now waiting for our trial flight permits. When we have permits, they will be flying in countries publicly aired desperately. Where do you see the greatest opportunity . Commercial usehe of drones and human caring drones. We are only at the beginning stages of largescale use of drones, especially passenger drones represented by ehang 184. Our company has shifted from technology to the commercial business this year as we see huge opportunities in the global market. Is the biggest challenge the Regulatory Environment<\/a> . That is still the number one obstacle you have to get over . Civil aviation authorities in the uae and china have given us the green light for drone testing. The u. S. , and other places come all the policymakers are working closely with us every day on regulations. This is already very a unusual. Your prime focus in terms of the market, or are you looking overseas for sales . The overseas market is indeed bickerton the Chinese Market<\/a> in terms of purchasing ability. However we are making our way in china. We signed deals with two local governments and help them build to control centers like this one for them to use our drones extensively in areas of control and monitoring. More than half the revenue came from commercial deals in china this year. I expect our passenger drones to bring us much more income next year. We have secured a 1 million order and formed a strategic partnership. Ehang 184 passenger drones will become a star in 2018. You receive 52 million in funding. Foryou still looking investors, or are you fully funded . We will kick off deround targeting 300 million as we start mass production of passenger drones next year. Install fully Automated Production<\/a> lines to enlarge manufacturing capacity in 2018. We will sign deals in saudi arabia, singapore, and several european sites where we won need funding to support run testing. Also putting their fleet of delivery drones through their paces, dropping off coffee from a local store. It is another service they hope will soon take off. Haidi coming up, shutting down how australiarty, property problem could determine the fate of the entire economy. We would look at some of the numbers. They are alarming given we are looking at an economy that is overleveraged and a slowdown is starting to take place in the property market. We will look at the biggest risks, where they are, just after this break. This is bloomberg. Planning a new crackdown on microlenders. The state run International Financial<\/a> news says the 157 microlenders will be purged, leaving only state owned firms with licenses. Accelerates tried to brexit negotiations i suggesting land lock the final a card final accord. Avoiding a hard border is a key issue. Dublin wants a written u. K. Commitment on the border question, something london is reluctant to offer. The u. K. Has been warned it is on course for the longest fall in Living Standards<\/a> since records began 60 years ago. Saysins fiscal watchdog the economy will be 42 billion pounds or 56 billion smaller and 2022 than the government predicted in march. Wont return to prefinancial crisis levels until 2025. The oecd is warning saying household borrowing in advanced in developing countries poses an increasing threat to growth. Korea, canada, and the u. K. Lead the world in private borrowing. While in dead this not necessarily imply problems, it does increase font ability to shock and as that debt and credit quality are among issues that could trigger a downturn. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Haidi thanks for that. Watching Chinese Markets<\/a> as we close out this trading wake week. We are seeing losses deepening, but we are watching for that accelerated selloff in the afternoon session like yesterday. 3 the klein raising the ghosts of that 2015 selloff. Sengad the hang marginally up. We are teetering at the moment. Generally fears that what happened on thursday may well find a repeat story friday. We have the afternoon session to look at all that. It is against the backdrop fundamentally of a chinese economy which is doing pretty some of the biggest economies in this part of the world are facing some important decisions over the next few weeks, whether to change or real point of central bank chiefs. If they change, a policy shift will follow . My guest is with me here now. Malcolm, who is set for a change . Of course the pboc governor is front and center. The question is who is not. We had the pboc governor. It willnows when or if happen, but expected between now and march. The boj, governor kuroda, the view there from our latest survey is he may well seek reappointment. We have had freshly reelected abe, which should add to the case the kuroda will be the candidate. That reflation target is still very much front and center for him. That would be up in april. We also have korea, taiwan, indonesia, and new zealand. This thing about interbank funding costs in china, this is getting concerning, is it not . In leadership at the central bank is coming at an interesting time. Rishaad lets bring it up, chart 2056. There we go. Tell us about this. We have this real squeeze coming from at least in terms of rhetoric to some part of the Financial System<\/a>. It is not across the board. Chinese authorities want money to keep going to the real economy. The credit aggregates, so that is still happening, but the screws are being tightened. We are seeing that reflected in bond markets in stock markets. Thiser takes the reins at interbank will probably continue this to track policy, keeping real borrowing costs low