Transcripts For BLOOMBERG Bloomberg Markets Asia 20161125

Growth has picked up slightly this month. Asia is back in the black lit to cheap fuel. D by whats going on in the broader region . Lets find out more. Asian stocks are gaining. Gain, another day of gains thats after four weeks of losses. Asian stocks have been on a tear, getting cues from the u. S. As we saw record highs there. The u. S. Is closed on the holidays for thanksgiving. The nikkei is up. 6 . Data this morning showing that came in line with estimates, another month of deflation for october with the cpi falling. 4 . Seven days of consecutive gains and now near overbought territory on the rsi. The asx 200 of. 4 and data from new zealand showing the trade data narrowed. The kospi, not a lot of movement but remember its been a very brutal last few sessions for emerging markets. We will see how they trade throughout the day. Malaysia is unchanged that remember the ring that has seen quite a beating from the surging dollar. Lets get a check of the dxy. It is surging after taking upon sin the last session. Up. 1 . That seems to be the story, the dollar against all other currencies. Take a look at the turkish lira. Its at record lows, weakening almost 2 after seeing a little bit of strength after the central bank surprised markets by raising Interest Rates in the last session. But then it is now weakening and weve seen the lira now falling to record lows. The same thing for the Malaysian Ringgit which is at the lowest level since 1998. A little bit of a cause on its weakness but its still at 4. 4625. Story now seems to be what will be emergingmarket currencies do and where thats going to take equities. Lets get the first word headlines. Shine chinas seeking a regional trade deal as soon as possible with the tpp a nonstarter. China will work with ici nations on agreement. More convenient global trade. Chinas push for a trade pact following Donald Trumps election victory which dashed hopes for the tpp. Opec ships its attention to iran were told thed cartel has scheduled meetings ahead of wednesdays summit in vienna where members will be asked to lower output by 900,000 barrels a day. Prepared toit is freeze output but not cut. Speculation over donald trump slightly policies and the feds impending rate hike are weighing on precious metal. Silver entered a bear market as investors anticipate the consequences of trump plans. Set for the biggest monthly fallen more than three years and silver has dropped about 20 since august. Silver trading just at 16. 28 an ounce and goal at about 1276 an ounce. For its bestg month in a decade, surging around 20 in november. It sometimes referred to as dr. Copper ports perceived ability to track the health of the global economy. But some banks are calling the rally unhealthy, saying its being driven mainly by speculators. Day innews 24 hours a more than 120 countries. This is bloomberg. Rishaad thank you for that. Japan cpi has extended its longest losing streak in five years, falling. 4 in october. Her th asia economy at editor joins us. What is the basic take away about the trend . It does seem to be stubbornly below zero. , but what we are seeing is that the decline in inflation, the downward pressure on prices appears to be bottoming out, or will soon be bottoming out as the effects of Lower Energy Prices fade away. Food roseluding fresh slightly last month, which is a good sign. The question is, will prices start rising to the upside to anywhere near the bank of japans 2 inflation target . Of course that is the big challenge. Rishaad what kind of behavior are we seeing in the micro economy, is there any indication that we could see Price Expectations changing . Consumer spending remains weak, Consumer Sentiment remains weak, as do wage gains. In that environment, at this point retailers are competing on price. Mr. Donut and walmart are among the major retailers to have cut prices recently. So where does this leave us in terms of that suit that the boj has . Inflation is around 2 or thereabouts. There has been a lot of skepticism about reaching that goal. No doubt the bank of japan is happy with the decline in the yen since donald trump selection in the u. S. That will help in the longerterm, as will Higher Energy prices, but again, it will come back to domestic increasesnd wage before the central bank has a whole lot of luck with that. ,ishaad thank you, henry joining us from tokyo. Asia is back in profit in the Third Quarter. High fares, more passengers, and lower fuel costs as well. And of course making money from Aircraft Leasing on top of all that. If you look at the numbers, net income, 79 million. A record 87 , rising six points from a year ago. We heard from Tony Fernandez, he expects an even better q4. That, talk about oil. As you said, it tumbled 22 . That means lower fuel expenses. Fuel traditionally the biggest cost for any airline. Air asia has reason to be the list. Its positioning itself as a digital carrier. 2017 will be exciting. It plans to boost inflight Wifi Services which it says will translate to more income. Investors are buying into that story. Look at how air asia shares have been trading. Date versusear to the k lti, which tumbled 68 during that time. Say buy recommendation or hold air asia shares. So its looking good for air asia at this time. Apiece there telling us how they make more money out of leasing than actually selling tickets. Article. Eresting leasing business is moneymaking. It makes more money for air asia than anything else it does. It often loses money on see sales. It doesnt make that much from baggage or inflight meals. And its is buying power has capitalized on that. Lets take a look at this bart chart. Air asia among the biggest carriers waiting for orders to be delivered. About 400 planes yet to be delivered from airbus. It has great Bargaining Power because it has ordered so many. When it finds itself with to me planes on its balance sheet, it sells and leases them back, so it makes a premium of its buying rice, but they may sell the leasing unit as soon as december. So maybe no more cash cow or golden goose, whatever you choose to call it. Something he may want to explain. Rishaad thanks for that. Tony fernandez will join us in about 20 minutes to run through the results. That is at 12 30 if you are in sydney. Why japanese retailers are causing concern at the bank of japan. Look at the dollar and why the risk and rewards are low. Rishaad a quick check of the business flash headlines. There may be some room to ease up on the bond buying program. Rising yields ease liquidity concerns. So members may consider postponing a decision on extending qe. They will have to consider the sustainability of the program. 19 people were killed a little over year ago when a mine collapsed. The surrounding area was swamped with a wave of toxic sludge. The shortterm Credit Facility will be used to carry out remediation and stabilization work to support operations. Pursuing a takeover deal, saying it entered a credit swap with an unidentified investment act for 147 million. The deal was announced last month. It may not be completed until the middle of next year, and down to antitrust concerns. Statebased bailout would be worth 900 million. Its the largest investor. Its rival sharp needs enormous amounts of capital to invest in the displays for future iphones and other mobile devices. In the currency markets, the dollar is the strongest level in well over a decade against its major peers. Is surged almost 5 since the election, prompting some investors to wonder if the rally is overdone. Sean, good to see you. What is going on . It has been a stunning rally, that is for sure, a very broadbased as you mentioned. The dollar index at those highs of close to 13 years. Its accommodation of factors. Obviously the yields are really the key. Its the reversal in the 10 year yield that has caught markets very much off guard. Markets were primed for a clinton win, so a few tweaks here and there, but that was very much the consensus. And thent get it, treasury starts to move higher and you get a new narrative of infrastructure, wider deficits which means extra treasury supply so higher yields. So that has had a huge impact. Rishaad one of the currencies to be impacted is the chinese one. This is just in. Had 6. 90 thursday. So another day of strengthening affecting whats going on with the yuan. Again, its such a difficult position for the chinese authorities, because they want to maintain what theyve been saying quite some time, which is that the yuan will be roughly stable against the trade weighted basket. It was depreciating against that basket but it was not volatile so is not drawing too much attention. Stable yuan means a stronger u. S. Dollar, it draws a theof headlines and discussion is about how high will the u. S. Dollar go, and that encourages local investors to expect further depreciation. So why not sell your yuan now . Thats that cycle of expectations that can cult to great. Rishaad when we look at the bond market, i havent seen anything like that in years. Must beferential attracting money into the treasury market and out of bunds. How far is that a driver . It should have been a driver for longer than it was, really. Were moving into the u. S. s favor for quite some time. It seems to be catching up. Perhaps ont of risk the euro but certainly those yields that were on offer in the u. S. , does it raise the perhaps, are the yields close to a high for this way . Then the money should be coming out of euro and into the u. S. Dollar and putting it cap on those yields. Thats probably the main question into the currency meeting next month. Rishaad one of the victims has been emergingmarket currencies. As well thererday in the philippines. Do you think its a little bit overdone . I suspect they will run for a little while longer. You talk about whats been the fundamental changes in the evaluation of the currency like the ring it or peso or the rupee. Thats why Central Banks are on alert. If it is a real game changer in terms of peoples expectations of where u. S. Yields will be next year, and we start to get some of those Inflation Numbers ticking higher, then there would just be this expectation that its not going to last until further notice and that has to hurt those low yielding currencies in asia that have benefited from that reach for yield. Rishaad your top calls for the next three months and be on . Theres going to be a lot to digest. I think the euro could keep falling nearterm but its going to play for a bit of a rebound in december. We will get the high that everyone is expecting but the tone could be a big different. If they have a dovish height, that could undermine the u. S. Dollar. I think the euro will be one of the key beneficiaries. There is quite a bit more downside on sterling. We think the political the market focus will return to the political troubles of brexit in early december. Some upside because fair valley in Commodity Prices is around 78 cents. Rishaad great talking to you, have a fabulous weekend. Coming up, signs of stability and signs of a pickup in china. This is bloomberg. Just minutes away from the start of the trading day in hong kong. Hang seng futures showing a slight decline here. Is no movement, unchanged in the free trade in hong kong. A quick look at the big story of the week, the Dollar Strength at the moment, rising to records against the indian rupee. At the highs level in years. Chinas early indicators for novembers suggest stability and a slight pickup in some areas of the economy. Another day of weakness on the yuan. That factors in with the outlook as well. The numbers from the satellite inch imaging and other surveys of purchasing and sales managers, and the indications are or november, the early indicators are that the conley has further stabilized. Its pretty good growth. They say they will needed by the end of the year, but they always do. Thats run through these quickly. Youre seeing slight upticks in certain areas including from the satellite manufacturing index. It uses imagery to track industrial activity across a number of industrial sector facilities in china. It doesnt reflect what is actually happening. Its a five year high. The chart is just running off a little bit there. Data for thegh the last five years and it is a five year high. Above 50 indicates expansion. Lets look at market news international, they need to shorten the name. 53. 