>> lots to talk about. looking at chinese debt, it's another way of looking at all of this as the deleveraging campaign continues. , have a up the chart look at this is the borrowing binge. it has really been chronic. it is a chronic concern. looking at this, we have total 206% of gdp, higher then twice the average economies. should we be paying that much attention to the total amount or should we be looking ahead? this is deleveraging, the push that we have. there could be some light at the end of the tunnel for the naysayers about the chinese economy. kong, shenzhen, shanghai and just under half an hour. and we have singapore, taipei, and kuala lumpur. on the street of dreams overnight. >> a tech rally, it was felt by the draw we saw in metals. it could be in for an interesting session. we will take a look at the big picture. the longest losing streak this year. a dollar. tracking the decline into your treasury yields. some of the tax talk optimism. sliding with bond yields on the gdp. seeing the 10 year yield for aussie note 57 basis points this morning. g #btv 15 35, you can see the 10 to three-year yield spread narrowing even further. it is flattening the yield curve by the most in a year. minors are following, leading gains. byailers are being led higher holdings. unlimited short-term impact from amazon's lodge and amazons australia day. checking on some key movers on the cost beat, which is a two day rise. record. by the most on they are adding the most points along with kia motors and lg electronics. morgan stanley remains cautious on samsung. by tencent and alibaba with recent declines. they have seen profit-taking of late and are funding a rotation away from growth sectors into g #btv 1772 ise what i want to draw your attention to. the bank of new york mellon index of american depository 7.5%pts has lost almost over the seven-day decline, the longest losing streak this year. we will be keeping a close eye on tencent at the open. >> let's get to the first word news and look at what is happening with the north korean peninsula. tensions are really dominating things. >> reports from seoul say that the u.s. air force is sending -- thebers to the guam-based planes will join other aircraft. one dozen fighters and the latest u.s. warplanes, the f 40 -- the f-35. israel has threatened to respond. the russia inquiry has moved another step closer to the white house with special prosecutor robert mueller demanding details of president trump's links to deutsche bank. more transparency over the roughly 300 land dollars trump vote for real estate doings prior to becoming president. they want to know if there is any link to moscow. president trump told leaders that he wants to move the u.s. embassy from tel aviv to jerusalem. a recognition of the divided city. he called palestinian president and king of jordan and warned that it would of the peace process. sources tell us the president is planning a six-month waiver on the move. corruption at malaysia's state fund is kleptocracy at its worst. running on the justice department website, sessions said that it was laundered through a web of transactions and fraudulent shelf companies in singapore. needing a place to do business. wants to protect existing ties to the eu. after brexit for ireland and the continental europe. global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. day in moree worst than two years. pushing tree dollars a pound. >> that is right and we have seen a real jolt of pessimism on the market from investors. and we think we boil down to a and certainly,sm there is some expectation that that is set for a major slowdown. bloomberg survey in recent days, we have seen the immediate estimate. year.ecast to 12% next 20% in the first 10 months of this year. a slow down on the demand side. we have seen that flag this week. say thatop and they the next six months look a little bit more pessimistic. all of that translated to the price and in london, more than 4%, the worst day since 2015. rishaad: it is all doom and gloom at the moment, but there are people that are quite a list long and medium-term. is that the case still? >> absolutely. there are drivers both on the supply side and the demand side. you see rising demand from continued industrialization and a more intensive use of copper. it is all seen as a big demand, the best minds are getting older. a constrained supply. the long-term outlook is bullish. ceo saying they're pretty bullish in the long term, particularly from that around renewables. david, i have one more dostion, and that has to with the inventory side of things. would that give us any ideas about copper short-term? seen concerns on the demand side. we see the stockpiles and deliverable metal, we have the largest jump since september. we certainly see another indication of weaker consumption of copper in the short term. david, thank you in melbourne. still ahead, japan's growth is seemingly firming up. what does it mean for the central bank? boj and bank of america merrill lynch's head of japan economic joining us with that view. and next, a look at the year ahead. joining is with his outlook with the banking industry and the economy at large. this is bloomberg. ♪ rishaad: you are back with bloomberg markets. hosting the year ahead asia conference. and important issues challenges. chief international correspondent, she is there. >> that is a big question and it must be the fourth industrial revolution. technology is disrupting every sector there is. and in the banking sector alone, expect 30% of jobs to be lost over the next five years. that is a huge problem for the industry. but the upside for asia is growth. companies are growing between 5% and 7%. and it is benefiting from that growth. it is great third-quarter numbers, record operating profit. the question is if that is going forward. >> and we have definitely benefited from it. it is a very strong nine months for the group. announced some results last week. challenges that we will be facing. if it is sustainable, i think the answer is yes. macroeconomics, the backdrop a strong. we expect a growth to be there. those countries we have, especially indonesia and thailand. those are expected to grow stronger next year. and entering the transformation the investorst we've done the last few years. in it is not showing results. [no audio] just a couple of technical problems there. are trying to get her back and continue that discussion. a brief look at what is going on market wise, a lots of things weighing on u.s. equities. that is at the moment making itself felt in this part of the world. we see the down arrow, the nikkei down by .5%. indexoking at the times also lower in the session. as we try to resolve our technical problems, we will tell you about what we have coming up. a full check on markets and later on in the program, u.s. tech stocks. looking at how the proposed tax plan is being talked through congress. more coming up. this is bloomberg. ♪ rishaad: this is bloomberg markets. getting you back in jakarta for interviewing a rather important ceo. >> technology lets you down sometimes. about newalking expectations. that to work?end >> the target's round 9.5%. last year, it was 8%. bloomberg is around 10.5%. and it shows that we are improving. earlier, the cost of compliance and also increasing. competition from the nonbanks, right? segments of banking. we will see it. very high. and alaska results, we were at 51%. we need to make sure that this is sustainable. banks really look at the arrival. .hat model of bank arose, you are right. we need to look at that. >> does that mean restructuring is done. >> it is more about recalibration. the midst of planning for the next five years for the group. in that changes how banks operate. >> i want to touch on malaysia, one of the key markets. optimistic it is that they reached $95 million this year -- $95 billion this year, $85 billion last year. >> a major player in the markets. >> and we are confident. we have seen tremendous growth in the market. we are not just her than by malaysia or this region, but we seen stronger participation. has created the momentum for next year. we have seen more infrastructure. withnies are more familiar this. megadeals?xpect more can we see more next year? >> selfishly, i hope yes. thatt really depends on fine line. >> in the middle east? >> i'm not sure. and in the middle east, there is a precedent. >> and about that up-and-coming area. >> the up-and-coming market, leasing the singapore bank. the partner.ms, and the same time, we want to look at that. banking.e investment between banking. it is something we need to focus on. i must say that we are a bit floored in our push to recalibrate. for 2018.be a focus and are you planning any acquisitions to help you grow faster? >> yes. ishink today, the appetite the banking wealth management and that something that we can't sell. we are a bit more open to the idea. that infrastructure that we built, i think the calibration, whether we are ready to go. the opportunities are there, and we look to make sense. >> i was starting to have the target. tell you that we want to be in the top 20. >> and what time frame? >> do we join? >> take a look at the year ahead. precisely the theme for this conference, what do you see is the bigger challenge for the banking industry? goes.depends on how china it is something related. geopolitics, it is asia. the u.s. and europe as well. everything is pointing to the direction that it will be a moderate group. it is also driven by growth itself. the outlook, the macro site. in the moderate growth. >> technology is key. >> what is the digital strategy going forward? >> we are launching it. this month, in fact, we're launching in vietnam. know, we have gotten approval. what we want to do is assess this to market and try to bring it. >> of course, a bank. it is the only bank with the -- all 10and all 10 markets. rishaad: at bloomberg at the asia conference in the indonesian capital of jakarta. end, seven points up by the end of it. , the techinto china fund is said to be eyeing stakes in the company. ♪ retail. under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. or a little internet machine? [ phone rings ] it makes you wonder. shouldn't we get our phones and internet from the same company? that's why xfinity mobile comes with your internet. you get up to 5 lines of talk and text at no extra cost. so all you pay for is data. choose by the gig or unlimited. and ask how to get a $200 prepaid card when you buy any new samsung device with xfinity mobile. a new kind of network designed to save you money. click, call or visit today. rishaad: victoria harbour in the heart of hong kong. a few seconds away from the start of the session right there. things weighing on investors and certainly didn't get much where we saw some fairly steep losses for the major indices there. their.miss those miners really weighing on the regional index. impact for the tax cuts. market participants head in india is well. bank.serve it will not change. it will be a cut in the pipeline and will be open here in hong kong. >> take a look at what is going arethe chinese large caps continuing to drop down one third of 8%. day,are over for a third seeing how they are also faring this morning. the hung sending a little bit higher. lower, theen shares shanghai composite materials. that stock is falling over 1%. it is a red day across sectors. equity movers and hong kong. the china merchants port is leading