and money going to the real economy, but tightening this cruise to flush out and put a brake on some of the shadowy finance product. Malcolm kummer we can make a guessing game as to who will move come 2018 come up that were sure the boj isnt. Give us a 6990, Bigger Picture<\/a> when you talk about the extraordinary Balance Sheets<\/a> of the fed come ecb, while the boj trumps them all in the green in terms of that percentage of gdp assets held by Central Banks<\/a>. Theyre just going to keep going for the long run, right . We will not hit to prison anytime soon . Thats right. Shinzo abe freshly reelected has staked everything on getting to 2 , governor kuroda has followed suit. Governor kuroda is clear that they will keep stimulating that economy until they had 2 . The missing picture is inflation and wages. Wage growth is needed to get there. We assume that may be governor kuroda wants to retire, whoever comes next is unlikely to change. Right across the region, we are seeing that trend that we might see some new faces, but the policy direction does seem fairly set. In korea, it looks like we will see some tightening their, maybe as soon as next week. His term is is up, up and march. He could theoretically get a second term, however no one has since the 1970s, and of course appointed bywas park, so those two factors are weighing against him. The one that could be a good chance for a second term is in indonesia. His term is up in may. He can also get a second term. New zealand, the governor there has already retired and there is a standin, and we should get a full governor appointed sometime in march. Some changes coming there. He will face a broader mandate of potentially three on his panel. Haidi we spend so much time talking about leadership changes at the fed. Should we be watching the pboc and who replaces him here at dashcam . Him . They take their overall instruction from chinas willet, so that as well show policy continuity, especially given the direction is set. The pboc governor has been key in setting that direction. His vocal calls for a reduction makeverage and warnings that direction fairly clear. An interesting thing is that whoever follows him will probably not have the same profile. That may make it tougher for them to articulate as clearly as he has. Rishaad we do have one change that is being announced already, and Jerome Powell<\/a> at the fed. But that is, another one. Will because you for these guys in this part of the world. Especially for indonesia. We have seen this we are to , indonesia cutting rates eight times. That is unusual when you have a tightening fed here it fed. Whoever comes in the in indonesia will face that the constraint. A new fed chief who is tightening. Rishaad ok, thank you very much. Right, what have we got at the moment . Markets in a state of flux. We will get more details on this and where we are headed with regard to them. ,urrency pretty much stable dollar holding on to recent losses, but it is about equities, your money. The hang seng just about positive. Sophie we are looking at a fairly negative session when it comes to equities. Japanese traders playing catchup, the nikkei lower by. 3 as the yen holds below 112. The main focus has been chinese stocks. Shanghai and the largecap index extending its worst slide since last summer. Seeing tech stocks under pressure like tencent and aac. Hshares maintaining, but trading at session lows. Financials and automobile stocks under pressure. Industrials keeping the hshare gauge afloat as rails are being led higher. Byd electronics falling to a in august low. Slidinghi materials amid a falsified data scandal. On talks. Nt swinging air asia falling on its thirdquarter loss. A last look at shares in sydney, dragged lower by i. T. , tech, and financial players, but the benchmark with a weekly gain, but for now losing. 3 . Thank you so much for that. Lets talk about the Housing Market<\/a> in australia a popular topic of discussion in this part of the world. The house party may be getting shut down because we have seen property prices surging. Trillion for 5. 6 housing in australia. We have been tracking all this. A Housing Market<\/a> four times gdp, is that as concerning as it sounds . On one hand, you might see it is a good thing. It is a strong signal in australia, a strong signal that all straight is a desirable place to live, and Strong Demand<\/a> from overseas investors, especially asia, china, but on the other hand, that number reflects the shared amount of liabilities being run up against these value wishons, so these valuations. That is the concern, that chinese households have run up so much depth that they would not be spending because they have some much debt. The other concern is that a minor correction or minor shock could become something more significant with all those liabilities and such high valuations. Haidi you have quite a bit of leverage. Household loans close to record highs. Financial stability concerns. Thate rba has made clear it is satisfied that banks, which are the most exposed to property in the world, financial property, they have made it clear that they are satisfied the banks are well capitalized enough and have Strong Enough<\/a> buffers to withstand any pick shocks. Big shocks. What they are more concerned about is the health of the consumer. Where as banks may be able to withstand any shocks, consumers may not. Tankad is the reserve concerned . Bank what have they been saying about the Housing Market<\/a> . They certainly have not got their head in the sand. Every time they release a statement