1 in october. Its based on surveys of executives at Larger Companies listed in shanghai and shenzhen. Upwards. A slight tick it has not updated, but the number has updated, not the chart. A senior Economist Says companies in their survey are trading optimistically about production demand and financial standing. We did the official numbers. They have more challenges right now because we have Interest Rates at record lows. Weve had a cycle of easing that has helped the bigger companies. Rishaad steve, thank you. Asias talk about air Third Quarter results and looking to the future. \ rishaad this is Bloomberg Markets asia. The open for shang chi and hong moving to the upside, were seeing the sort of reserves, the normalization of Monetary Policy playing out as well, as well as hopes that president elect trump will be embarking on a fiscal stimulus , building infrastructure. Thats all helping the dollar move higher and putting pressure on emergingmarket currencies, especially in this part of the world. We do have the asiapacific stock picture looking very positive. Its pretty green out there. We are checking on hong kong, looking at a mixed start. Lets find out how things are going at the moment. At the opentocks are not doing much. They are standing still, the hang seng index fell in the last session, were not seeing Much Movement at the open. Still, our bloomberg strategists are saying that because were seeing the yuan to appreciate at a rapid pace, we could see mainland investors just taking advantage of the premium and investing in hong kong shares. So we could see some momentum for hong kong. Remember the hong kong dollar is pegged to the u. S. Dollar. Talking about currencies, the chinese yuan has again been cut, reflecting the dollar rally. The offshore you want falling to record lows after a brief pause in that weakness in the last session. The offshores discount to the onshore has just risen to the widest gap in two weeks. That means that some analysts are saying we can see that trade in buying cheaper all sore yuan offshore you want which could push the domestic rate weaker. Also a brief path with the dollar rally, but the dollar is again searching, still at the highs level in 13 years. So we are seeing some more momentum to the down time for other current sees including the yuan and also the japanese yen, falling. 4 against the dollar. The yen has been weakening for the past four sessions and is now at the weakest level in eight months. This giving a boost to equity markets, especially exporters in japan. Rishaad lets get to the first word headlines. Prices fellonsumer for an eighth straight month in october. The longest streak of declines in five years. Consumer prices excluding fresh food fell. 4 from year earlier. Policymakers struggling to break the cycle reinforced by week wage gains and retail discounting. Air asia with Revenue Growth supported by swelling fares and passenger volume. , a sixd factor at 87 point jumped from the same time last year. Asias biggest budget carrier benefited from a reduction in average fuel costs and made more from its lucrative sideline of leasing out aircraft. Park is facing impeachment calls. Consumer confidence has plunged to its lowest in more than seven years with some of the biggest corporate names dragged into the scandal. Seven buildings in wellington state face demolition after the recent earthquake and after shot. The earthquake in new zealands south island on november 14 has been followed by more than 50 aftershocks of magnitude five or more. Global news 24 hours a day. This is bloomberg. Rishaad lets get you back to air asia, joining us is the executive, Tony Fernandez. Great to see you. I think we had fantastic load factors from indonesia and the philippines, coupled with very strong income. It drove a fantastic quarter for us. Sustainable,his and how does the weakness play out with your bottom line . When we had the first , is it, analysts said sustainable . We had a fantastic second quarter, very strong thirdquarter. The ring it is 60 hedged in terms of aircraft. It also benefits by more inbound tourists. Rishaad are you talking about aircraft hedging or fuel hedging . Both, to be honest. Weve hedged our fuel over 70 free this year. Weve had 12 year fixed currency hedges for 66 of our planes. Rishaad what price did you assume . Key looking ahead. We are hedging it just under six dollars. We are very happy with that. Thats one of the major risks taken out. Rishaad you mentioned ancillary revenues. How do you grow that particular part of the business . Selling things on aircraft and that sort of thing. That is key in your business as a lowcost carrier. Correct. The existing ancillary businesses, we have invested a lot in data. We are a combination of data and price dynamics. Sold, were premium seating, targeting the right people. That, too big initiatives are rolling out and beginning to get traction. Our passengers fx, so we offer a product for them to buy it as well. I know of paolo bures, Michael Oleary at ryan air. He was saying he sees today when he doesnt charge for tickets on his aircraft because he will be able to share revenues made at airports. Do you foresee the day when you will be able to do that . We have three pillars of business. We are all about driving fares lower. I share michael sentiment that we should be driving fares lower, and get more airports involved. , andhe day will calm hopefully that will drive even more stimulation. Are a little bit behind europe in that aspect. Rishaad is this a vote of confidence . India has had so Much Negative rest, but the team has done a fantastic job. It has stuck with its guns and will be profitable in the fourth order. Were now making a decision of whether to add in 12 aircraft and we feel very confident that after that, it will be a very profitable airline. Or we take it at a slow pace. Cost airlineowest in india. One investors that they see tremendous upside in india. Theyve also invested in a rival. That has never been an issue of mine. This is a different segment of the market. If you look at the number of plays per population, is very small. Onhaad we have a few going as far as the ministry. Is that affecting you in any way . No, not really. We just focus on what we are doing best, lowering costs, to anng their, and adding incredible market. The other benefit is that china has been a driving force but now into india is playing catchup. The middle class in india is growing. There is plenty of growth for air asia going forth. We got a great hes today about how Aircraft Leasing is becoming such a huge business for you right now because of your sheer purchasing power that you have. With there be any plans to spin that all . We are in that process right now. The bankers just made a presentation to the board yesterday. A diligence process will take place and we will see if the right valuations are tracked. There seems to be tremendous attention to it. We are looking at lifting up training academy. I am, and value that using the cash to build a strong chinese and indian franchise. You said earlier that this part of your business could fetch about a billion dollars. Are you standing by that . It would be a dealbreaker if it didnt. Very much standing by it in terms of the valuation metric and what the board will accept. It is a very positive, strong business with good aircraft. I would love to stay in the business but i think the market doesnt give as much value. And use ite the cash to grow our airline further. Weve got plenty of cash Going Forward. Rishaad i was going to ask you how youre going to actually spend it. You have a big backlog of planes you are waiting for. Decide,for the board to but obviously a dividend is there, Share Buyback is there. Our fleet is being funded by cash flow, so we dont really require that. But we have some expansion plans in terms of some other countries. The team has done a fantastic job in indonesia and philippines. We have india, japan, so a very exciting 2017. Rishaad where next after japan . Asked me in a few months. Lets deliver a. Deliberate. There is a very large country we would like to be in. Course . Myanmar of wait and see. Nice try. Rishaad thank you for joining us today. Taking matters into their own hands. Why certain japanese retailers dont appear to be lying the pledge to overshoot inflation. Rishaad japan continues to make little progress as it tries to get to the 2 inflation target. Way down forn the the eighth straight month because retailers yet to see evidence of the pledge to overshoot that target will happen. This morning got data from japan, core inflation falling. 