adventures up over about 1.5%. gaining ground. sector and energy hong kong today. space, and take a , it is alsolopers on the radar. agreeing to a hong kong property disposal. planning about 4% at the open. and residential sites to carry property. rising about three quarters of a percent. >> let's get to the first word news headlines. raimi: senate majority leader mitch mcconnell says roy moore can expect to face the senate ethics investigation if he wins next week's special election in alabama. initiating ased of sexual encounter with a 14-year-old girl and assaulting a 16-year-old when he was in his 30's. he remains a serious contender to win the december 12 election the democrat doug jones in heavily republican state. asian airlines that witnessed north korea's missile launch say envisage changing flight plans. true members saw a launch as their planes flew to asia from the u.s.. the carrier say the relevant authorities were informed of the time and no route changes are being planned. some airlines have altered their routes. the counselor ended abruptly with hours of starting that and a dispute over qatar. it raises questions about the group's future. forming a new partnership with saudi arabia separate from the gcc. the group a set up to counterbalance the influence from iran. macau has emphatically denied being attacked haven -- a tax haven. lionel says that the enclave is engaged in long-running talks and will illicit funds. macau is named on a 17 strong black list which features south korea the rain and the uae. globalist when for hours it am powered by 2700 journalists and analysts in over 120 countries. this is bloomberg. >> softbank making a harder push into china. the technology fund and , asia tech editor in tokyo. about thea little bit affiliated companies and exactly what the vision funds game is here. >> very actively investing in what sourcesctors , the onlinelling us lender has been rolling -- growing very quickly. online health portal that has been quite successful. they are headed for ipos. take and small stakes compared to uber and other countries. it may have some quick wins if the companies go public relatively soon. how does this fit when it is investing yeah they have really been a tech fund up till now. >> they have invested aggressively and a number of different areas and they are in take ast of this to stake. it is a little bit different. it has been very successful at this lending space which is controversial because there have been problems with some of the other companies. it has also been very fast-growing given the countries traditionally state dominated finance sector. they have been able to bring some innovation to that sector. people search for higher returns. that business could give softbank an opportunity to cash and if there is an ipo in the near future. it may be able to iraqi up a couple of wins and record gains that may help the fund. this begs the question how important is china for the fund? >> they met with donald trump and talked about big investment plans in the u.s. and has invested very aggressively in china. alibaba in china, it is worth more than $100 billion at this point. it looks quite promising. rishaad: at the global forum, our correspondent is there. tell us what this is all about. >> this is all about bringing some of the world's top business executives into china, into guangzhou particularly. along with some of the national leaders as well. hear from canadian prime minister justin trudeau. at some point, we will be hearing from the vice premier. and the u.s. ambassador to china , bringing those executives together. it tim cook is going to be there. hsbc, and we will talk about that. key issues throughout this year. shaping globalization. they will be giving the speech as well. terry branstad later today, will also be speaking to the ceo. interesting news. >> there is talk that they are just telling the party line. what of you been hearing? >> it is interesting because we have the world's internet conference in southernheld china this week. and apple's ceo said that. conference, a really elevated to new levels now because you have these big u.s. tech sites and it is rich with irony. it is more repressive in terms of freedom of speech online. and yet, these executives come. the interesting aspect of this is that china is trying to recast what it has done in china and on its home turf with the internet and push that out globally as well. we know from a senior chinese leaders saying that they want to see more aggressive government controls. in this is also coming at a time when chinese tech companies are pushing abroad. with her the likes of jd.com the e-commerce company planning to expand. event, reshaping the internet. >> what is behind this share sale here? the $1.4 billion in the sale of the shares. tries to work on sales from early may of next year. the news comes with the expectation that it would suffer for a while because the demand for new vessels and offshore projects. a preemptive measure to improve its financial systems and respond to risk. >> will this help the company? and what about the broad environment for shipbuilders? it is helpful to move for now as it faces combined operating losses this year and next year. the loss is temporary. investors are concerned fundamentals of the company as they are really getting back. as you mentioned, the builders have been struggling for the past few years. after thatslow down capacity. joining us from seoul. coming up, they had a good ride, but can japan stay on the growth trade to the next year? .e will get the take this is bloomberg. ♪ rishaad: you are back with bloomberg markets, i'm rishaad mat.mi -- salaam i our next guest is head of japan economics at bank of america merrill lynch. give me your rationale here. >> great to be here, thank you. rishaad: so tell me why you going tot there's not be a slowdown in growth and what you do expect out of the japanese economy looking into 28 teen. -- 2018. globalerms of the backdrop, we are still very optimistic about the outlook for global growth. we think global growth is going to continue to expand at a very solid 3.8% next year. should be positive for exports. importantly, we think domestic demand, specifically, it will support the economic expansion. >> a self-sustaining recovery, so will there be a need for boj to be there in the market? >> i think that is what will be the very interesting and key theme for next year. if we are talking about the 2% inflation will remain very far from those numbers. we think that x energy core inflation which is around 0.3% actually start to accelerate to 1% on the back of stronger wage growth and more tailwinds from fx. specifically, we think they can list the 10 year yield target. rishaad: you are suggesting don't give up on inflation just yet. people say about 2% inflation target should be consigned to the wastepaper basket of history. >> i think this issue of the disconnect between strong growth and inflation is really a global phenomenon. i think people say the same things about the united states. in short, that curve is not dead. there is a connection between the ongoing tightening of the economy. and in japan in particular, we think some idiosyncratic factors suppress inflation this year. and we can that is going to change. nation,ill have that the non-accelerating inflation rate. we are not seeing that yet. will we see at? -- will we see it? if you continue to see the economy grow above trend, we will gradually get inflation pressure sticking up. one of the most interesting things about the labor markets and japan over the last couple of years, demand has increased and so has supply. you have older and female workers per dissipating in the labor market. have an influx of foreign workers. we are weaker than it otherwise would be. it means japan's labor potential is actually improved. it is not all bad. starting with your first answer and going back to that, with the recovery in corporate japan. not quite volatile nominal growth figures, doing on? it is a lot of profitability. >> the recovery and nominal growth, the gdp numbers just turned positive. .t is very positive i think the problem in japan is that we haven't incorporate spend all this cash. the labor market tightening and shortages are driving the need to raise efficiency. on forofficially skimped so long, it's about time that they stepped it up. will be the external picture and will be the biggest shock. quickly. >> that is him as the case was japan, but yes, i think some of the risks include bigger than expect it slowdown in china. , andfed tightening effectively delivering a policy mistake. obviously, geopolitical tensions and north korea will be on the back of our mind. the backdrop is favorable for japan. rishaad: head of japan economics at maryland securities. allure, america is becoming less welcoming. we have a next's of interview with the ceo next. this is bloomberg. ♪ rishaad: you are back with bloomberg markets, looking at that theaying president trump travel ban means the u.s. is not as welcoming as it has been. in some instances, it is being seen in the fallout, the fall off, i should say, of international shares. the upside in asia. 8%.e were up about in absolute terms, that is tremendous year-over-year growth. reflects growing demand and some pricing power. on the basis of commerce, the economies are generally performing well. the growing middle class and growth and leisure travel, the biggest story there is the continued increase year-over-year of outbound chinese travel. it to other markets in southeast asia and around the world. you look around the rest of the world -- [talking over each other] in asia, correct. [talking over each other] in the united states, it is fairly anemic growth. about 0% to 2% in 2018. we have obviously got some supply growth in the united states. it but will we see is the u.s. economy growing a bit that are than it has in the last 12 months. continuing to be in the 2% to 3% gdp growth range. nothing extraordinarily exciting. obviously, the markets are a bit more optimistic. i hope the markets are right that optimism shows ultimately higher gdp growth. >> the stock market is doing very well. of again overnight to a record high, 55% year to date. is there a bubble forming in u.s. stocks? >> i don't know that. you've got a couple of things driving that. you have some optimism gdp will grow more aggressively than it has in the last year or two. but that that is gdp going from a roughly 2% level to a roughly 3% level. proofen't seen definitive of that. the second is obviously more focused on tax reform. i think there is increasing optimism that congress and the administration will get something done on tax reform. that it willa hope drive increased investment and increased economic growth in the united states. and almost certainly will drive increased profitability for marriott and other taxpayers in the united states. that the trump travel ban has been temporarily reinstated. what impact does that have on business? >> we are competing in a global travel dynamic. look at 2017 and global employments, international trips all around the world, we see that it is continuing to grow. , theink by 3% or 4% arrival of travelers to the united states is down a bit in 2017. losing share to other destinations around the world. the travel ban classically is not necessarily the only driver of that. i think it feeds a bit of the narrative for the rest of the world. a little