come they mentioned the word household debt. A fairly understated bunch, so that means they are worried. They made very clear on several occasions that it is not their job to control house prices, but it is their job to make sure lending does not get out of hand and that the countrys Financial System<\/a> is in a stable place because of that. There have been moves by the regulators to clamp down on lending, and that seems to be doing its job. Good stuff there. Having a look at the Housing Market<\/a> there in australia. That is a look at what is going on. Lets have a look at what is on the way. Battle, thead loan strategy state lenders are using to tighten the screws on borrowers. That is next. This is bloomberg. Rishaad india seeking to tighten bankruptcy rules to prevent in solvent companies from buying. Willful defaulters would do qualify would disqualify it from bankruptcy proceedings. Tell us a little bit more about this. Ordinance which is an executive order seeks to bar or disqualify defaulters and people involved in fraudulent transactions from bidding for companies in bankruptcy proceedings. It basically seeks to stop such from regaining companies the backdoor. Measures are lenders taking to reduce loan accounts and improve recovery ultimately here . Tolenders have started inernance bring governments, and that includes collateral 1. 5 times by you of the loan, or insisting on contracts where they are able to convert loans into liquidity when the asset becomes stressed, and also rating triggers. There is a doubt grade downgrade, they can demand immediate repayment from the borrower. Npls . What about have they checked on bad loans for these banks . In the middle of the 2017, to rbi took 12 borrowers court. 31 billion for of bad debt in indias banking system. The r. B. I. Also told banks to result the defaulters within a year. ,n addition to indias cabinet they decided to infuse 32 billion capital to help them fight the problem of bad loans. Haidi thank you so much for that. Our asia Credit Report<\/a> it there for us. At theup, we look multimillion dollar works on offer at christies latest auction season. Christies asia deputy chairman Jonathan Stone<\/a> is with us next and we will be talking about that famous da vinci. This is bloomberg. Haidi this is Bloomberg Markets<\/a> asia. I am haidi lun in sydney. Rishaad i am Rishaad Salamat<\/a> in hong kong. Offsties autumn sale kicks saturday. Its shaping up to be one of the most significant asia has seen. The combined value of items to billion,s put at 1 the sale coming after a da vinci painting went for 450 million in new york. Lets take a look with Jonathan Stone<\/a>. Quite something. Very exciting. Rishaad what is your view as to what will be sold . What will be the Star Attraction<\/a> . Exciting this time is there are a number of firsts for what we are doing in asia in hong kong. For the first time we are launching the major new york collection next year, the rockefeller collection, launched in asia before anywhere else,. Hich is a real indication we have a ming dynasty evening sale, and impression the sale , someed around mr. Monet property he had as a personal collection for the first time. I think these are all great highlights in addition to every department in hong kong has a lot to at over 100 million hong kong dollars. There is a superb range of art and luxury products. Had a fewe have people coming over the border of the is still 35 global art market, this part of the world, is it not . Yes. This year,t part of asia accounted for 35 of global sales, more than europe, which is a real indication of the coming of asia. Anythingyou dont see with this crackdown on corruption and conspicuous consumption affecting your business . No. Have thee in china ability to transact with us and chinese buying has remained strong, and has moved not only from chinese art look at also into western impressionists, modern contemporary art as well. Rishaad tell me about when people come to auction, for instance that da vinci picture, 450 million. There has been all sorts of controversy come a but the point you dont know how much something is worth until you put it up for auction. That is absolutely true. Particular with Something Like<\/a> a da vinci, a unique and iconic work of art, and how often does the da vinci come up for auction . Never. How do you price Something Like<\/a> that . It is absolutely what someone is willing to pay, see you get that spectacular result, and it was a very exciting moment. I watched it online, and it is a truly historic moment. He gave me goosebumps. It gave me goosebumps. Haidi you can see the appeal of the ultimate trophy to be part, but it also raises questions the veracity of a piece come it is down to believe, isnt it, faith . I think it is not entirely down to faith. Wish tolways quibble about something when you have a huge success like that, but for eight work of art so widely accepted as by the artist, it was in the da vinci National Exhibition<\/a> a couple of years ago come i think talks about veracity are hugely exaggerated, and it was a great work of art. We had it here in hong kong and i saw it. It is a fabulous work of art. Works of art i think achieve truly great prices. It is a recognition of the ecstatic value aesthetic value of the work of art as well. Haidi the buyer is unknown, but are we allowed to know from what region . Was it an asian bitter bi dder . I dont know. We are not allowed to know. I will happily remain silent on that one no matter how much you try. Rishaad right. Pink dimon also on offer, 45 million. Tell