4 in october. Eight months of straight declines for the longest losing streak since 2011. Number underscores the tough task of policymakers to live japan out of the deflationary mindset we are seeing. The fact that more retailers are cutting prices to maintain or grow market share. Rishaad we have competition against retailers thats pretty ferocious out there and that is one of the reasons why. Savvy have a budget consumer. Is set to make 556 items cheaper. Demonstrating retailers are not japans inbank of inflation pledge. Jpmorgan saying these type of retailers are just being practical, especially with strong doubts around that pledge and the concept of overshooting the commitment is not translating well to the man on the street in japan. The president telling bloomberg earlier this week he cannot stop smiling because they are selling so well. Backlash from the budget conscious consumer, they will be bringing back lower prices to the shelves. But you can expect cheaper treats from the likes of mr. Donut. Rishaad thank you very much indeed. A bailout would be worth nearly 900 million. Bailout japan need this in the first place . If you remember the way the company was formed a couple of years ago, they were all making screens and losing money. They decided to merge and form japan display. It was a good idea for a couple of years, but now its not that competitive. It has lost money three years in a row and its not looking good again this year either. Basically the company is running out of money and it needed more capital to invest in future technology. It needs the capital injection right now to prepare for the future. Existing businesses are not doing too well. The oledtalk about screens. What is so special about it and why do people expect it to be the standard in the future . Most peoples phone is an lcd. That means when i when it lights up, there is a light behind the phone. Thats why you can see the screen and thats why it it lights up. How oled is different is it doesnt need a light behind it. The screen produces the light by itself. That makes the phone much thinner. The screen itself, you can bend it a little bit because you dont have this light behind it. Samsung already has a couple of oled phones on the market. It isason apple wants they want to make a big splash with the next iphone. Iphone 7 didnt raise the bar that fine. That high. This will allow apple to be or creative with the design. Some people have said you could have a folding phone. You could carry it around like a little book. It lets you manipulate the screen physically and become more creative with it. Hats why apple wants oled rishaad thanks very much indeed. Lets look at some of the latest disney headlines. Describing Donald Trumps election win as a game changer for the motor industry. The chief executive telling bloombergs statements about nafta were a big issue because of the impact on his operations in mexico and canada. Johnson johnson may be looking to buy a swiss drugmaker for 17 billion. Sources say the company made an initial offer and talks are at an early stage. Its been a takeover target for about a year but opted to remain independent. In may be more open to a sale at a sufficient premium. Amazon said to be in talks to. Uy a company it sells more than 1. 5 million Products Online across the region. It initially pledged to sell a stake of 30 . Neither company is commenting on that. Still ahead, the start of the u. S. Holiday shopping season. Black ride a on the way. This is bloomberg. Rishaad today marks the start of the biggest Holiday Shopping season in the United States. Retailers count on black friday sales to give them a muchneeded black friday boost. Friday, the u. S. Biggest shopping day of the year and the start of the 2017 christmas and Holiday Retail season is this friday. Its a battle between revenue made in stores versus revenue made online. An online is winning. Last year was the first year when more americans shop online than in physical stores during the fourday thanksgiving date weekend, according to the National Retail federation, and it could be set to continue. Iconic stores like macys and jcpenney, this year they are fighting back. Macys is emphasizing exclusivity, clothing and fragrances only available in store. Jcpenney has rolled out appliance showrooms and is pushing into toys. Nordstrom has teamed up with j. Crew to sell clothes at its store. Women can rent out downs and accessories. But it will be tough to beat amazon. Com. About 55 of americans surveyed say they plan to shop there for Holiday Gifts, up 41 from just two years ago. Above the fray, its expected to be a good retail year for the u. S. And retailers could be in the black. The National Retail federation has present it sale predicted 6. 68growth to a record billion. Even better news for online retailers. They could see a jump of 7 in sales, all being helped by Interest Rates, inflation, and unemployment. Its being dubbed of goldilocks economy. The Holiday Shopping season is upon us. Lookingauction houses east. They have been doing that, looking to boost disneys by bringing business to this part of the world. We will ask the chief executive how hes hoping to attract more buyers in this part of the world. That interview is coming up in about a half hour. Dont miss it. It is almost 10 00 a. M. In singapore, and 9 00 in new york city. Fromrishaad salamat bloomberg asias markets headquarters in hong kong. This is Bloomberg Markets asia. Rishaad the strong dollar putting pressure on the yuan weakening defects for a third day, but signs of stability, growth may have picked up slightly this month. The boj,ves for inflation a distant dream with that 2 target out of reach. Uncertainty over Donald Trumps policies pushing gold to the lowest since february, silver also in a bear market. Across to the session the asiapacific, no lead out of wall street because of thanksgiving. Heres a look at whats going on right now. Juliette its looking like we will round out a volatile week for equity markets on a positive note, led by this rally in Japanese Equities. By. 7kkei is higher percent, in bull market territory, and the topix Holding Higher for an 11th straight session, the longest winning streak on japanese equity markets since june last year. Price the consumer data numbers coming out of japan, cpi down for an eighth straight month, the longest decline since 2011, but not playing into that equity space, still seeing Dollar Strength pushing export stocks higher. In shanghai, down. 3 , and. 4 , and come up by solid moves in australia, new zealand, and most of Southeast Asia. Weakness playing into these emergingmarket currencies because of this Dollar Strength. The Dollar Strength, the surgeon that most, barometers believe the u. S. Economy is doing quite well, and we are expecting a rate hike in december, playing into the gold market. Gold holding at levels we have not seen since february this year, a ninemonth low. The Actual Movement today is still seeing signs of weakness, down. 8 . We have been watching closely emergingmarket currencies. , fallingore renminbi to a record low again. Fixing cut again today, and the offshore renminbi looking stronger at the moment. Thank you. Right, first word news headlines. Here is Sophie Kamaruddin. Sophie china seeking a regional trade deal, but the tpp is seen as a nonstarter. A ministry of commerce official says china will work with asean nations on agreement called rcep. Follows Donald Trumps election victory, which killed hopes for the tpp. Support for south koreas president at 4 , facing overchment calls allegations she let a close friend medal in state affairs. Consumer confidence plunges, big corporate names dragged into the scandal. Lowerntral bank is now than last years outbreak. Oil for a second week of gains as opec shifts its attention to iran and russia. The cartel has scheduled meetings ahead of wednesdays summit, where members will be asked to lower output line 900,000 barrels a day. Iran insists it wants to raise production to presanction levels, while russia says it is compared to freeze, but not cut. Copper surging 20 in november, the metal is sometimes referred to as dr. Copper for its perceived ability to track the health of the global economy. Some banks call the rally unhealthy as it seems to be driven by speculators. Pricesre warning that have overshot fundamentals. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Rishaad asia shares rising toer the company returned profit, lifted by higher fares and more passengers. The carrier benefited from low fuel costs and Aircraft Leasing. We have the numbers. Tell us about what happened here. Everything is aligned, all the stars are aligned, causing this double celebration. Income 79e black, net Million Dollars, load factor at 87 percent, rising six points from a year ago. Tony fernandez expecting and even better q4, 90 load. Cheap oil helped, 22 lower, savings on expenses, and looking ahead, Tony Fernandez is bullish, plenty of growth, he says, plans to boost inflight services. All that means more income. Investors are buying into that. Take a look at the shares, i jumped year to date versus 68 tumble. So they seem to be in a sweet spot right now. Rishaad tell me, we were talking to Tony Fernandez, the company is making more money by leasing out aircraft and ticket sales, thinking about splitting it off as early as next month. Haslinda moneymaking business. It makes more money than anything else. Buyingng is it has power. Among carriers in asia, they have the biggest plane orders, 570 five planes on order from airbus, 400 yet to be delivered. Because of that, it has great Bargaining Power in negotiating prices, so when it finds itself with too many planes, it leases them back. Tony fernandez may sell the unit. We are in the process now. Made akers just presentation to our board yesterday. They believe we will receive its about december 5, and then a diligence process will take place and we will see if the it,t valuations are tracked then selloff the leasing business. There seems to be tremendous attention to this business. For me, im all about selling off noncore businesses. Haslinda he would love to keep investorssses, but prefer him to run strictly an airline business. Tony did say he stands by what he expects to make from it, 1 billion. Thanks. He said if he did not get that 1 billion, he may walk away from that spinoff. Precious metals are coming under increasing pressure. Cold prices dropping to the lowest level since february, but silver entering a bear market. Lets look at all this and get back to singapore. What is pushing goal down at the moment . Gold is at a ninemonth low, and it is heading for the biggest monthly decline since june 2013. This is such a change from where it was at the end of june. Gold rose 25 in the first half of this year, and what has changed so far . Basically now we have investors hike,g in a fed rate increasing Interest Rates in the u. S. , and that will weigh on gold, which does not pay interest. The fact that we will see high Interest Rates in december has propelled the dollar, and that is also weighing on gold. Selloff in a huge goldbach coldbacked etfs. Weve had investors who have sold all of the Gold Holdings on the night of the u. S. Elections. Aat has also changed is that donald Trump Victory. Gold was expected to rally on the back of that, but instead, gold plunged. That is weighing on gold. Rishaad absolutely. We have the inverse relationship , the golden the dollar, one goes up, the other falls, so what are people saying about the prospects for gold and how much are they contingent on what happens with the greenback looking ahead . Ahead, in the shortterm, the prospects are still not good leading to the fed meeting in december. Had theforward, we forecast by abm amro who said they downgraded the forecast for gold by the end of 2017. The analyst said from an investor point of view that there is little reason to hold cold, but again, we have other people who think that next year, when Donald Trumps inflationary sorry. Well, moving ahead, in an inflationary environment, that is good for gold. Stuff. good thank you for joining as. Lets get the prospects for Precious Metals. Still too calm, we asked phillips auctions house a record low. Our next guest, we ask if we can expect anything from the a emerging market route here it we will hear from bank of America Merrill lynch. Rishaad a quick check of the latest business flash headlines. Classaction suit being filed against samsung against note 7seven smartphones. Demanding the equivalent of 420 compensation for being inconvenienced. Three owners whose phones caught fire have fired separate lawsuits. Displaysplies, japan close to a bailout worth 900 million. The company may issue preferred shares to raise cash. Japan display has made a loss. Sharp needs unknown amount of investment to make oled displays for iphones and other mobile devices. Bhp billiton will provide a a jointacility to venture in brazil. 