bit less welcoming than it has been the last few years. rishaad: speaking with our north cheap asian correspondent stephen engle. --ing up, we are looking at globally speaking, we are looking at brexit, indonesia, emerging markets. for thefolio manager asia-pacific, he will be joining us. also a lot of the dollar. the greenback heading for its worst year in more than a decade. what does this in for 2018 -- what does this mean in 2018? will there be recovery? there are two schools of thought when it comes to that. forget we will be hearing from the indonesian theident in the course of next 60 minutes. this is bloomberg. ♪ ♪ rishaad: commodities downward by a route -- growth missed estimates. samsung a big loser today. a $1.5 billionf share sale. 30,000 square feet. half the size -- starbucks opening its biggest-ever cafe in shanghai. this is bloomberg markets. ♪ rishaad: looking at the dollar, a mixed bag today. having the worst year in a decade. let's look at predictions for 2018. two schools of thought. estimates for the dollar index. heads for itsck worst year in what the decade we have bearish projections piling up for next year. he says growth is becoming more balanced and synchronized and the dollar looks expensive. he projects the benchmark u.s. dollar index will drop by 4.5%. he's not the most bearish. td securities thinks an even bigger depreciation to 87.8. the dollar prospect for next year. i am sure other people think the reverse. stocks in asia set for an eighth date in losses and the yuan down about half a percent. a two-week low. they were blacklisted as a tax haven. the factors driving a stronger yuan are fading away. the parliament agreed to raise so top corporate tax rate companies face reduced profitability. in australia we are seeing pressure for assets. the aussie dollar just off a session low but sliding along with australian body years -- yields. gdp came in as a miss. we are seeing commodity producers slide in sydney and across the region tracking the tumble in metal. copper sliding over 3% in shanghai. g #btv 1843. you can see that tracking. stockpiles tracked up for a fifth week. adding to concerns around a slowing chinese economy. construction activity is expected to moderate in 2018. chinese copper stocks falling over 2% in shanghai. fallingve that stock about 4%. when you look at other stock carmakershave auto, falling in hong kong. losing over 3%. hong kong step -- tech stocks are looking mixed. phone 3.4%. tencent is on the rise. the biggest laggard of the day is samsung heavy industries plunging by a record as it announced a share sale on the back of a surprise lost. rishaad: thank you very much. let's move along and look at what's happening with first word news and head over to sydney and joined paul allen. intelligence says that has foiled a plot to kill prime minister theresa may. sky news assizes sources who say the mi5 director briefed cabinet on the story. the plan involved lacing and explosive device on downing street and using the ensuing chaos to attack may. men weresays two charged with preparing active terror. reports from seoul says the u.s. air force is sending bombers to the -- the planes will join more than 230 other aircraft and many troops. they include a dozen stealth fighter's and the f-35. north korea says the drills are a preparation for war and has threatened to respond. the rush inquiry has moved another step closer to the white house with special prosecutor robert mueller demanding details of president trump's link to deutsche bank. the bank has for months rebuffed calls by democrats to provide more transparency over the $300 million trump vote for rias the -- for real estate dealings prior to becoming president. president trump has told middle east leaders he intends to move the u.s. embassy from tel aviv to jerusalem. a recognition of the divided city as israel's capital. he called the palestinian president and the king of jordan and both warned him the decision would up and the delicate middle east peace process. he is planning a six-month waiver on the move. u.s. attorney general jeff sessions says the alleged corruption of malaysia is hypocrisy at its worst in washington is working to provide justice. ing on the justice department website he said more than $4 billion was laundered through a transaction with fraudulent companies. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am paul allen. this is bloomberg. investors are waiting to see if the reserve bank of india opts for another policy hold or surprises markets. kathleen hays joins us with a preview of the decision and look at a fed decision this is the case for a rate hike is less clear. the path of rate hikes is very important to the economies and central banks around the world. >> absolutely. the third quarter gdp figure we -- onet from australia reason why people are optimistic for growth in australia and individual rate hike is that if the fed is hiking rates, that could weaken the aussie dollar. these things move quickly. charles evans, president of the chicago fed, he is definitely a dove. he has been in favor of rate hikes for most of the year. ofis raising the question why is the fed in a hurry to raise interest rates? he said he had been looking at the data and they did not indicate such a need for a rate hike. certainly in 2018. 6897. line,n see the white that's the headline pce, which is back up to 1.6. the blue line only at 1.4. a long way from 2%, the red line, and that is the target. charlie evans said the fed should just wait until the middle of next year and inflation picks up, then hike rates. this is not in line with the consensus. we will see what the new fed chair jerome powell has to say about this when he takes over when janet yellen steps down sometime after the first of the year. jerome powell seems in line with the consensus. he is open the doors a little to what is going on with inflation and pulling wages down. it is interesting that charlie evans has gotten so definite about this. over the years charlie is one i whosewho is thinking, analysis has had an impression another members. rishaad: let's move to india. no change in policy predicted. but economists are leading out to was a rate hike in the future. some are looking for a cut. so what gives? kathleen: let's start with what is going on at the reserve bank of india as a wreps up at today meeting today. -- two day meeting today. growth rebounded in the third quarter. what you are going to see is after five straight quarters of decelerating growth, the green line, six quarters ago, 9%. we had demonetization, a new goods and services tax. suddenly growth is picking up again. some say the indian economy is doing very well with changes implemented by the prime minister. but the question is still out there, i guess could day rate hikes but could also could they cut? india's consumer price index is seen rising in the near term, but then starts to fall. a temporary rise in inflation. also with an interview a few key ago, one of modi's economic advisers says the r.b.i. has not been a problem. it's time to cut rates. #btv 1506. line represents the weibo rate at 6% for the reserve bank of india. the turquoise line, bloomberg economics team estimate of the core cpi. it is trended up but they are in the camp saying it will start to weaken. just in the last 24 hours, india's services purchasing manager index was out. people are wondering, does that put more pressure on the head of the r.b.i. to start thinking about a rate cut? even know we are still looking at this question about inflation, i want to emphasize the strap in the indian services -- this drop to 48.5 in november from 51.7 in october. any number below 50 indicates contraction. why is one of many reasons our bloomberg economics team has a bold call. they say when we get to the end of this meeting we're going to find out that the r.b.i. is responding to all those factors and has announced a rate hike. if that happens, boy oh boy. that could have some very immediate impact in the indian bond market. rishaad: kathleen, thank you for that. having a look at india in it it would detail is marc franklin who joins me now. ok, inflation may go up and down, but ultimately an economy that is structured in a way that in the is is -- india's is, -- or is it a case of using other levers? marc: the sensitivity of the economy interest rate sees interest late -- rate as lower than it used to be. we see studying crewmates -- if you look at the rural parts of the economy it is subdued. rishaad: something look 40% of food is wasted on its travels. marc: exactly. investment in infrastructure. logistics would be must more powerful -- would be much more powerful. rishaad: gst should ferment a change? marc: eventually. the implementation and practice of requirements has been a slow process. a lot of smell -- small companies have not been set up. it will take time to have long-term benefits. rishaad: it's not simple. it was meant to be simple. fashiont bureaucratic means it is not. marc: harmonized tax rates from one state to the other. so some states to concentrate economic activity to the extent of other states. it requires a systems, i.t., paperwork. given your -- marc: there are some questions emerging around this in india. 100% ofet to close to the for your target compared to 80% last year. have -- to bond market is starting say what is your fiscal position. it needs to be conservative. rishaad: what happens with growth looking ahead multiple quarters? do we see a pickup we saw in the third quarter resume? marc: we think growth continues to steadily improve. it will be uneven. certain parts of the economy are doing well at manufacturing. exports are still very subdued. it will be an uneven recovery. rishaad: it has always been domestic, unlike that of china. marc: marginal changes in the export picture can have a disproportionate impact on gdp. rishaad: stick around because we have a lot to talk about. indonesia, brexit. much more. looking ahead we're going to continue our focus on indonesia with marc. he says the government bond there offers a very attractive carry. singapore ignoring oversupply warnings. this is bloomberg. ♪ ♪ rishaad: this is bloomberg markets. speaking atresident the year ahead summit in asia. offering a 360 degree view of the urgent topics facing us in the coming year. we believe that they are but bloomberg subscribers can continue watching at live go. franklin.ack to marc we were talking about india. let's go to indonesia. what are the challenges facing this country? marc: gdp growth has been subdued around 5% recently. that is in spite of the central bank having a fairly accommodated monetary policy start. we have seen rate cuts over the last few quarters but gdp growth is not reacted that much. you have an economy that is growing subpar but nevertheless inflation is fairly subdued. the question is how can you read excel the rate growth and -- re-accelerate growth. rishaad: that's the challenge for most developing nations ultimately. there is a renewed degree of confidence perhaps. marc: if you look at the equity market, the banks have performed very well this year. that's to assume probably because of a lack of interesting ideas beyond the banking sector. rishaad: i just want to bring up a chart. we have been hitting new records. i am not going to bring that up -- there is the indonesian president walking into the hall. he will be sitting down and chatting with us in a short while. this is after