Transcripts For BLOOMBERG Bloomberg Markets Asia 20161230

Just a little ways from the open here in hong kong and shanghai. A bit of positivity for singapore. Whats the mood like . Have one market that is already closed, new zealand. Volumes are quite thin. Theres not a lot of appetite to take big bets ahead of the new year. Have a look at new zealand. Extremes,ot of especially across assets, if you will, in the past several weeks. We scaled back from those extremes when you look at gold, which fell to a 10 month low. It has recovered quite a bit. In australia, gold miners are on the way out. Its close for the day. It is clocked in. Its fifth straight annual gains. That market is quiet and we dont talk about it a lot because it is quite small. A nice rally the past 15 years. 11 of the past 15 years, we have seen markets here at five straight into this year. Australia has a short trading session p. M. Korea is already closed for the year. South korea just managing to buck the trend. Overall in east asia, the second year of gains in south korea. The nikkei 225,. 7 . Topics that the the topix is clocking in its first loss since abenomics. Have a look at taiwan. We are up 10 for that market. , retracing some of these extremes. To 47. Year yields back 2. 47. Japan is well anchored at these asset levels. Let me end with a look at oil, which is continuing to hit extremes. Course, thatof opec a nonopec producers deliver as promised. 53. 54 for all intents and purposes. Story. The other market verylizing after that eventful trading day. We do know its not driven by any sort of specific news. Watch out 2017. Algos, man versus machine. Donald trump saying it is time for the United States to move on after president obama punished russia for its hacking and the in the president ial election. Moscow responding that it will respond in kind. Russian sanctions, no he released fbi evidence. Those are main actions that president barack obama mentioned. Obama saident, mr. All americans should be alarmed by russias actions. The data theft and disclosure activities could only have been directed by the highest levels of the russian government. Chris pratt, russia has chris for its part, russia has denied any involvement. Experts have linked to the gr you to the hacking of the Democratic National committee. The have also linked Successor Agency to the kgb. Operatives working under diplomatic cover to compounds in new york and maryland will be shot. Department of Homeland Security also released a report with evidence intended to prove that russia was in fact behind the hacking. In the meantime, congressional leaders reacted quickly with Chuck Schumer tweeting we need to punch back and punch back hard. Paul ryan praise to the president upon his actions and senator john mccain said the andres are long overdue at stronger sanctions are still needed. Four hours after president obama announced sanctions, president elect donald trump released his own statement. He said its time for our country to move on to bigger and Better Things. Nevertheless, in the interest of our country and his great people, i will meet with leaders of the Intelligence Community next week to be updated on the facts of the situation. A kremlin spokesman did note that mr. Trump will be president in just three weeks. But a white house official says he could reverse president obamas executive action, but he may not want to let russian spies to come back to the note states. To the United States. Rishaad first word news headlines. Data recorders on the airplane that crashed into the black sea have no evidence of an explosion. It crashed soon after leaving sochi on sunday. 92 people were killed. China is pledging more proactive fiscal policy to tackle local government risk and to defuse risk. The ministry is saying that china must assess its difficulties and protect itself from domestic and international hazards. The bank of japan governor has admitted japan is in no condition to say it has escaped to deflation or that it can reach 2 inflation. Canda said policymakers relax some unknowing that the surge has been corrected. The European Commission approved moneyme request to borrow. Our opinion nomura has cut hundreds of jobs in the last few monster. Japans biggest brokerage is not done yet. Announced a new plan to improve efficiency and bring costs down. How much more can he take the knife to hear . To here . Is about cutting waste and improving productivity throughout the organization. Previous costcutting rounds were focused on job cuts. This time, he is looking at costeffectiveness of everything the people do. The project waterline can it is like a big ship that has its called the project waterline. It is like a big ship that has excess baggage. What they do every day at the office. They will be looking at administers, tasks, meetings, emails, all the source of things that could get in the way of productivity, starting right at the top with executives and how much work they create for their subordinates. Once the review is done, the company has to estimate how much money they can save from this initiative. How does this differ from their previous costcutting efforts . Russell the Lehman Brothers board inherited some hefty personnel costs. This is quite different. This is more about efficiency throughout the organization. Most recently, they cut 900 thele in europe and americans to save 700 million this fiscal year. A look says this this is starting it looks as if this is helping to become more profitable. To be profitable outside of japan for the first time in two years. Cuts, now theyst are eking out savings from everyday tasks that employees do on the job. Rishaad thank you very much. Still ahead, super mario is said. O hop onto Android Devices i minutes of trading, eking out a small gain. Nikkei on the way down. Itsext guest says that time to take profit now that the trump rally is phasing out. The reflation has been driving the market thus far, so i the prospect of it. Thisre suggesting that market is fizzling out. Can say that the Economic Activities are improving. The u. S. Economy is operating at full capacity. And inflation is increasing across the board. And inflation is going to be a big thing for 2017. Does this also mean that the centrality, the importance of Central Banks in politics and economics in countries will receive as a result of this . We are moving from monetary to more fiscal orientated reform. I think him a the past six years, we have lived in a steady and slow and predictable growth. Whenever growth falters, banks would come in and backstop any risks. Monetary policy is losing its effectiveness. With trump, we can see the fiscal policy and the regular real tory changes will be taking center stage. That will be a big change for 2017. A little bit more uncertainty. Policy is this unstable pendulum that could be potentially good. It could be potentially bad. If he goes with the regulars in, that will be good for markets. But antiimmigration would be bad for markets. Will be affected by economic outcomes. It his higher uncertainty for investment returns. Rishaad does the bond market comeback . We see a little bit of bond yields backing down slightly. Generally, our call has been a bigion is one to be theme for 2017. We have been urging investors to reduce bond duration. At the same time, we urge investors to gain instant exposures to inflation rate bonds. Do you think that theres going to be more uncertainty looking ahead as well . What does that mean for returns . In terms of returns, you can expect a wider range of returns. In the emerging bond market, i think you can expect lower returns. 