19 people were killed when they am at the mine collapsed and the area was swamped. The shortterm Credit Facility will carry out risks, remediation, and stabilization work and support operations. Tatt pursues a takeover deal. Investment undefined bank. This will help facilitate that deal. Its unlikely to be completed until the middle of next year because there are a few antitrust concerns. Markets, emerging market currencies trading at lowes as the rush to the dollar accelerates. , and the lira tumbling to lowes. The ringgit reached levels it had not seen since 1998. They really are taking a beating, arent they, these currencies here . Absolutely. This again was what we were expecting to the degree that protrump, clean sweep and the Republican Congress now means we have transparency in terms of a prostimulus approach from the u. S. , which is lifting u. S. Rates, and lifting real rates in the u. S. , which means that inflationadjusted returns are going higher, making a big sound in terms of potential flows into the u. S. Dollar and dragging emergingmarket currencies lower. Rishaad it is bizarre though, isnt it . We dont know what he will do. They are betting on this fiscal stimulus, and if he does announce it on the first day of , we will not see the benefits of this for the u. S. Economy and Inflationary Pressure for at least a year after that. Granted, but two points. Markets are for discounting machines, looking into the future and extrapolating from what is going on. Yes, we are taking him on his word, but you have to think clean sweeps where you have a dominant party in both chambers have historically led to a structural deterioration in the fiscal balance by about. 4 as a percent of gdp per year per and the 1960s, there has been only 19 occurrences of this, so this is a historic event to the degree we have a dominant party in both chambers, which means that fiscal policy historically has been more is alative, so there historical precedent to go on and the fact the market is trying to extrapolate and forecast that impact. Rishaad absolutely. And one nobody, knows the answer to, but everybody has a stab at it, how long does is rally go on and what of the key levels you have in mind . Untilhave to watch january 20, when trump gets into the white house. What his actions are. Day by day, we continue to get his cabinet being assembled, which seems to point to a probusiness stance. The other thing we have to watch for are the data. Orders dataurable proving stronger, so as long as the data flow is robust and strong, it gives support to the thesis that the dollar will lead in terms of resilience in the economy and policy leadership. Its not just Economic Leadership doing better to the rest of the world, it also seems to be policy leadership as well, reinforcing that trend was so whereas the data in europe and asia still seems to be mixed, i think that means this trend will extend itself. Looking at our positioning data, it seems to ask that we are continuing to have flows build into the dollar. We are getting positions building, but they dont look exceptionally stretched and that this rally has more momentum to go forward, so that is what i would say at this juncture. Rishaad one of the biggest headaches is for the pboc. How do they deal with that, and they have weakened it and only one way, continuing to weaken the fix. Against the euro, it is virtually unmoved, if anything, it has strengthened against the euro, so what gives . This is very problematic for the chinese. Easier for china to engineer some depreciation and some monetary easing through a Weaker Exchange rate when the dollar is weak. When the dollar is strong, it is a complicating factor. China foreign the Exchange Trading basket, it has been trading at the upper part of its range around the 94 level, which shows that china has been trying to fix the currency weaker against the dollar, but trying to keep its head above water in terms of trade weighted terms. Att is the best china can do the moment. If china were to really depreciate its currency at a faster pace, it would be more destabilizing for the region. More importantly, when you look at that spread between the onshore rate and the offshore pips, anare now at 400 indication of more capital outflow. Last fridays onshore trading vines were 44 billion dollars, twice as much as the annual around 20ich is billion per day, and that is an indication of more capital outflow and that the pboc is trying to intervene and slow the depreciation of the currency so that it is not disorderly and volatile, but we have to data for november to give us an indication of the stress. There will be rid nude focus in terms of that capital outflow and pressure and how much china is in control of the room and the. The rim and the rishaad right, coming up, balancing act, chinas economy looking set to remain stable despite property curbs beginning to bite. The latest economic indicators. This is bloomberg. Chinas early indicators for november suggestibility and the pickup in the economy. Gauges we have got, including satellite. Isnt it great . We satellite imaging index, can bring that up and see Manufacturing Activity of across a number of different industrial or send facilities in china, thousands of them across china, rising to a fiveyear high, 51. 4, so it uses commercial satellites from a san franciscobased company so it can see. On the far right, Economic Activity in these Industrial Areas across china is expanding. Anything above 50 is expansion. Both pmis at twoyear highs. Business sentiment is clipping off on the right. It does blip up in november. The data is so new and so early that the chart is not reflecting it yet. And october,2 these are surveys of executives at large corporations listed in shanghai and shenzhen. Rishaad we get these two pmi numbers, the official one and the other one. And one reflects what is going on more about the real economy come the small and Medium Enterprises of this world, so do we have evidence of what is going on with them . People bifurcate and look at the new economy and the old economy, but you also have to look at it in the four chambers of the heart, the old, the new, the big, and a small. To Small Companies according the sme confidence index, they are suffering more than the bigger ones. That index falling to 55 from october. Current activities according to this index improved slightly, but expectations Going Forward fell to a 10 month low, so small to Mediumsized Enterprises are worried about exports. If theres going to be a trade war with donald trump, they are not seeing the benefits yet of the weakening yuan. Rishaad right, lets tell you about some other news making headlines. Pakistan says it is making progress with projects under chinas silk road plan. About three quarters of the 46 billion investment are in an advanced stage of implementation. Money set aside to build railways, ports, and highways to boost trade. Playing downbeen security concerns surrounding the project. Turkey unexpectedly raised Interest Rates for the first time in three years, and why . It was trying to defend the currency because it plunged to a record low. The central Bank Increased the one we great to 8 and the overnight lending rate to 8. 5 . The currency did rebound, but resumed its fall after that news, concern about the banks independence and next months meeting of the federal reserve. Ecb, somerd about the ruse to ease up on its bond buying program. There is less urgency of among officials to buy bonds as rising yields ease liquidity concerns. Some members may postpone the decision on extending qe, though the chief has publicly maintained a dovish stance. The next meeting will have to consider the sustainability of the program. Coming up, heading to sydney for the latest on two big banks thing to settle a fiveyearold case. This is bloomberg. Loads more, and indeed a full market check on the way too. Sophie i am Sophie Kamaruddin with the first word headlines. The dollar set to cap its biggest gain since 1995 versus the yen, traders viewing a rise in fed rates a certainty. An eight montho high against the japanese currency. The on december, the probability of additional fed moves have climbed to 64 . Chinas a economy remains steady according to some of the earliest private economic indicators. A manufacturing gauge based on satellite imagery jumped to a fiveyear high, Large Companies confident, and steel manufactures are booking more orders. However, sme firms are less optimistic the cousin of real estate curbs and cuts to excess capacity. Speculation over Donald Trumps pending ratethe offendin hike are weighing on metals. Biggeste set for the monthly fall in more than three years, and silver has dropped 20 since august. 74 workers known to have been killed in thursdays powerplant claps in eastern try as part of eastern china. All but three of the people died. China is notorious for industrial disasters blamed on corruption, a lack of safety, and pressure to boost production in a slowing economy. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. This is Bloomberg Markets asia. I am rishaad salamat. Japan having another stellar session at the moment. Lets get more. Somette we are seeing solid strength coming through in the nikkei heading into that lunch break, lifting the asian regional index by. 3 , so the market is on track to see the first gain in a number of weeks. If we have a look at how the asian markets are faring, some Solid Movement coming through from the nikkei as it heads into that lunch break. The hang seng up by. 25 percent, some weakness from the shanghai composite, but that is a market that has been in bull market territory, down. 1 . Nikkei. Id move from the some other markets in the region, the kospi looking flat. Tie one higher by. 2 . Also again. It is interesting watching emergingmarket currencies, a lot of weakness coming through. The vietnamese currency, it is weakening once again. The indonesian rupiah , allhe indian rupee falling as well. The weakness in japanese yen, down. 4 . Is on Dollar Strength. Dollar arge and the barometer we are likely to see the fed increase rates in december, so that is weighing into these emerging markets and the bond space as well. Lets look at the movers, the other big for we have seen in terms of Dollar Strength is gold, and gold has plunged to significantly, the lowest level since february. These are some of the Australian Gold players coming under pressure today. All off by over 2 . If you look at the japanese movers affected by the weaker yen, exporters as you would takata has risen the most since may on speculation that we could see a bidder for the company. Mitsubishi motors doing well on this yen story, so some strength from the carmakers. Casio computer also a standout today. Rishaad thank you. Cpins inflation rate, the index has extended its longest losing streak in five years, the key gauge brought dropping by. 4 in october. To tokyo, what is the broad take away from this data . Can we say anything about the trend . Yes, there was another negative reading for japans inflation index this month, but we can say that things arent getting any worse at least. In fact, economists are saying that the decline in the cpi reading in the downward pressure on prices appears to be oftoming out as the effects Lower Energy Prices fade, but of awaye we remain a long way from the boj 2 inflation goal, and there is a big difference between stopping prices from falling and getting them rising again. It, isnthats just it . What about retailers, any indication of them having Price Expectations changing . Consumer spending remains weak. Consumers are very cautious about spending because they are not seeing significant wage gains, and in light of that, retailers are competing on price. Ister doughnut m and walmart have cut prices in japan, so that is worrying for the boj and part of the challenge for them. Rishaad thank you so much. Elusive 2 that is target set by the bank of japan when it comes to inflation, being far, far away. To india, where the Prime Minister is being criticized by his predecessor whose of the ban on high domination notes will hit gdp. The decision has cause chaos in the country, essentially all payments is Prime Minister Narendra Modi on the back foot here . You bet he is. It was say fascinating day in parliament yesterday. Offensive lead against him and criticized the drive, calling it a monumental mismanagement and organize loot and legalize plunder. He is often softspoken and you dont see this kind of language in parliament, but he believes that there will be a decline of two Percentage Points. He knows a thing or two about currency management. S creates, this political follett that will be seen followup that will be seen in elections in the next couple of months. The outcome will do fine whether it has worked politically or not. Rishaad right, ok, tell me here, what does the government do to reduce the hardship caused well, as much as it is changing that money and having the ability to do so . The exchange of notes is. Oming to an end overthecounter exchange it banks has come to an end, but the government has offered exceptions for farmers and traders. , butan Pay School Fees these are small tweaks. The fact of the matter remains is that there are still people queuing up outside atms. Thanks to not have enough of the new currency, which is causing hardship. The larger question is particular for those citizens who do not have access to a bank , and they are left high and dry with these notes in their hands, what did they do . This is a question the government will need to answer. Rishaad great talking to you. Have a fabulous weekend. Right, we will look at payment of banks and 11 million after admitting to attempted Cartel Conduct. The accc . Is watchdog, cumbersomeis a acronym, but you have to cast your mind back to 2011 in singapore. And anztrader traders communicated an online chat room and talked about the benchmark rate for the Malaysian Ringgit, and they would put in high and low submissions on that rate with a view to manipulating it. And mccoury have taken proceedings on a consensus basis, meaning they agree on the outlined, andave this whole case is reminder that even if youre doing business offshore, the cartel rules still apply to austrian businesses. Andaad so, what do anz mccoury make of all this. Both companies have not responded today. Admitted to 10 instances of attempted Cartel Conduct and will pay a 9 million penalty. Employee atays the the center of this was sacked in 2012 and said Senior Management had no knowledge of what was going on and were not involved and that macquarrie would pay a 6 million fine, but the ultimate penalty will be determined by the federal courts. Very muchhank you indeed for that. Paul allen in sydney. Osun on a global acquisition spree. The companysith founder and chairman about the concerns over leverage and comparisons with Warren Buffett and his Company Berkshire hathaway. I am overrsonal note, 40, but he is over 80. As institutions, we are a younger company, so it is pointless to compare ourselves, however, we can learn from him and look at what he was doing 3040 years ago. Fosun will follow its own strategy one step at a time. You have said you would deleverage in 2016, but by june, we had seen the net debt to equity was higher than december, so my question is, why is that and does it add pressure on the company to spin off some of your assets . With leverage ratios, lower isnt necessarily better. Current levels suit fosun. Our strategy is maintaining reasonable leverage and reducing financing costs and matching assets with liabilities. Our borrowing costs have declined substantially. In terms of liabilities, the proportion of shortterm debt will decrease in a while longterm debt will increase. Divert, we will financing to domestic and overseas markets. We will reach our target of racing our Credit Rating to Investment Grade from the comprehensive efforts i mentioned earlier. To tom talking mackenzie there. Next, a 200 year old auction house looking to boost its presence in the asian art market despite the chinaled slowdown there. We will talk to the chief executive of phillips, coming up. Rishaad a quick check of the latest business flash headlines. Lufthansa chief etc. Forming the airline must face down striking pilots if it is to survive. Hundreds of flights canceled. In, it wouldcaves have no future. Each day of strike is costing more than 10 million. Lufthansa failed to persuade a court to block the action. The biggest version of the airbus 350 has made its flight. It signals the potential death knell for the jumbo jet. It seats 366 passengers, but it has two turbines and composite construction. Twin jets are now the mainstay of longhaul flights. Trip says it is eyeing deals after acquiring u. K. They sky scanner. Executive saying that look for tie ups with other leading companies in the sack her. In the sector. Technology iss more on the front end, search, price comparison. Technology tong fulfill orders for the customers, so combining the strength of the technology, we will be able to offer good product to customers globally. Right, well, lets have a look at the art market. It has faced a challenging year with a slowdown in growth, but auctioneers have found a bright spot. Phillips contemporary art sale is in hong kong, and here to tell us more is edward dolman. What brings you to town and what are you selling . Lets get the pitch out first. Of high Quality Works of art, watches, and jewelry selling over three days at the mandarin hotel. We are excited about it. I have been involved with the development of the art market in hong kong over the last 20 years, and i am excited for phillips here and now for the foreseeable future to play our part in this continued growth story. Rishaad what these are you most excited about here . The fact that we bought western art and our sale on sunday night is two thirds of western art and one third asian art. We are reflecting and feeling the pulse of the new collecting habits of the mainland chinese in particular. Rishaad is there one pc would single out that you are excited about . The one i love is the Roy Lichtenstein. He is one of the Great American artists for the last half of the 20th century. We sold one of his works for over 20 million in new york last week. What we have here is a painting from 1996 in the chinese style. Rishaad you have this diamond ring as well, affected to fetch millions. Is that the Roy Lichtenstein work there . I beg your pardon. When you look at it, 20 million, this one will go between 3 million and 5 million. It is small in essence to the 20 million you got for one. A richter for 26 million, didnt you . So most is centered in the new york market, the center of the art market. 3 Million Dollars to five main dollars is a significant valuation outside of new york. Ago,ad a couple of years it was chinese collectors looking at chinese pieces and bringing them back home. Shift in that. We have seen a fast eva loose in an asian collecting habits over the last five years. A hugely, there was focus on contemporary art out of china and all the collectors when theyre seeking Investment Opportunities and building collections in that area, but they have become increasingly interested in the same works of rest of the world is interested in, Iconic International artists come us a recent contemporary, International Artists is where asian collectors seem to be going right now. Rishaad it seems you might be late in the game because all the other major auction houses have been established. Do you think that is a help or a hindrance . Because phillips is focused on 20th and 21st century art, so we have a fresh dynamic look at the now. We connect with contemporary art collectors, so this is the exact right time rishaad to be arriving in hong kong market. You said you have been looking at the trends, but would you expect to happen next in 2017 . How do you see things evolving . At anare looking inevitable growth story for the art market in this region. Mainland china has transformed the International Art market over the last few years. We think the opportunities are huge. One of the main show holders of sothebys is chinese, so there will obviously be a lot to open up. The promise of the chinese art market, and we want to be part of that. Rishaad thank you for joining us. Edward dolman chairman and chief executive of phillips. We look at how one regional japanese exchanges still putting up a fight. Youre watching bloomberg. Rishaad this is Bloomberg Markets asia. I am rishaad salamat. Looking at what we have in store. We will be talking about japan, another month, another decline when it comes to deflation there. Eight months of declines in the cpi gauge. Pushing higheres for an 11th straight session thanks to the weaker yen. We will talk about all things japan related, and speculation over Donald Trumps likely policy weighing on the yen and Precious Metals, that in pending fed rate hike of driving gold to a ninemonth low. We will look at this story, Narendra Modi undersupply are under fire. On nodes could cut gdp by two Percentage Points. Notes could cut gdp by two percentage is. An exchange fighting for its life in japan. With tokyos increasing exchanges provincial are fighting for scraps. Give us a background here. As you mentioned, it was 1949 in japans postwar, mccarthyled area when they reopened the talk you the Tokyo Stock Exchange and regional exchanges. Height of that boom, 1960, there were eight exchanges , and about 30 of the countrys turnover took place on regional boorses. Ance then, we have seen steady decline, and now 99. 