he makes his keynote address in that hall. let's get back to the challenges. looking at this graph of what we have, we have a composite index which is in one direction through the course of this year. there we go. hitting record highs earlier -- at the end of november. but that's what you expect. crowdedhis is looking trade as far as financials go. but you prefer other asset classes. marc: we think the indonesian equity market is becoming increasingly narrow and led exclusively by the banks. peaked ints have perhaps have the potential to come up over the coming years. beyond that there is a lack of interesting earning stories. the equity market is narrow, lack of opportunities. you have a fairly stable currency. policymaker credibility is high. accommodated monetary policy starts. reduced inflation which might even come down further. that is conducive for a carry trade by a local currency and heart government bonds. rishaad: a lot of that is going to be contingent on whether -- where the dollar goes. you either hedge yourself or have a firm conviction of where dollar goes. stronger dollar represents a challenge for a lot of emerging-market currencies. indonesia is in a stronger position than it has been in the past. started to rebuild currency reserve. the bond market has diversified to some extent away from high concentration of foreign ownership. structurally the indonesian economy is less vulnerable to a stronger dollar than it was in the past. policy credibility, predictability, all those things give bond investors a high degree of confidence. [indiscernible] marc: there was an initial spurt in terms of commitments towards the beginning. we have an election and listed two years. his position is not that clear whether he is likely to win power again. ms. a lot to do. -- if there is a lot to do. rishaad: there has been nascent signs of them doing it. it's a bit of a nightmare trying to connect indonesia with over 2500 islands. marc: there is a geographical challenge but also a legislative challenge. land acquisition is notoriously difficult in indonesia. local inquests -- bureaucracy is often a hindrance. us, we willck with get your thoughts on brexit and beyond. this is bloomberg. ♪ ♪ this is bloomberg markets. let's check in with the latest business flash headlines. samsung heavy plunging the most on record. 26% down at the moment. why? it announced a share sale which we were almost $1.5 billion -- worth almost $1.5 billion. ofy see an operating loss $450 million this year. google has pulled support from youtube from amazon streaming devices. points to the failure to make amazon prime video available through google equipment. fire top boxhe will end on the first of january. search giant and the online retailer have moved into hardware and -- softbank's vision fund is looking at investments in health and financial businesses. is ins tell us the fund talks to invest in china's largest online financial year -- financer. and good doctor. and 10% stakes in those. let's find out what is going on in china in what may happen in 2018. he with me is marc franklin. what is the motivation the think? ping and insurance arms or whatever -- it's a very crowded place. people have been talking about getting into health care. marc: it's the crossover between technology and health care. the application of technology increases healthcare services. they spend a lot of money on incubating these health care ventures. how do we get the market -- there's a very big potential upside. i think it's about starting to show visibility to the market about -- good doctor has 100 million subscribers but they are currently monetizing. the potential is huge and also the cross-selling opportunities. it might capitalize that value quickly. rishaad: do you look at this as well? marc: yes. health care we see is a structural growth opportunity in china. also health care insurance, service delivery. rishaad: insurance itself is under-owned. by the population, not by companies. marc: the government has trolled to roll out universal medicare -- medical insurance but reaching them all will be quite difficult. rishaad: that's going to be the challenge. lots more to talk about when it comes to china. going to ben, looking at the dollar's losing streak. the question they are asking is could the republican tax cuts turn all that around? a quick check on the markets. tokyo head to into its lunch break with the decline of 9/10 of 1%. ♪ retail. under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. ♪ >> i am paul allen with the first word headlines. with brexit talks all but torpedoed the u.k. chancellor is trying to reassure the financial world that london will remain a meeting face to do business. later on wednesday he will tell city u.k. that the government wants to protect existing ties to the eu. some businesses are already planning to leave london after brexit for ireland or continental europe. senate majority leader mitch mcconnell says roy moore can expect to face a senate ethics investigation if he wins next week's special election in alabama. molesting aused of 14-year-old and assaulting a 16-year-old when he was in his 30's. he still remains a serious contender to win in the heavily republican state. asian airlines who witnessed north korea's missile launch leslie say they don't envision changing flight plans. they say crewmembers saw the launch as their planes flew to asia from the u.s. see the relevant authorities were informed at the time and no new changes are being planned. some european airlines have altered their routes to avoid north korea. the two day meeting ended abruptly within hours of starting as a dispute over qatar -- it raises questions about the group's futures and follows news that there will be a new partnership separate from the gcc. they were originally set up to counterbalance -- --au has denied being thefinance secretary says enclave engaged in long-running talks with the eu on the issue and rejected claims it turns a blind eye to illicit funds. macau was named among the blacklist but also -- russian athlete will be allowed to compete at the 2018 winter olympics what their flag will not fly, their anthem won't play, and eddie -- any medals they win won't go to a national tally. dopingmlin denies allegations and has threatened to boycott the games. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. equity markets across this part of the world. all the major ones moving down. following the lead they got out of wall street. 9/10 of 1% down. on.s find out what is going they are carrying a wooden spoon. sophie: little respite for them during the lunch break because we see declines across all industry groups. banks and automakers are dragging the most. electronics makers are set for an eight-day decline. some bright spots. pulling up the board to show you what is going on. headed for its best climb into months. -- in two months. seoul, marine is on the rise. investment says it will benefit the most among nonlife insurers from the government's new budget. bargain precision following the most since january. in hong kong flipping the board to show you carmakers. they are being led lower by geely. dropping across asia. breakdowne from the for the asian benchmark. materials falling over 1%. they continue declines. copper, aluminum, zinc and steel sliding in shanghai. rishaad: the u.s. dollar heading for its worst year in more than a decade. wall street strategists say it will be no better next year. the bearish bets on the dollar are seemingly piling up. why? viewis is actually a getting traction. of it is the fact that the global growth story is going to gain traction. central banks will be hiking interest rates. and more importantly central banks will be more tolerant as well of currency appreciation in their own country and therefore traders say perhaps the dollar bull run is really over, especially after this year. also the ec and bank of england is possibly raising interest rates next year. traders pushing up projections. bank of korea has already stopped raising interest rates and possibly malaysia and r.b.i. are going to be next in line as well. you might be asking about the tax plan, the tax reform and dollar euphoria with that. deutsche bank says the repatriation story is unlikely to have that much of an impact. they think it will be more accountingof an issue. who aree the people quite bearish on the dollar. they think the dollar index will , especially year since the index is still about 20% -- about 5% above the 20 year average at the moment. that's all we have time for but thank you for joining us. looking at bearish bets piling up on the dollar. i wonder what marc franklin things about that. marc: one thing to focus on over the next 12 months is what happens the u.s. inflation. we think u.s. inflation is going to grind higher. rishaad: -- marc: to some extent yes in terms of what the markets are expecting for a fed rate hike extra week -- next year. two hikes. back towards 2%. you could see the fed raising it more than twice. if inflation is higher in the u.s. but perhaps stays stable elsewhere, inflation differential basis could be -- long-term if tax reform gets past and it is funded by a widening of fiscal deficits and a big buildup in u.s. dollar debt, then there is an increase -- that potentially long-term means a weaker dollar. muchad: we could get too inflation. inflation overshooting wildly. or totally benign. marc: if you look at the mechanics of why inflation has been soft, some of those factors stabilize but none of those factors are inflicting things. it suggests to us inflation grinds higher towards the fed target rather than overshooting. is itsue with inflation is a light cycle indicator even if the economy starts to slow down. the timing of the labor market and the buildup is quite late in the cycle. where inflation gets to is hard to call. rishaad: how tight is the labor market? you can look and say it is very tight. full employment or whatever. but you dealt into it and you --k at -- dealve into it no wonder we are not getting wage inflation. it is close to 4%. you six is above a percent. it is not -- it continues to tighten. even if the u.s. economy only as 100,000 jobs a month, net job creation is still positive. looks like the labor market will continue to tighten. eventually if you follow that to its conclusion, wage inflation will grind higher. you have to look at the types of jobs created. low-wage jobs. around, if you would. looking at the singapore property warnings, temperature of a market which has seen its nadir. this is bloomberg. ♪ ♪ back looking at south korea. raising nominal corporate rates for the highest earning companies including samsung will now face a 25% levy up from 22%. victory for the korean president. what is the rationale behind the attack site? -- the tax hike? >> a higher rate was part of his plan -- that increased spending on some public things like child care benefits and jobs. individual companies have not yet released any comments on what they think about the higher tax rate, it's expected to affect some of korea's biggest taxpayers. talk us through the highlights of the budget which was just past. increasing thet, number of government officials by more than 9000 for next year. if you include local government numbers the increases much bigger. also, along with the corporate tax revision, revisions for the individual income tax was also approved at parliament, meaning some of south korea's top