us about this. Its fabulous. Rishaad you would say that, wouldnt you . It is called the pink promise. It has the promise. It is the most expensive stone we have sold in hong kong or will have sold in hong kong come next week, so i think again it is an indication of the confidence that our vendors have in placing things in an asian art market. About asian talking art markets, asian art is, picasso equivalent here, tell us about this. We have sold a number of his works. This season, we have a masterpiece from 1964, one of the great years when he was transitioning into an increasingly abstract form. It is a stunning large work here it is quite spectacular. It deserves to achieve a record prices well. Rishaad give us an idea. The presale estimate is 85 million hong kong dollars to 125 million hong kong dollars. Rishaad we look for to it this weekend. Good stuff, jonathan. Come at the top of the hour. Equity markets in flux, looking at that massive fall for china ,n the session, late session thursday. Looking at what is going on. The hang seng keeping its head above water, but there is weakness elsewhere. That is what i will leave you with, a snapshot of the equity positions of the moment. Angie and david are next. This is bloomberg. It is almost 11 00 in hong kong, 2 00 in sydney. And we are in the last trading session of this week. Welcome to Bloomberg Markets<\/a> asia. David more stretched nerves as game mainland markets swing between the losses. Unintended correction. The powertralia fears shift retreats from asia. China says that is just irresponsible. David a Growth Strategy<\/a> that is purely cosmetic balances tradition with takeovers. We have an exclusive interview. After the recordbreaking da vinci, it fetches one billion big ones. Lets hope it does a little more wealth creation. The 140 billion angie ouch. Trying to see what the story really means for investors. Look at my bloomberg chart, corporate debts. Yields pushing up borrowing costs, whatever you want to call it. And then losing perhaps a very important option for refinancing. That is a looming shadow close to 1 billion in Corporate Bonds<\/a>, not including other type of debt that matures in the next 24 months could run into the problem and you cannot roll those things over. If you do, you are faced with higher borrowing costs than was the case in 2013. Angie even policy banks like China Development<\/a> bank, the super bank. Even it is called caught up in the concern of corporate debt in china. That concern is having effect on the market. You and i were counting how many times the shanghai composite change directions. A dozen times. Could you say there is conviction . Conviction they do not know which way to turn. Yesterday there was a huge route. Thathat beijing put investors in Mainland China<\/a> had expected to see, was not there. Close toccelerated, the close. Is down. Msci that shows the general sentiment in the market. It is a mixed market day today. Hong kong shrugging off the contingent affect for now. It is below the 30,000 mark. Remember earlier this week we were talking about it breaching that 2007 record high. It is now below that psychologically important 30,000 mark because the contagion effect from china had an effect on hong kong, dropping 1 . Though now it is gaining 0. 4 higher. I do want to talk about shanghai composite because Credit Suisse<\/a> came out with the notes. The gains you have seen year to date, 2017 gains all the way up to this big sharp drop you see here, investors taking profit off the table. They say it is probably a good idea. What they wrote in the note is that these market corrections we are seeing in the mainland might last a while. They say it is likely to stay tight until the end of the year, making asian shares less attractive to banks and insurers. That is what we are talking about to corporate debts and bond yields we are seeing selloff. Also, government efforts to cool the jets. These highly evaluated and forainly very frothy moves some of these chinese equities by the chinese government. Also notable in japan they had a market holiday yesterday. And they wake up to another Corporate Governance<\/a> issue. Inare watching mitsubishi your bloomberg terminal. Threeday chart, plunged right off the cliff here. Right now it is off the intraday low. Yet again, another group admitting it faked data. Really putting into question the the goods that it sold to aircraft makers, automobile makers. Yet another corporate drama being unveiled in japan. Mitsubishi materials falling the most in a year. David fake news, real fake news, we should say. Angie, thank you for the market rep. Lets get an update of your first word news. The u. S. Navy has abandoned the search for three sailors missing after c2 greyhound crashed off southern japan. The plane crashed southeast of okinawa. Three helicopter squadrons another aircraft failed to find them. Eight of their colleagues were found soon after the crash, and they are said to be in Good Condition<\/a> in the hospital. A step closer to a Coalition Government<\/a> with the biggest Opposition Party<\/a> ready to begin talks. Martin schulz and the spd were wary about renewing talks for the grand coalition. Merkel is struggling to form a government, and talks with the felldemocrats and greens apart over the weekend. Consideringratists dropping their referendum of independence in return for negotiated deal with spain. The senior official for carles hegdemont told bloomberg could be omitted from the manifesto if madrid agrees to hold talks as equal. Catalonia holds new elections in december, imposed by spain. Samsung has rejected claims workers have been abused at two factories in vietnam. A study by a hanoibased researcher documented a series of alleged labor violations. They say some workers, including pregnant women, were retired to stand during their entire shift or face a pay cut. They interviewed 45 female staff at the factories. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am debra mao, this is bloomberg. Angie the china stock is abating a bit. We have Stephen Engle<\/a> following the development. I am watching the market gyrations because hong kong is defying the market persuasion we saw two years ago. Angie it is not the afternoon yet. Stephen no, the hang seng up 0. 5 . Red chips up 0. 25 . Though the main composite indices in china, shenzhen and shanghai, are slightly down. But not like yesterday. We saw 52 points down on that asx 200. We did not get the order to go buy blue chips in china, which are already pricey. It looks as though the market has stabilized. That is not a bad thing. But there are still pressures in the market against the leverage crackdown in china. They are concerned over too much margin lending. That really fueled the collapse of the popping of the bubble two years ago. We have a chart where we can see the levels of margin lending and the chinese economy. It has risen for six straight months. This month it did pass the one trillion yuan threshold. 152 million in lending into stocks. That is on the right side of the screen. Fujishaped david matterhorn. Stephen it looks like point could in oregon. 364 billion. As we are seeing a crackdown in micro lending, it has gone into stocks as well. We are seeing a rise marginally. The micro financing crackdown, you have a lot of ipo s waiting in line. Stephen they can shelve those plans. Angie interesting to know, Goldman Sachs<\/a> expecting the index at 32,000 by the end of 2018. We have to get through this blip first. Stephen hong kong has a very good ipo market this year. Economyly these new and tech companies. Crackdownking at a and regulations possibly coming down the pipeline in the cash and online and lending space. 157 of them license. Reports of a statelinked newspaper in china of those could be purged and licenses sticking with the big, alibaba. Ed banks, 157 could be absolutely purged. Lenders, 8000 cash many unsanctioned but sanctioned unofficially through governments. Maybe the regulatory eyeballs should be on the local government and the practices they have been doing in giving unofficial sanctioning to these online lenders. It is so complicated. They do serve a purpose in china but can be editorial. They do the legal limit they can do. Angie that is like loan shark territory. Thank you so much for that, Stephen Engle<\/a>. David innovators in china. When it comes to tech. To solve the worlds congestion problems, we take a look at taxi drones, hopefully they get it right. Back here on earth, nearing the end of 2017. It is been quite a year for Global Equity<\/a> markets. Will it continue the trend . This is bloomberg. David that is the show, Bloomberg Markets<\/a> asia. Just some breaking lines crossing the bloomberg terminal, from the minister of finance in china. They will be adjusting import tariffs in the country on some consumer goods. We do not have details on what those consumer goods are. Starting december 1 they will be cutting consumer tariffs. We still do not have details. On the basis of previous tax cuts, it further reduces import tariffs on consumer goods rings like food, health care, farmer, footwear. Pharma, footwear. A total of 187. Tax rate, 17. 3 , down to 7. 7 . We will bring you more details when we find out more from Chinas Ministry<\/a> of finance. Angie that would be a big deal for Companies Getting<\/a> into the china consumer market. Lets talk about china. Chinas largecap index remains in the red. What some traders are seeing is it states statesanctioned selloff. State sanctions selloff, where does it leave all the little people, the momandpop Retail Investors<\/a> . You got to look at the fact that the Chinese Markets<\/a> had almost 20 this year. We are coming from an elevated base. Sees not surprising we these tweaks taking place with the government looking to crack down on some of the excess euphoria. I do not think it is necessarily going to change very much. Outlook is still reasonably positive and proving the doomsayerswrong. Wrong. Seems perception over the attitude of beijing on markets drives this up and down. Which tells me, even when you go to 2015, the markets had not matured. Is there anything on fundamentals to trust when it comes to this market . And of the day, nothing matters except this. Steve david, i absolutely agree with you. We do not have a country allocation specifically the china, preferring to play it through a more regional bunch of problems in our portfolio. Are getting awe degree of diversification and focusing on the limited number of companies in which we do feel comfortable and have the degree of transparency we look for when we are investing. Angie i want to get your opinion on this line we just broke, david. This tax cut that china is going to adjust its input terror for some consumer broad but it is pretty based, food, pharmaceuticals, clothing and footwear. 17. 3 to 7. 