97 of japans trading takes place in tokyo, while only 100 million worth of shares trade elsewhere. Theaad right, what is state of these exchanges now . Gethey are trying to companies to list there. There is a lot of dual listing with the regional exchanges out of tokyo. Has companies that only list on their exchange. The problem is trading is very individualne investor said that when he tries to trade on the exchange, he has to wait hours for his stock to price, and so it is not viable price, and so it is not viable for an institutional investor. Rishaad what is fukuoka doing to combat this decline . They are doing little things. Allowingn 2010 started Foreign Companies to list on their stock exchange, but unfortunately they have not seen anything yet. Another thing they are trying to do is hold the hands of local Small Companies to train them on how to better manage themselves able,ow to become list o which is controversial because you know what companies are out there and others could sweep in. They are holding a lot of investment relations seminars with independent investors to keep them interested in stock trading. Rishaad great talking to you. Have a great weekend. Markets on a tear at the moment. In therate environments u. S. Helping to boost sentiment and this part of the world. Bloomberg markets asia continues after this. Its 11 00 in hong kong, 2 00 p. M. In sydney. We are in the middle of the asian trading day. Welcome to Bloomberg Markets asia. Asianpacific stocks extending their first week of gains since october. Japan is pushing higher for an 11th straight session. For thes cold comfort doj. Inflation remains a distant dream with a 2 target far out of reach. More signs of stability in china. Growth they have even picked up slightly this month. And asia turned up on more passengers and cheaper fuel. Iacks if i were american, would be giving thanks to this dollar rally we are seeing. Exactly, that will help with inflation, pushing up import prices. Not really seeing the impact of this dollar value, we have the peso, of course, and also the rupee seeing record lows all over the place, and then you have the fed in the mix as well. Exactly. Its a difficult time for emerging markets right now. Higheryielding assets not so attractive for investors, but look at what is happening in asia so far. For japan, the nikkei searching for another day, up. 7 . By the dollard value, which is again resuming after a brief pause, and that sending the yen lower, and all with theogether speculation of a fed rate hike coming on very soon in december, so we are seeing Precious Metals losing ground, and gold declining to its lowest level since february, but a different story when it comes to commodities and metals such as copper. Take a look at the big picture right now. Is the dollar against a basket of 10 currencies, which is now in a 10year high and continues to soar. The Commodity Index now at the highest level in a month. All of this because of the fed now 100 chance of a fed rate hike priced in in markets. Lets now get the other headlines across the world. Sophie thanks. China has canceled talks with visitia in protest of a by the dalai lama. The Foreign Ministry says they were to discuss soft loans, plus a new railway, cover loans, and a new rail project, but beijing calls the visit unacceptable. But our says the dalai lama plus visit was religious and nothing to do with the government. Consumer confidence has plunged to its lowest in more than seven years with some of koreas big corporate names dragged into the scandal. The Central Banks measures lower than during last years outbreak. Oil experiencing its second week of gains. Were told the cartel has scheduled meetings ahead of wednesdays summit in vienna tore members will be asked lower output by 900 barrels a day. Iran still insists and wants to previousduction to levels while russia wants to say it wants to freeze output but not cut. Ofrges relate to the setting a benchmark malaysian rate in 2011. The chairman of the Commission Says it involved singapore traders communicating in private chat rooms. Was banks say the rate never successfully manipulated. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. Thanks for that. Aeration shares are rising and could return to profit in the Third Quarter. They were getting a bit of a lift. The region also benefited from lower fuel costs as well as Aircraft Leasing. Our Southeast Asia correspondent has the numbers. Was the quarter for asia . Pop that champagne. Net income 79 million. Up six points from a year ago, a record, by the way, and expect the Fourth Quarter to be even better. Thats what the group ceo says. Yes, oil helped as well. 22 cheaper mostly thanks to fuel expenses. Bullish 2017, plenty of growth, plans to boost inflight Wifi Services, entertainment products. All that means more income. Investors pretty much liking what they hear. If you look at the shares, you can see the optimism of more than 100 year to date. Air asia off to a great and to the year. Its quite interesting if you look at the sort of breakdown, air asia is making more money by leasing out its aircraft, potentially making more money doing that than actual ticket sales. What is going on there . Leasing business is moneymaking. It makes more money for air asia than anything else it does. It has buying power, deep pockets. Air asia among carriers in asia with the biggest plane orders. 575 lanes on order from airbus. About 400 yet to be delivered. Because of that, it has great Bargaining Power when negotiating prices. When it finds itself with too many plays planes on its balance sheet, it leases them, but Tony Fernandes says he may sell the leasing unit. Take a listen. The bank has just made a presentation to our board yesterday. They believe that we will receive bids about december 5, the diligence process will take place and we will see if the right valuations are attractive. We will then selloff the leasing business. I am all about selling off our noncore businesses. The thing is, tony says he would love to keep the business, but shareholders prefer air asia to strictly run an airline business, so that unit may go, though it may sell for a cool, cool 1 billion. Only 1 billion. Thank you so much for that. Japans cpi has extended its longest losing streak in five years with a key gauge of prices all in 0. 4 in october. What is the broad take away from todays numbers . Can we say anything about this trend . It looks like 2 is pretty out there for the boj. Thats right. , asas another down month you said, the eighth consecutive month. If there is any positive news, its that things are not getting any worse. Theact, economists say decline in the cpi reading and the downward pressure on prices appears to be bottoming out now. You can see that in some of the data. I think overall prices rose slightly, 0. 1 , but of course, that is far, far away from the bank of japans goal of 2 . With japan, not just these numbers, is the deflationary mindset. What kind of the haters are we seeing in the micro economy . Is there any expectation of prices changing here . Theres no expectations so far. In fact, Consumer Spending remains weak. People are very cautious about spending. They are not seeing significant wage gains, so they are in a position defensive position in terms of buying right now. We have seen recently some price cutting. Mr. Doughnut and walmart, for example, both cut prices recently. Certainly, that is worrying for the bank of japan and not something they want to see catch on into a broader trend. When you look at the pace of wage increases and also that reluctance for japanese corporates to invest the cash deposit they are sitting on top of, it speaks to the animal spirits failing to be revised. Where does this leave the bank of japan government in this pursuit of not only hitting 2 , but they want to overshoot it. Right. There is, of course, a lot of skepticism about that target. Its about if they can reach that even in the next couple of years. They might get some help on the macro front. The yen has declined quite sharply since Donald Trumps election in the u. S. That will help them in the longer term, as what Higher Energy prices, but again, it comes back to can they convince companies to raise wages . Will consumers start spending again . So far, they have not had a lot of luck with that. Thank you so much for joining us with the latest from japan with its cpi numbers. Thes now checkin on market. Another day of gains. Julia joins us with a look at that function on the bloomberg. , yes, that the asia basket and you can see the japanese yen is leading these declines amongst asian currencies, down by another. 4 against the dollar at the moment, but we are still seeing a lot of pressure coming through in these emergingmarket currencies as well. Indonesias rupee fell to a june low yesterday, also down by another. 1 , and of course, the philippine peso, holding at the asian level since the financial crisis. You are, though, seeing a little bit of upside coming through in both the onshore and offshore renminbi. Was actuallyyuan tried to hit a record low, but we are seeing a little bit of strength coming through at the moment, but really, this dollars story is the main story of the market, so lets have a look at how that is playing into the equity markets. Butn is on its lunch break, we are seeing the index higher for its 11th straight session, the longest run weve seen in Japanese Equities in seven straight months. There has been a little bit of a debt out of chinese equities, so remember also in a bull market dustbowl market territory. Pretty flat coming through in korea. Remember we had a pretty awful session during yesterdays trade, but you are seeing the korean you want a little bit stronger against the dollar as well. Elsewhere, of course, it really is a story about currency markets. We have a look as well at the index a. P. Function on the bloomberg. Maybe we can get that up later, but it is showing this strength coming through in terms of some of these export players, particularly in japan. Let coming through from carmakers, but what were seeing is still this weakness. Thanks for that. Looking ahead to the rest of this hour, the dollar gives Precious Metals silver and gold a beating. We will ask how low gold can go. Next, japan languishes in the inflation doldrums. We discussed that with Lgt Capital Partners coming up. This is bloomberg. Welcome back. A quick check of the latest headlines. Secured 10 ings has of tax group as a secures a takeover deal. Tactical says it into the swap with an Unidentified Investment Bank for about 125 million shares. That will help facilitate the deal announced last month which may not be completed until the middle of next year due