individual learners will be subject to higher income tax rates. rishaad: does it make any difference that president moon this, and does it make any difference to his domestic agenda as we look to the future? >> the fact he parliament approved the total spending son of -- a 7% increase from the spending plan this year, it shows they are more willing to actively use fiscal policy. is there wasnote large disagreement between parties on the details of the budget, which led to a delay of the budget being approved beyond the deadline. also the biggest conservative party boycotted the vote. the shows a hurdle for the president and government getting future agendas approved. rishaad: thank you. singapore.o they extend their share rally into 2018 on a reviving home market. central banks warned of an potential -- what are signs getting analysts excited? >> prices have broken free from a prolonged slump. if you recall, singapore home sidental. re the revival encompasses more than just residential. also seeing commercial rents on the ride. on the residential side, the revival seems more pronounced, especially with the fact that the long decline has come to an end and prices on the residential side edged up. sentiment seems to be rather buoyant at this point. those are some of the points, some of the things pointing to signs of a revival. this is not a linear equation. there's a lot of headwinds that one can look to. rishaad: but you can always find something if you're looking for it. it depends what you are motivated by us is. what are analysts suggesting about this oversupply problem? it is not imminent. >> it does not look like we actually going to see some of these land deals translate into actual supply until 2020. for the short-term at least, it looks like this might be something that developers will still benefit from, this amassing land banks and benefiting from rising home prices. accountsear, by all for the big singapore developers, analysts predict double-digit gains for some of the big developers. expect priceshey may rise as much as 8% next year. the lesstell me about bullish voices. you can always find a narrative to be bullish or bearish. fallbackthey see any or concerns? >> just last week, singapore's -- the monetary policy of singapore came out and cautioned -- they tempered all the optimism in the market. they said we are seeing rising vacancies. they are concerned about slowing economic growth in the face of all the supply coming on stream. there is of course the prospect of rising interest rates, which is very well-publicized at this point that we are moving towards a trajectory of rising rates, and that definitely might put a damper on the party if rates rise more sharply than people expect. rishaad: stay there for a second because we still have our guest here, marc franklin. you are not a property expert, but you must invest in developers in this part of the world? marc: we take a view on property he -- bieing -- prices iss up asset an abundance of loan money, effectively. in this part of the world in particular, banks have been cutting mortgage rates even know they haven't rising. banks are fueling this by having low cost to borrow. rishaad: developers are what we are looking at at the end of the day. we are seeing property bulls ignoring what you're talking about. gives?nt is -- what >> for singapore, different -- rishaad: hong kong is a different market as well. >> in terms of singapore, certainly. rates are historically still at low levels. there is no doubt about that. we are at a point in the cycle where it's been how many years of near zero interest rates, now we see a gradual climb. when it does tend to alter is the sentiment around property as well as developers. there are so many other fundamental factors when it comes to property, that that's not the only thing. she looks also at what is happening on hedge funds. we had a great story, activists versus passive investors. you want financial markets to reflect fundamentals and reflect companies doing well and be rewarded. companies doing poor decisions not to be rewarded. -- a rising tide lifts all boats. that might incentivize to allocate capital badly because the seat share price is going up and keep buying shares. if you are an investor taking a long-term view you want companies reinvesting back into future growth. it is starting to distort things. >> just curious what you think about corporate governance issues as we see the rise of indexing and passive funds in the marketplace. marc: theoretically for larger proportions being passive it might means there is less engagement with management teams. i think the active investment community -- the answer is no. i don't think passive is any worse than active investments. hopefully over time active investments start of hold management teams more accountable. rishaad: stick around. just going to bring your attention to our interactive television. and catchtch us live up with interviews you may have missed. that we doecurities talk about. this is for bloomberg subscribers only. do check it out. ♪ ♪ rishaad: you are back with bloomberg markets. he has addressed his last conference and delivered a stark warning. sidelined.risk being chineseabout these payment models. >> i think what he is referring to is the fact that alibaba and tencent occupy more than 90% of the payment market in china. the keys to their success is that they are willing to invest a lot of money at the height of the war for winning users over mobile payments business. tencent at one point was losing as much as 300 million yuan to gain users. the other thing is convenience. more than 40% of the time people are paying with mobile. not with cards anymore in china. the typical payment scenario right now across groceries, ride services, our qr codes. thinking thehe is u.s. is going to geared towards. rishaad: there are people begging on the streets in china using qr codes is incredible. how important is access to the payment data? that's what people want. lulu: exactly. that's what they are fighting for. the wars you are she's -- you are seeing breaking out. all of these are actually fronts, access points for these companies to win users. using that they are analyzing with the users like, what they spend time on, and building other services around that. rishaad: thank you very much for that. having a look at chinese payment systems and different models. the scope back to marc franklin -- let's go back to marc franklin. what's going to be the big thing next year? marc: good question. -pricing inflation is one thing that could transpire in early 2018. what that means in practice is whether your written -- which sectors do well and which don't. rishaad: which other ones? marc: financials is the obvious area. stocks -- industrial is an area which could perform well. a lot of industrial companies have inflation linked pricing. you could see revenue acceleration in some industrial business models at his -- as inflation grinds higher. rishaad: there is nothing more inflationary at the moment. 3% up again. bitcoin. what is going on here? marc: i'm not sure. governmentsay is have been very much behind the curve in how to regulate this. is there an equation what is happening with bitcoin with money laundering and non-formal hundred laundering -- when governments feel if they are suffering they will get involved. one start to see government by government start to regulate and look for increasing stability in terms of the transactions. rishaad: there's no way of knowing where this is going to go. some say goes to zero, others say goes to one million. who knows. marc: the technology behind crypto -- rishaad: but this is what it is all about. is valued on the basis of the net worth which supports it. marc: andy seamlessness and applicable he of that technology to broader banking in payments in financial channels. that is something to which could sustain cryptocurrency for years. the question is which one will prevail. when you have a technological advancement -- what you get to the end of that evolution you have a fewer number of players. but which cryptocurrency will win? we don't know. rishaad: describe what is going on market wise. marc: we are reaching the end for a very strong year financial performance. rishaad: windowdressing. marc: rotation. seasonality to these patterns. the market also tries to grapple with happening with the u.s. and china. then thinking about which ways to play the emerging scenes of 2018 which might be quite different from 2017. rishaad: thank you very much for that. marc franklin. day across equity markets. ♪ is this a phone? or a little internet machine? [ phone rings ] it makes you wonder. shouldn't we get our phones and internet from the same company? that's why xfinity mobile comes with your internet. you get up to 5 lines of talk and text at no extra cost. so all you pay for is data. choose by the gig or unlimited. and ask how to get a $200 prepaid card when you buy any new samsung device with xfinity mobile. a new kind of network designed to save you money. click, call or visit today. >> it is almost 11:00 in hong kong. 2:00 p.m. in sydney. i am david ingles. we are in the middle of this asian trading session. welcome to "bloomberg markets: asia." commodities leading. the asia-pacific lower, led by this copper. the aussie dollar falling after growth missing estimates. biggest losing share, something by a record of $1.5 billion share sales. the best launch ever. aussie generally underwhelmed. ahead over the next 16 minutes or so, when you look at what is happening in the markets, a lack of risk appetite right here. you're looking ahead to the reserve bank of india. very interesting decision coming out from the central bank. it is one of the few times you have three possibilities all on the table, obviously in varying degrees. have a look at my bloomberg to set this up. eco-india is your function. this is your homepage, essentially. and what you're seeing. 