7 . M what does this mean . Steve it is a good question. Onlytedly, bad news has just come out. I have not had time to analyze it. But it is in line with what china appears to be wanting to do, the show itself is a good and global trade citizen, particularly in the face of more protectionist rhetoric that has been coming out of the u. S. For the last 12 months. I view it very much in that prism. I think it is very much china trying to show it is still open for business and trying to show it is amenable to twoway trade rather than benefiting from an export driven model up to this point. The view,s broaden moving away from china. We have a graphic to illustrate your call for viewers. 26 from levels on current japan. What assumption do you have here in yields . Apart from japan, which i imagine explodes when the yield curve explodes, it is hard to imagine we get to these levels from the current levels, if riskfree rates move up in a big way. Steve that is correct. To be fair, that is exactly what i point out, a significant potential risk for next year. It is all about inflation. If we get an inflation number coming out from the u. S. And elsewhere, then we will see a rapid increase in Interest Rates<\/a> than is currently being expected. Having said that, we are quite used to the fact inflationary pressures have remained for a long time. There is no indication that pitch will change for the first half. Our expectations when we look ahead to 2018 is based on earnings grace and a continuation of the current spaces growth as far as Interest Rates<\/a> and inflation. Japan looks attractive. It is producing the strongest rates of earnings growth. On the basis the yen remains at current levels. If it strengthens materially, those forecast would change. Angie how do you play that in japan . 2017 one could argue is the year of etf. Is that a safe play in 2018 18 or du have to be more specific . Still a think it is case of the broad market phenomenon. You can hedge at your Currency Exposure<\/a> for a variety of different etfs, which do give you yenhedged and u. S. Dollarhedged versions. It is a way to temper your currency risk. From that perspective we have to play that to the beginning of next year. David we also like india and vietnam. Help us understand that, because india is very expensive and vietnam is up 40 this year. Why do you expect them to outperform . Steve you could say all Global Markets<\/a> are pretty expensive. If you look at the shiller valuation metrics matrix, everything is at historic highs. India and vietnam are not unique in that respect. Benefitingvery much from reform, restructuring, exportlead role models. Skepticism as far as india is concerned with regards to the modi reforms being pushed into the background, on that basis, still a lot of room for growth. Those are the markets we continue to favor. Angie steve davies, thank you so much for joining. Ceo of javelin wealth management. The wrinkles in its Market Strategy<\/a> with plans to triple online revenue. We get our exclusive interview. This is bloomberg. Angie this is Bloomberg Markets<\/a> asia. I am angie lau. David i am david ingles. Shiseido is old, but moving forward. They led the company to 15 last year. From makeovers to takeovers, they spoke to its apac president about the push to become true equals. Needed a change, we needed to transform the company to accelerate our growth. We went through a vision 2020, which is in fact a midto longterm strategy. Is it enough . It is an increasingly competitive market, with the likes of loreal and others. All clamoring for a bigger slice of the market. Can you see ahead with this strategy . Three years are proving we are ahead. Goldman sachs has been pretty upbeat about the prospects at shiseido. But there have been other concerns. When you think about bare essentials, the company had to take a writedown in excess of was that a mistake . 6 million. There is a history between bare essentials. We believe we can make this brand better than it is today. I think we have not grasped all. He potential of this brand this is what the group is trying to do today to revive it and , make it better. Shiseido is now constructing a manufacturing plant in japan, something it has not done in decades. What is the thinking behind that and where is demand coming from . Demand comes from many markets. We have three factories in japan, and it is not enough to follow all the capacity. We needed to have another factory. So it is a very good sign we are expanding. Talk to us about your digital strategy. Because currently brands across sectors need to look at digital access. It is no longer enough to have brickandmortar business models. How are you approaching it for a , company deep in tradition . We look at consumers and how they shop. There have been big changes. There is data showing 67 of millennials are shopping online. That is a big number. In china, ecommerce is big. In southeast asia, ecommerce will be big in the future. We need to adapt. We have created a Digital Center<\/a> of excellence in the u. S. To help the Group Progress<\/a> in this area. We have people here in asia, singapore, to help grow the ecommerce part. I see a very big potential for that. It will be increasing in the future. We calculated that we want to triple our contribution to ecommerce in the coming three years. Case you missed that interview, you can catch all the other interviews here on Bloomberg Television<\/a> in the past 24 hours. Tv is your function. Watch us live, look at charts we bring up on the show. Be part of the conversation by sending us in some messages. This is for bloomberg subscribers only. Check it out, tv. Angie in a real time we will take a look at business in tokyo. Declined, thes yen remained in overnight highs against the u. S. Greenback. 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