to antitrust concerns. An apple supplier in japan may from theferred shares innovation Corporate Network of japan, its largest investor. It needs enormous amounts of oledal to invest in displays for future iphones and other devices. The surrounding area was swamped in a wave of toxic sludge after a mine collapsed. The shortterm Credit Facility will be used to carry out remediation and stabilization work and to support operations. When it comes to what is happening, todays extraordinary markets and the activity we are seeing the moment, we are joined andhe global strategist executive director. Lets start with the yen. This is sort of the blessing in disguise. The governor must be feeling a little bit of relief, but i want to take you into my bloomberg. This chart shows that analysts and japan are not upgrading their profit estimates. Does this speak to a sort of doubt when you talk about animal spirits failing to revive, tying in with companies and their failure to invest . There is a lot of uncertainty. Exactly, and my personal view is that they are wrong and will be proven wrong. It is just so ridiculously wrong, its really sad. Point,get back to your in september, the bank of japan tweaked the policy regime, as you know. They had a bad year with , but they have adjusted that. Actually, that was a low point in the u. S. Dollar versus the yen and also the nikkei. From that day, japan its not only having an effect on the currency, it is also having a very positive effect on the stock market. The market now because of the that event is realizing mr. Corona has installed an automatic yenproducing machine. Basically the bank of japan amounts of yen, which is exactly what you need when you want to reflate the economy. I think he is doing a very good job overall. Well, he has a little bit of luck on his side at the moment. Still, when we talk about japanese yields, the 10year, for example, at the highest since february. How are we positioning ourselves with this change in dynamics in japan . Youre talking about investment implications. What we did, of course, is we continued to reduce our exposure to the yen. Yes, there are some sectors that benefit more from a slightly more inflationary environment like including commodities, but the real big story is that you have a shift in global yield curves higher while japan is keeping it a zero or near zero. It does not matter exactly where it is, which means that alternatively, which is what i said in this program, i hope the bank of japan should act and lower the yield curve further into negative territory. The member are started boring your viewers with that. Now what is happening instead is the global yield curves would hire a little bit, and suddenly, you have plenty of yen coming into the environment. That is the pro se of inflationary cyclical pro inflationary signal you need. I really hope he gets confirmed. Lets break down the cpi numbers we saw today. Take a look at this chart on the bloomberg, and you will see the fresh food surging more than 11 , and we are also seeing a drop in costs dragging down inflation. Overall, though, core cpi is falling on here, so we are talking about the weakening yen, Inflationary Pressures. How much will this help in the next few months when it comes to the core cpi and what doj is trying to do right now . As far as the start of are concerned, a lot of the elements depend on things outside the bank of japans control. Energy prices and things like that. As a firm, we are relatively constructive on energy and that part of the market, but we do not know at the end of the day. What is important is that nominal gdp in japan is growing on average, almost 2 every quarter, so you have a broader level of prices in the economy, not just those reflected in the cpi. They are steadily rising. Before, they were stuck for 20 years. That is a big and important change. The underlying things are ok. The bank of japan has not been super successful over the past year, and i think that is the general feeling, but we should not exaggerate on the negative side. Overall, policy is going in the right direction. You always have something optimistic to say when it comes to japanese policies. We will hear more from you about not just japan but overall what trump is doing to asia equity markets and so on in the group discussion. Thank you for joining us. , coming under fire. We will be going to mumbai after this very short break. Back. Come this is Bloomberg Markets asia. The indian Prime Minister is being criticized by his predecessor who says the controversial ban on high denomination notes will hit gdp. Decision caused chaos in a country where virtually all transactions are done in cash. Is he on the back foot now politically with these comments coming through from the pnc . Yes, there has been quite a. Ramatic turn of events the Prime Minister led the ,ffensive for the congress particularly criticizing the demoralization drive. He called it a monumental mismanagement. Recall called it organized loot and legalized plunder. Believe gdp will decline by about two Percentage Points thanks to this move. This has caused quite a bit of controversy. This is also the first time in the last two and a half years you are seeing everybody ganging up against b thejp, against the demoralization drive. If it backfires politically will not depends on the upcoming state elections. If the Prime Ministers message is translating into political dividends or not, we will have to wait and watch. We are looking at video ,ootage of these endless queues a chaotic situation in india. What is the government doing to reduce hardship . A bunch of things they have already announced a bunch of exemptions for farmers and small traders. But these are minor tweaks. The fact of the matter remains that banks have stopped. Xchanging this continues to create distress for people, particularly people in a large section of india that do not have access to bank accounts. Remember, there is anger on the streets and you are absolutely right. The long queues outside bank are and Bank Branches causing a lot of distress. It remains to be seen what relief measures will be announced by the government in the next few days. Thanks for that. Take a look at the afternoon trading in tokyo. There looking at games on back of that weaker yen. In hong kong a. M. And 12 29 p. M. In tokyo. Heres the latest verse word news. Japans Consumer Prices fell four and eight straight month in october underlying how distant remains, the longest streak of declines in five years. Consumer prices including fresh a yearlp. 4 from earlier. Policymakers struggling to break a cycle being enforced by poor wage gain and negative Consumer Sentiment. The manufacturing gauge based on satellite imagery jumped to a fiveyear high. Large companies are more confident and manufacturers are booking more orders after a holiday dip, but small and mediumsized firms are less optimistic because of real estate firms and cuts to capacity. The air asia group ceo says the carrier still has plenty of potential including the expansion of its india unit and a plan january launch in japan. He says he is still aiming to setting offlion by its rental business. News 24 hours a day powered by more than 2600 journalists and analysts more than 120 countries, this is bloomberg. Thank you so much for that. We have to talk about the rally in japan right now. Seven consecutive sessions of entering now just overbought territory. A lot of this on the back of this weaker yen. Up. Ysts revising take a look at this chart on my bloomberg. We went into negative rates and subsequently,e driven by financials and banks in so much pain. And another leg down because of the brexit. Huge challenge within the weakening yen boosting the nikkei 225. This sort ofe kneejerk reaction. We thought that sort of pain would hold a little longer, but take a look at the rally we have seen. Heading into overbought territory. We could finish the year on a positive note. Ares see what the markets reopening here, what japan looks like. Here is juliet. As you say, we are focusing on the continued strength you see coming through in the nikkei. I want to look at stocks coming back after that lunch break, that have been on a bit of a tear today. This is on reports that it is very close to restructuring deals. You see a lot of strength coming through, and also carmakers in japan getting a very strong leg pack. Tsubishi leading the Trading Volume has actually tripled today. Strong dollarthis and weaker gold. Gold industrial you getting quite a bit of a hammering today. Passed largest gold producer up by about 2 in late all thea trade and others coming under pressure as well. You can see that weakness. This is what the overall picture looks like on that index. You are seeing securities higher by about. 5 . This will send the regional index on track for a weekly game, what will be its first weekly game that we have seen in a month. Thate seeing very close to overbought territory, really leading these gains, but Consumer Discretionary stocks also very strong, particularly in hong kong, casino players and retailers on quite a bit of a tear this week. Materials stocks getting a very solid boost on the back of that big valley we are seeing coming through in copper and you even see defensive stocks being welded today as well. Energy stocks still doing very well. Quickly showing you what the indices are actually doing you at the moment, if you go to your weei three, this will show you. Ll the asian markets trading of weakness coming through in some of these emerging markets as well. The Dollar Strength playing into emerging market currencies. Thank you very much. What is moving in asia right now. Precious metals coming under increasing pressure. What is pushing gold down at the moment . Gold, as you said, is at a ninemonth low, and its heading to the biggest monthly declines since june 2013, and that is such a change from how gold performed in the first half of 25 , so when it was up what has changed . Basically, now investors are looking at a 100 chance of the fed raising rates. Hasprospect of higher rates propelled the dollar, and we know that gold has an inverse relationship to the dollar. When donald trump won the election, people expected gold to rally on the back of uncertainty, but instead, it slumped. Some billionaire investor sold all their gold on the night of the election. Basically, there has been a huge selloff in goldbacked etfs. The dollars the main driver for gold prices right now and we expect a stronger dollar in coming months. Does that mean gold will keep losing ground, or could the safe haven characteristic of gold be a savior . It depends on who you speak to. People likeou have the secondbest top forecaster for the Third Quarter saying tot basically gold will fall 1100 an ounce on the back of higher rates and the stronger dollar. She also said that basically, there is little reason for people to hold gold from an investor viewpoint. Goldman sachs also cut its three and sixmonth outlook for gold. On the other hand, you have trumpshinking that agenda may help spur inflation. Gold as ators see hedge against inflation, so that could be positive for gold. Thank you so much for joining us. Early indicators for november pickup a slight potentially in some of these areas of the economy. What are these early indicators telling us . Early indicators before even the end of the month, we are getting signs that the economy has stabilized. There is steady progress and in some areas, even some strength. We have seen some strength in steel and at some of these larger stateof companies as well. Lets go through some of these charts that show some of these earlier indicators. No franciscobased space rising to a fiveyear high. Uses commercial satellite imagery to monitor activity across thousands of Industrial Facilities in china, good indication on the right side of the screen. The chart is a little bit misleading. It is a fiveyear high, even though we are clipped off a little bit on the right here. Trust me, i went back and look at all the data. The reading above 50 indicates expansion, just like those pmis. We can also go into the bloomberg terminal and see also the stabilization in the market news international. China Business Sentiment indicator. We can go to the terminal here on heidis computer and see that to 53 point one from 52. 