6%. is what we are expecting roughly speaking. you have more than a couple. we might get a cut. it has a 25 basis point cut across some of the market here that is local time. . we are talking about previewing this, in fact,. -- he will be joining us in 30 minutes from now. he things they are going to hold. we will see. that is a sticking point. we are continuing to look at the year ahead and jakarta, guests. thomas? us for an joining exclusive interview in 10 minutes now, led by haslinda amin and 30 minutes after that, the wealthof management asia-pacific offices joining us. there we go. 2:40 if you are watching out of sydney. i will be leading the chat with him. yours get you an update of first word news. and here is paul allen. paul: thanks, david. the russia inquiry has moved another step closer to the white house with official prosecutor robert mueller demanding details of president trump links to deutsche bank. it has rebuffed calls to provide more transparency over the $300 million. they want to know if there is any link to moscow. president trump has told middle east leaders he intends to move the u.s. industry from tel aviv to jerusalem, a de facto recognition. he called palestinian presidents wouldng abdullah that it upend the peace process. sources tell us the president is planning a six-month waiver on the move. the plan of the two-day meeting hours ofuptly within starting. the abandonment of the talks in kuwait raises questions about the group prosecutor and follows news the uae is following a new -- forming a new partnership separate from the gcc. the group was set up to counterbalance the sheer influence from huron. macau has emphatically denied being a tax haven and says it is working with international authorities to clamp down on black money. saysce secretary lionel the enclave is engaged in long-running talks with the european union on the issue and rejects claims that it turns a blind i to illicit funds. it was named on a 17 strong tax blacklist that features saudi arabia, bahrain, and the uae. than 2700 more journalists and analysts in more than 120 countries. i am paul allen. david: that's a markets come up back from 168 on the msci asia-pacific. down seven sessions. longest losing streak in two years. this bleeding in the damage for us right now. it is going bad. >> quite bad. this column shows you it is bleeding across the region. spot inght indonesia. when you take a look at where lawsuits are being felt, pulling up the board to show you what is going on in hong kong. losses accelerating as the year's top stocks are falling. h-shares have fallen to a .wo-month low on the mainland, flipping the board to show you large cap halting a two day rise. small caps are gaining ground for the first session in three. the shanghai composite has fallen below 3300 points for the first time since august, led lower by material. the tech sector is being voided. shares -- the tech sector is being buoyed. chipmakers continue to be under pressure. morgan stanley remains cautious on bellwethers. it is precision that is weighing the most. it tumbled the most in the top six days, the biggest loss since 2011. david: it is quite bad. you talk about some of these names. you talked about that 8% drop. 47 thoughts on the hang seng. 412 point drop as we speak. we had trade. have a look at the currency space there. what is happening with the won, what is happening with the aussie? >> a two week low. south korea was blacklisted by the european union as a tax haven. that perhaps might be adding to the pressure. the good time factors for the are being eroded like the improving economy and dok's rate -- the hike. that could be weighing as reduced profitability could be on the verizon for companies in south korea. when it comes to the australian session, like we do with the aussie slighting, it is off the session. gdp from australia this morning. david: copper. [laughter] >> it is very red. david: whenever that shows up on the gmm, that is something we don't normally see. >> you don't normally see that>> . that is because of a stockpile decline me have seen for copper. as you can see, copper, allinum, zinc, steel, dragging in shanghai. materials falling over 1% on the regional benchmark. pulling up the board to show you some of the equity movers in the space, feeling the pain. you have that sliding along. i think that is a gold producer. falling almost 6% in shanghai today. david. david: absolutely. thank you so much for that, sophie. just an update here. 400 point drop on the hang seng index. copper has been bleeding red across the quantity let us bring in markland field -- mark mliveield, our and live -- strategist. mark: essentially a couple of things. people noticed a buildup in inventory is china, a negative sign, but maybe a bigger thing with a survey yesterday. bar scene structure spending falling for china. not going into negative territory. just going at a slower pace. of subwayven evidence building coming to a halt. people are worried that china will not be spending so much on traditional infrastructure, which usually would affect copper. david: in a big way, of course. any change in increments moves the needle quite a bit. where else are we looking at concerns? mark: when you consider that commodities have had a pretty good second half across the board, and you look at the trading in china, steel, rebar and iron ore have rallied a lot. it could be as much as anything people say. there is tremendous gains in those, so why don't we start looking in some of that as well? iron and steel will be in the picture today. david: broader picture, it has been read for several -- red for several days now. a lot of these benchmarks moving lower. is there one reason we are seeing this confluence of sectors where sentiment does not seem supportive of risk? mark: i think there is a lot of things coming together at the same time. people trying to take money off the table there. the senate bill, maybe the tax bill, is not going to be such a good thing for the economy as people originally thought. that is an issue as well coming within the end of the year when so many things are locking gains. a number of things coming together. david: it has been an astounding year. the conversation moving forward is whether or not we get the same conditions next year. mark, thank you so much. my cranfield -- mark cranfield from mliv. we are headed back to jakarta with our year ahead asia summit, and we will be hearing from the former finance minister. stay tuned for that interview that is coming up in a few moments. this is bloomberg. ♪ david: welcome back. you are watching "bloomberg markets: asia." i'm just getting computer and now. let's give you an update of your latest business flash headlines here. jpmorgan and bank of america say republican tax bill will be good for big lenders once some of the initial pain comes off. adjustment as much as $2 billion in remitted overseas earnings, facing taxation. tok of america also expect take a short-term hit on deferred tax access. the ceo says the plan is good overall for orbit america. now, south korea has blocked a recent trend and blocked corporate taxes. the rate will rise from 22% to 25% on businesses whose taxable income is more than $275 million. other countries are moving to cut their own corporate taxes. slash their rate. a budget worth $400 billion. let's have a look at tech now. here is a big story in this space. google has pooled support for youtube from amazon streaming services, citing a failure to make amazon prime video available via google equipment. access through the echo shows a smart speaker has been blocked while support for the fire -- the rivalry between the two companies, google and amazon, has risen as the online retailer has moved into hardware and internet services. encroaching. encroaching on each other's territory. the bank of indonesia has cut rates several times since last year. the former finance minister says they may need to raise rates again soon. our guests spoke to us exclusively in jakarta. problem has come from the other side. the question is what is the point for the business people to expand their production if the demand is not there? the fiscaln is to expansion. unfortunately, we have some problem on the fiscal revenue with this not allowing the government to do the fiscal expansion. >> is that reflected in loan growth, below historical averages? chatib: correct. it is around 7% to 8% even though it was cut eight times almost 200 business point, but no impact. this is not only unique in indonesia. the same thing happens in japan and the u.s. we need to be more aggressive. unfortunately, because of the tax revenue, the collection is still a problem. we don't have much room to do so. cuts,pite the eight rate the president has suggested he is for furthering cuts. should bank indonesia consider hiking rates considering the higher rank environment - -- bak environment now? chatib: maybe next year, starting next year, if the ecb ecbts to start hating -- starts tapering, i think they will. the risks to the priority for the president, infrastructure development, alleviation of poverty? given the current situation and circumstances, what are the risks? chatib: my biggest concern about this is about the issue of the fiscal liabilities. if you look at our debt to gdp, it is less than 30%, but there are some state owned enterprises who borrow money quite aggressively. i think we need to be very careful to make sure that all this process goes through the good governance and also economically not having an impact on the fiscal issue. >> it has been three years since the president took office. if you are two great the president, one to 10, where does he stand? chatib: i will give him seven. the macro stability is there. if you look at the current account deficit, it is subdued. he worked very hard on this issue of infrastructure. it is something we need. the only constant is our economic growth, 5%. david: seven out of 10. quite brutal. let us take you back to bloomberg zero ahead. haslinda amin is there for us with a closer look at the outlook for indonesia in the coming months. david, seven out of 10 is not so bad. that's a be plus. this is a president that some people thought in the beginning would be out of power in just one year. he is pushing ahead. 5%, yes, it could do more. why isn't it? the investment chief of indonesia joins us now. good to have you with us. at 5%.tuck the president wants 7%. why isn't this happening? >> i would not say we are stuck, haslinda, that i would acknowledge that we have yet to hit that inflection point where ignited a newt cycle. we have not hit the ignition yet , unlike so many other countries. . we have to appreciate the enormity of the drag on the economy. appreciated just how exposed we were to commodities. it might be we underappreciated the indirect effect on financial liquidity in purchasing power from what on the surface looks like a small or manageable commodities sector. the other thing we never appreciated is the size of our infrastructure gap. you know, as we pointed out, when we upgraded the airports, suddenly, the number of chinese from 4000 per year to 12,000 per month. infrastructure made all the difference. it was a small thing. so, to me, the perfect story, illustration of how critical is infrastructure. >> billions of dollars of foreign investment, and the world bank says what stands in the way is uncertain regulations. we talk about flip-flopping within the mining sector, we talk about how changes were made to the negative investment, and investors felt uncomfortable with that. will that change? tom: i think we definitely admit that the top investors -- complaint of investors is regulatory uncertainty. as many people know, i joined the bureaucracy, i joined the cabinet 2.5 years ago from the private sector, and i am quite startled by how underdeveloped our policymaking properties are, right? so the way we formulate policy has fallen very far behind, you know, the cutting-edge, if you will. very aware. we started to put more discipline, more procedure, into the process, so that ministers do not willy-nilly issue decrees with no prior notice and no transition periods, for example. but i think, at the root of it, i think, we now have no choice requiredve towards the reform, because the president is trying to move the bureaucracy from the mindset of a ruler, right? of an authority that tries to regulate and will everything, to the mindset of a servant, a public servant. how can we help? how can we serve? that is a very huge shift in mindset from a hierarchical, almost feudal, top-down ruler mindset, to a public servant, how can we help kind of mindset. that is a huge transition. haslinda: in your own words, you said there is much bad policy around. one of the worst performers in asia this year -- a market is lagging behind its asian counterparts. what message would you like to send investors? how all of that -- how will all of that be recognized? tom: the headline figures don't tell the story. 