2 in october. That is based on surveys of , some of the larger stateowned enterprises. We can take some minutia here and extrapolate and say stabilization was a plus to the upside. Always a bit of reading tea leaves when we look at china data, but when we look at pmi, we look at two sets. These smaller, midsize private companies, official stateowned companies, so how are the small guys doing . You can look at the economy in the big and the small. If we want to look at small and Mediumsized Enterprises, theyre doing ok, but in the worried. Tors, theyre they are worried about a trade war potentially with the United States and the whole state of play on a global trade. Quickly, the standard chart from 55ce index falling to 56. 1, so there is a little bit of weakness in expectations. Current climate they say is ok, unchanged, but expectations dipping. I imagine i could take a big leg down. Because atay in china country conglomerate has been on a global acquisition spree. Tom mackenzie spoke to the Company Founder and chairman ledgeshe concerns over and also comparisons to Berkshire Hathaway as well. Im overersonal note, 40, but he is over 80. We are a much younger company, so it is pointless to compare ourselves. However, we can learn from him and look at what he was doing 30. R 40 years ago 2016 has also been a year where folks have said you will deleverage in 2016, but by june, we had seen the net debt to equity was actually higher than it was in december, so my question is why is that, and does it add pressure on the company to spin off some of your assets . With leverage ratios, lower is not necessarily better. Our overall strategy is maintaining reasonable leverage while reducing financing costs and matching the duration of our assets with our liabilities. Our borrowing costs have declined substantially compared to the last year. In terms of liabilities, the proportion of shortterm debt will decrease while longterm debt will increase. Third, we will diversify financing to both domestic and overseas markets. We will reach our target of raising our Credit Rating to Investment Grade from the comprehensive efforts i mentioned earlier. Andhat was the chairman founder speaking to our tom mackenzie. We have been joined by some leading ceos today talking about profits and future strategies. The head of see tripp told us the Online Travel company is already looking for more acquisitions. Be focused on travelrelated business. Second, we only look at the leaders in each vertical, and were only interested in investing in number one or number two in each vertical. The third is the valuation also needs to be reasonable. Going forward, the investment we are looking at will enable us to expand our business line or our product coverage quickly. That deal would buy sky scanner for 1. 7 million. Another trying to Grow Business in asia is the are dealing world. The asia president told us she is optimistic about finding buyers on the mainland, too. We just started in china one or two years ago, and the opportunities in china have been growing so much. We set up our wholly owned into prices in shanghai and started auctioning shanghai three years ago. We just open our new beijing office. We see big potential for us in the future and china is very promising. Another auctioneer betting on asian interest is phyllis, staging its inaugural 20th century and contemporary art sale in hong kong. The chairman and ceo told us how collective habits are changing. Fast evolution in asias collecting habits over the last five years, really, so that initially, there was a huge focus on contemporary art out of seeking Investment Opportunities and building collections in that area, but they have come increasingly interested, in great iconic works of International Artists that represent the moment we are in. And that is the word from asia. Perfect time to get your Christmas Shopping done. Also coming up, how what Investment Firm Sees Opportunities emerging in this post election environment. More from Lgt Capital Partners next. This is bloomberg. Welcome back. This is Bloomberg Markets asia. Latestick check of the headlines. Vietnamese brewers share press new a quadrupling within a month. It reach the equivalent of six dollars 40 recently having debuted on october 28 at just one dollar 70. In august, the vietnamese toernment said it wanted sell and was aiming for 400 million. Hundreds of flights have been canceled as industrial action extends into a fourth the day. Says each day of strike is costing more than 10 million. The first airbus a350 has made its successful flight, signaling the success of the twinengine jumbo jet. It seats 356 passengers, 44 competitor, but it scores higher on fuel consumption. Welcome back. We have to talk about the Trump Victory in the u. S. Elections. We have to talk about the death of the tpp, which is also a geopolitical deal. Is trump has election victory net positive or negative for, say, japan . The tpp was huge for them. Or is opportunity in every crisis, so i do not know what the longterm will bring. For the shortterm, i think it is net positive at the end of the day because of far more important term selection, not because of whatever mr. Trump is, but because of the effect it has had on markets. It is priced in a more inflationary, may be related to protectionism, but at the end of the day, we have slightly more aowth and more inflation on global scale, which, of course, is very good for japan. That said, the jury is out on what it will mean. Symbolically, are we talking a shift to asia and china will be able to step in . Yes, but i think it is still early days. I have no idea how credible it is, but there is speculation that evoke a trump ivanka trump will be nominated ambassador to japan. Obviously, trump wants to signal that japan remains or is a key ally in the asiapacific, so i would not call it the end of days. I think also japan has some negotiating position over the tpp because it is actually very in favor of u. S. Interests, and im sure certain agreements can be changed further up necessary, but from japans perspective, it is very important that we keep this prowestern oriented trade it is democracy over the asiapacific. The u. S. , canada, mexico, so the americas basically japan and new zealand. Asianis the only major economy there. It is very important for the u. S. , and for japan, of course, but also the u. S. More of as there threat, instead of just scrapping tpp or the u. S. Involvement, is the bigger threat trumps pledges to put the tariff on chinese imports and the impending trade war, also labeling china a currency manipulator . Absolutely. That goes without saying in my way of thinking. Imposing tariffs on countries with which you are trading most, where most of the exports go, is not a good idea. Of the countrys mr. Trump mentioned most often china, mexico, and i forgot the third one, i must admit, but im sure there is one they are also the biggest export destinations for u. S. Companies, so lets see what will actually happen. I understand there is a negotiating position going on and there are some legitimate interest the u. S. Might want to tweak further in its favor. You can be happy or unhappy about that, but that is not a completely rational way to act. When yourket reaction, say that the selloff was possibly overdone, and you use it to buy a gift, but we do have analysts saying there is more pain ahead for markets. What do you see a head . There are obviously some cases which need further attention. India has this cash replacement deal going on. Same for all emerging markets, but overall, emerging markets are very sensitive to what is going on in the commodities space. It looks like the commodities space is bottoming in terms of price. That also has to do with the fiscal and monetary environment we are in. Even with a stronger dollar, i think most emerging markets will actually do fine. Im not that skeptical. How do you play currencies . A littlecies may need bit of caution for now in the emerging space. There may be more on the upside for the u. S. Dollar, but i think post the fed decision in a couple of weeks, we will get a better idea where the fed really wants to take its Monetary Policy. This hike is pretty much factored in. It is about what they will communicate Going Forward. The important thing is trumps or the market hopes about what he will do on the fiscal side especially, is very to the fed. We will have to wait and see. Up next, here comes black friday. The annual u. S. Shopping frenzy gets under way later today. It will be tough to beat amazon. Com. 55 of americans surveyed by cantor retail say they plan to shop on the worlds biggest ecommerce site for Holiday Gifts up from 41 just eat of years ago. Above that fray, it is expected to be a good retail year for the u. S. , and retailers could very well be in the black, hence black friday. The National Retail federation has predicted year on year sales growth of three point x percent to a record 665. 8 billion dollars, and its even better news or online retailers. They could see a jump of 7 in sales. This is being helped by Interest Rates, if layton, and unemployment that are all about as low as economists could hope, a situation being dubbed the goldilocks economy. This is the american shopping extravaganza. If you look at the numbers, is a sort of a dilution of its noon here in hong kong. Heres an update on the top stories. Japans Consumer Price is falling for an eighth month as a remains everflag out of reach. Its the longest streak of years. S in five fell 4 10 of 1 four years ago. Well, early indicators say chinas economy remains steady this month. Manufacturing gauge based on satellite imagery jumped to a fiveyear high with Large Companies more company. Mediumsizedl and firms are less optimistic