5% gdp growth -- that's an average number that masks big turmoil underneath it, big conservation of the economy. our tourism sector is drawing 25 per year. at the same time, certain mining sectors, those sectors are shrinking 50% per year. you don't see that looking at just the 5% average. ar example, the rupiah, convenient headline figure exchange rate. for example, it does not tell the whole story about e-commerce and online transaction, and simtech financial technology. answer -- i think technology is the big solution, the big answer. think it islunt, i not the most diplomatic thing for me to say, but a lot of people are moving online. they are escaping government regulation by just moving online. where regulatory reach is much more difficult. and that is a danger. there is such urgency deregulating because if we don't deregulate fast enough, if we do not make it convenient and friendly enough to be in the formal sector of the economy, people will move to the informal sector. that increasingly -- that is online. told, thereuth be is suboptimal policy. where is that being reflected the most? tom: gosh. haslinda: where to begin? [laughter] tom: i think it would be unfair to highlight any particular ones because i think we are all guilty across many ministries and agencies. again, it is a systemwide problem. and it is rooted in this mindset where we are the ruler and you are the ruled. that is just an outdated, obsolete mindset, you know? government needs to be public servant and supportive rather than talking a lot. we need to be great listeners. that is what he is. it takes time. personally, i think there has been startling progress in a mere three years. he has really changed the tone, changed the discussion, changed the flavor and the frequency, you know, of the atmosphere around bureaucracy and authority. haslinda: we talked about the weakening rupiah. which sectors in particular are being exposed the most, do you think? tom: so far, it has been manageable. and one underappreciated strength of the economy is probably how balanced it is, how diversified it is, so look. for example, investment is running 20% higher compared to the week in office. i cannot take all the credit because, frankly, when the currency depreciated 25%, it made investments cheaper and more effective. so i would say market forces are working, and the economy will respond, right? we need to have more consumption. the rupiah will probably strengthen. -- the currency over the weekend will support the us for a factor. the good news is indonesia has all of that. it is a well-balanced and well diversified economy, and notwithstanding our policy on many fronts, it is still a surprisingly flexible economy. the economy does respond reasonably well to shifts in exchange rates, to shifts in interest rates, and other market signals. haslinda: we have to leave it there. lembong, investment chief of indonesia. david, it makes strides definitely under the leadership of the president. they had gained the investment grade, climbed 17 notches when it comes to ease of doing business. there has been in chie -- there have been achievements. those challenges remain. david: it is a good start. to 7% growth is the tricky part. haslinda amin, thank you for joining us. thank you for joining us out of jakarta. let's see what's happening in south korea. one-stop we are following quote -- one stock we are following closely, samsung. heavy. this is chart 1516. essentially what you're looking at is the value of the company, essentially, lighter by close to one third today. that is after the company said it is seeking a share sale. we are joined by still became in seoul. my first question to you is what is behind this new share sale. newet me tell you about details. they plan to raise about $1.4 billion in the sale of new shares to improve its finances. they want to complete new share sales via may. expectations are it would suffer for a while because of demand. the company says this is a preemptive measure to improve its financial than respond to risks. now, that is the company side. i want to ask what is the broader environment for chip builders right now? sohee: korean chip builders have been struggling due to a slowdown after excess local capacity. new chinese competitors and a plunge in will prices also made them softer. the entire shipyard industry is undergoing hard restructuring such as cuts and asset sales, and i hope you can remember this, but last year was the worst time for the industry with the collapse of shipping businesses. david: it just could better from there. that is a bright spot. thank you so much for coming on the program. we are looking forward to the afternoon business in tokyo, not that there is anything to look forward to. ourwe can of course keep fingers crossed as things improve from here. tokyo reopen comes up next. this is bloomberg. ♪ ♪ >> you're watching bloomberg markets: asia. let's get a sense of what is happening across your markets right now. getting a bit, and we are getting declines mostly across a lot of these currencies in the asia-pacific. worth noting that when you look at the equities space, just about every single market again is lower. this actually takes the street now of losses. we are calling it eight below, bottomyou can see, the has really been the main tried. i'm not saying all of it comes down to that, but certainly, this blue line is a 1% decline. out of past four or so days, you can see it for a five times, and we are approaching again a 1% decline on the index. that has been the main drag. last 30 minutes of trade in hong kong, just to give you a sense of what is happening, losses exacerbated earlier. i have come off the lows of the day so far. sunny optical, tencent also falling quite sharply again as well. in thes some concern u.s. where you have the s&p 500 opening higher. have we lost momentum as we move into the year? bute looking at declines, the bull market, we are looking at one indicator here, seems to suggest that one indicator -- your decline line below -- that we may be some time away from the market turning. advanced the klein line. the problem is when these things move in different directions. that had been leading into the most stocksle, but were declining, and you see the deceleration on the way down at this moment. both lines still moving in one direction. sort of a more acute example of one of the worst performing this year, net supporting level as the 200-day moving average. as you can see, this market really lost momentum weeks ago. as you can see, pointing lower as well. in other words, you look at the opposite of what we just went through. it does seem that the declines we are seeing or the pressure we are seeing on the shanghai composite might just be here little while longer. let's keep an eye on that one. hong kong getting a little bit of traction. in meantime, let's give you an update. thanks, david. british intelligence says it foiled a plot to kill prime minister theresa may. forcess size -- sites who said andrew packer briefed the cabinet on the story. police say the plan involves placing an improvised explosive demise on downing street and using the ensuing chaos to attack may. sky also says two men were arrested last week in charge -- and charged with preparing acts of terror. u.k. chancellor philip hammond is trying to reassure the financial world that london will remain a leading place to do business. later on wednesday, he will tell city u.k. that the government wants to protect existing ties with the eu some businesses are already planning to leave london after brexit for ireland or continental europe. cathay pacific and korean airlines say crewmembers saw the launch as the planes flew to asia from the u.s. thatrities were informed the time and no route changes are being planned. some european airlines have altered their routes to avoid north korea. russian athletes will be allowed to compete at the 2018 winter olympics, but their flag will not fly, there and him will not play, and any medals they win will not count toward the national tally. the ioc decision follows a three-year investigation leading up to the sochi winter games in 2014. the kremlin denies the doping allegations and has threatened to boycott the pyeongchang games . global news powered by more than in0 journalists and analysts more than 120 countries. i'm tall allen. this is bloomberg. david: we are waiting to see what the reserve rank of india the general expectation is it will lower rates today. bloomberg'sst is .op-ranked economist on india very nice to see you. what i find strange looking ahead to this specific meeting is you actually have the three probabilities, all part of the conversation. i know you think they will hold, but why do you think that is? what you think there is a case for a cut and why do you think there is a case for a hike? >> everything altogether, i think you are completely right. i think the vast probability is they will hold. think it is almost a certainty they will hold this time. there's too much uncertainty. everything on the global side. the fed is almost certain to hike. we do not know what is going to happen on the carry trades. the portfolio flows have come into the emerging markets, particularly india. that is one side. we do not know how global currencies are going to move with europeans, with americans, the ecb, the u.s. fed, how they are likely to take it. but i think there is a far greater degree of uncertainty. first, inflation. target of 4%,dia plus or -2%. the next round, the next cbi is probablyasure going to see a round of 4.2 to 4.4. it's likely over the next year that it will climb from there. a large part of that is notional allowance, that provincial governments in india are likely to give. it is still risky, particularly given the way that oil and commodity prices have moved. fiscal side is an even bigger concern. bank of india studies have indicated that inflation is very level dependent. how thet really know state governments are likely to conduct their fiscal affairs. the center's fiscal situation is still not very clear. at this point in time, it is almost a certainty that they will hold. the important thing is if they will do a wait and watch for if it is an extended pause. david: very quickly, before we move on, do you think the next move would be a hike or a cut, or is that also uncertain? >> i do not quite see at this point in time. i think india's growth is still fairly fragile. whatever inflation you see is transient, not driven by fundamentals. david: you mentioned oil and the .mport bill at what level, at what price of oil does it start to really hurt the indian economy, all things equal? that even nowsume -- i think the sweet spot that we were in when oil was in the $50 to $60 per barrel range -- i think even now, it is beginning to pinch, but i think things will begin to become a concern if oil begins to go towards the $70 range. frankly, i do not think that will happen. it is still likely it is going to stabilize around the $65 level range, but a move beyond that is likely to be a concern, both from the current account side as well as the fiscal side. thed: i want to talk about banks now because lending capacity is certainly an issue, and the government has moved into help i guess in a lot of ways relieve them of that burden, start lending again, but fixing the bank is almost like fixing the railway system in india. everyone talks about it, but it is very complicated to actually try to solve. do you think by this time next year, the government will be able to actually ask the banking problem? >> keep your fingers crossed, mine as well. i think we're beginning to move in the direction of reforms. task, railways, banks, a really tough six. but addressing the problem every capitalization, the structure is not very clear. we are waiting for the structure to become a little bit clear, but some hard positions need to be taken. they have already started moving in terms of lateral entries, in terms of some leeway, flexibility, but this is nowhere close. having said this, what you mentioned about credit, i think that is a far more complex thing because there are too many things happening. keen tornment is very ship some part of credit risk onto the market, and they are striving very hard to develop corporate bond markets. that is one. think the interplay between these is a very complex one, and that is something that we will wait and watch as well other side of the balance sheet. what kind of demand now comes in from the corporate in terms of credit. david: your outlook for growth next year, 6% seems like it is the top already. if things get worse from here for indian growth? >> get worse? no, it will get better. , but iseeing 6.7% growth would not be surprised if the current fiscal year -- fiscal -- fiscal year 2018, growth looks better. downh might be notched because the effect of the other supply shocks will begin to get incorporated. be that as it may, the baseline , i think we can pretty much factor and growth of somewhere around 7.2%, 7.3 percent for fiscal year 2019 and slowly begin to move up from there. are a very optimistic man and i look forward to having you back on the program next quarter when the number does come in, hopefully at 7%. coming up on the program, we will be back in jakarta. the year ahead. stay with us. this is bloomberg. ♪ ♪ david: this is bloomberg. i'm david english -- david ingles. japan reopened it down. taiwan is getting whacked as well. suffice to say we have seen better days. commodity companies leading declines. do have this disaster we are seeing across markets, right now, relatively speaking because this year has been super, super good. let's have a look at where we go from here. the asia-pacific cio at deutsche bank wealth management joins us now. very nice to see you. i want to start with something simple. when you look at 2018 equities, is that still the place to be? it is the case. we think equities should also form bonds for next year, maybe not in the same magnitude we have seen this year, but given ourgrowth outlook and also forecast on earnings growth, we think equities should be the asset class to look at next year. earningsen you look at growth, any specific part of the asia-pacific that stands out? what are your top two? >> we feel it north asia over southeast asia, i have to admit. we've been calling for north asia for some time already. when you look at, for example, china, hong kong, or taiwan, earnings from this year, as you rightly said, have been already outstanding and we think this could continue into next year. what we like here is a particular, china and taiwan for next year. david: when i look across what has been happening the past week and a half, certainly there has been some rotation out of the big tech plays for various .easons have you been advising your clients to start taking profits as well? >> indeed. when you look at especially the tech stocks, there is tremendous rally, so we have actually been advising our clients a couple of weeks ago already to take some we are, but longer term, still positive on the bank sector. but given the strong rally, it is never a mistake to pull out some money. david: you talked about china and taiwan. do you buy the index or is there anything specific within those markets you like? >> of course, we are looking at the so-called new economy. technology, as i mentioned before, was one of our biggest sector calls. taiwanese technology companies also benefited a lot from the apple new iphone launches this year. we can see the demand is quite robust. we think this can also last into of ourar, so visit one major calls for china. we are also looking at a specially consumer names. we think retail sales and overall consumer confidence has been stabilized over the past few quarters. whichan also be a sector should outperform the market as well. david: when you say china, are or are youshares looking at msci china? >> we're more looking at msci china, to be honest. david: your outlook on rising bond yields in china. you can almost make the argument that it is almost on purpose, what they are doing, to just sort of take some of the froth out of this, and a lot of the leverage that is taking place. the question is -- does that become disruptive? yields is clearly something we are also looking at , but as you rightly said, i think this is part of the government policy to continue with the deleveraging, something we have seen for the past 12 to 18 months. i think the market is much, much better than compared to two years ago. we think given how robust china's growth is, we do not think this will be a disruption to the market. still positive outlook on china. weid: virtually everyone have asked on what they thought is the biggest risk to the strata rally, their answer is always the same -- faster than inflation.- expected do usage guide to that view, and do you see that coming within the next quarter? >> not really. of course, china also benefited from the global trade recovery, like many other export-oriented countries. given the overall and for the first time since the financial crisis level synchronized growth recovery, i think china is in a very good position to benefit further from .his global trade recovery we do not really see much further noise on this side. david: conditions today i would say are almost perfect for this risk trade. anything that changes from here almost seems counterproductive. do you get a sense when you talk to your clients that 2018 will not be the same as 2017, and do you think you need to ratchet down expectations on their returns? >> that is what we are trying to do. obviously not so easy, as you can imagine, given the outstanding year have had so far, but i think our clients and most of the other private and also institutional clients -- i think there is still some skepticism in the markets, which is quite good. hence, we have not really seen this bullishness in the markets. as you also pointed out, it looks to be almost too good to be true, but there are still, of course, risks around which we also have to monitor closely. something to watch out, and then on the political front, not much in asia, but more like in europe and u.s., something which can also cause more volatility in the markets. david: i'm sure you have been asked about this. bitcoin and cryptocurrencies. what is the position of the bank and would you recommend even taking a very, very small exposure to bitcoin? >> as this is not an official currency, our sense, of course, is we cannot and will not do any recommendation on bitcoin, sorry. david: [laughter] all right. it cannot all be good. what is one developed market or emerging-market you suggest i do not dare get anywhere near in 2018? market, if you talk about some risky countries -- in europe, it will be clearly italy , given the upcoming election, as i mentioned before, this could cause some volatility in asia. we used to be quite bearish on malaysia, but it can also turn around, so, hence, we have also been here a bit more positive. a country where we would maybe be a little bit more careful would be thailand. if i compare thailand to indonesia where i currently am is somehow, it falling back because of various reasons we have witnessed over the past few quarters. something which might cause some underperformance of the country. david: ok, we have got to leave it there, but thank you for coming on the program. program, carthe production made chennai the detroit of india, so that label is a bit entertaining. will the city actually inherit motown's most recent woes? that's next. ♪ ♪ david: chennai is known as the detroit of india, but other parts of the country are competing to make their cities more attractive, to make other carmakers come in and invest. ouriscussed this with bloomberg india reporter. take us through the declines. >> parts of south india have traditionally developed other than -- faster than other northern states of india. are goingn india, you to didn't sleep populated poor states. instead of india, you had a better educated workforce, less population density, and a lot of industries were located there like aerospace and engineering firms, so you generally have this workforce and situation in a sense that was really right for those industries to take off. -- chennai in particular became known as the detroit of india for this booming auto sector it had. now we are hearing also it's a things about people beginning to slowdown investments and think about moving out. david: the more up and coming states, how will those places actually benefit the broader economy? do they have enough clout to actually move the needle at this point? >> yeah, i think traditional flowed to theve states, but a lot of other have different things, so when national office pledging to bring development to all of india, so some of these states begin to come up, start to learn investments from overseas -- start to lure investments from overseas away from traditional hubs, it looks like development is spreading across the country. david: this comparison to detroit isn't it bit ominous because we all know what happened to detroit. broader question, i guess, would be -- can the old manufacturing states successfully move up the value chain? what will it take? >> obviously, this is a hard question, and it is something a lot of countries are facing. in some ways because southern india was more developed than the north, they are sort of bumping up against that classic middle income trap earlier than the rest of india. that sort ofng phenomenon with india, but companies are investing in new technology, investing in machinery, so some of them are managing to move the value chain, that it is difficult because they in up employing less people, and you have underemployment, low employment, and that is a problem the rest of india is facing. if they solve one problem, in some ways, they are being confronted by another. david: the road ahead is, of course, complicated. that is just about it from us here. bloomberg markets: middle east coming up at the top of the next hour. this is bloomberg. ♪ alisa: i'm a alisa parenti in washington, and you are watching "bloomberg technology." let's start with a check of your first word news. president trump plans to sign a six-month waiver on moving the u.s. embassy to jerusalem. he reportedly told palestinian authority president has plans to move the embassy from tel aviv. abbass reportedly warned the president against taking that step, moving the embassy is said to be a redline for muslims. the u.s. is ordering personnel and their families not to conduct personal travel in the jerusalem area. palestinian groups have threatened widespread protests if president trump recognizes jerusalem as israel's capital or advances plans to move the u.s. embassy. a white house announcement could come tomorrow.

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