2016 has been a very good year for emerging market bonds. Highyield bonds returned more than 15 of our. For 2017, it is unrealistic to expect such total returns. Its likely to be a coupon clipping year. Are selective opportunities in the emerging market bond space, particularly some of the regions in central europe, eastern europe, even africa. I think those regions look exciting to us. Be moreographies will shield from trump policies. Theaad does it result in donald strength the Dollar Strength continuing . I think the Dollar Strength looks to be fizzling out against the major currencies like the euro and the japanese yen. The Dollar Strength can continue , especially emerging market asian currencies. Cost anti goes on his i think the dollar can continue to strengthen against rging markets and agent and asian currencies and 2017. Rishaad you highlighted some stocks you like. Would you like to go through some of them . I think 2017 will be a year in which you dont chase the broad market rally. You have to be more specific in your investments, bits specific sectors and specific stocks and physical trust. In that respect, we like u. S. Banks because they will beth and that benefit from a steepening of the you got. Particularly, we like the regional banks in the United States. We also like the u. S. Welker sector because donald trump will reforms. Ggressive on u. S. Health care looks exciting for next year. At the same time, we also like u. S. Discretionary, consumer spending. That sector will do well if the tax cuts come in and if the wages continue to hold up. I think these are the very exciting sectors for next year. Rishaad have a good one. It dropped as much as a quarter one person, widening its discount to the onshore rate in over two weeks. Southeast asias bestperforming stock is expecting a running here in the new year. Shares are more than triple this year. You see the stock increasing. It is the highest price since may 2012. Also benefiting from the election of donald trump. Death by overworked is looking for ways to give employees a break. The campaign is scheduled to start in february. Typically use just half of their annual paid leave. Coming up, the clock is ticking on indias rupee. We will assess the impact of rural next. Lenders have risen to dangerous levels. Total nonperforming loans are expected to rise even further by the end of this fiscal year. Weakness in the indian Banking System would deal a blow to raisera modis attempt to credit loans from a near twodecade low. Lets talk about indians having to deposit the official window closes today. Its been chaotic since this came in. This is the last day. 50 days was given for people to deposit their old notes, one thousands, 500s and swap them for new years for new ones. People jostling at banks, trying to change the money. Mrs. In a country where catches getting this is in a country where cash is king. Transactions go noted because it is all cash. Talking about illegal activities , corruption, for example. The black economy is often said to be bigger than the real economy in india. Courted cash back into the system then that will give the economy a boost. In the longterm, Digital Payments will help to ensure compliance and cleaning up the economy. There is a big move to transfer people away from cash because it is easier to keep track of things when they are electronically accounted for. However, it has attracted a lot of criticism. Currency availability will improve in the coming weeks. Rishaad he was surprised by how orderly things were generally speaking when it came to exchanging this money. The thing is, a lot of people are not happy about it, but not blaming modi particularly. Things havent been to bed. There are people who are supporting him. People in the queue saying they targeting unaccounted wealth, but see what people really have to say about the big selections when the come along. That would be considered a referendum in a way on the danone at his asian policy. This already seen how drive has ashley impacted the economy. They forecast for october, november, december had to be revised down. We are hearing stories about farmers who cant sell. These effects have been taking place. Modi is expected to talk about incoming plans. Rishaad thank you. Record 392 gains. Rishaad lets have a look at the first word headlines. Move saying it is time to on to bigger and Better Things after the u. S. Punished rush for hacking the u. S. President ial election. The president elect says he will meet with intelligence officials next week during russia rejects the accusation and says it has no choice but to respond in kind. North Korean Leader kim jongun is said to have executed 140 official since he came to power in 2011. He says he ordered their deaths for disagreeing with him or failing to implement his policies. The total number of those executed is put at 340. Oil is heading for its first annual gain in three years. Crude also seeing its biggest for your rise since 2009. Thats despite your stockpiles being at their highest levels. Japanese Prime Minister shinzo abe public approval raising since is visit the pearl harbor. It a 4 of respondents agreed with the decision to visit pearl 94 of respondents agreed with the decision to visit pearl harbor. Weve got the Hong Kong Open upon us. David when you look at these markets, you look back and its really been quite a year. Hong kong 2015 and 2016, we are looking at a second straight loss. If we do rally about 100 points, we managed to get our heads above water. For 4 10 of 1 for shanghai. Oil hitting and you 2016 high. 12 months year to date, where are we . Shanghai deposit down 13 for the year. Hence saying index, here we go the hang seng index, here we go. Maybe about a hundred, 120 points. It does manage to get above water. Also watching a lot of these casino players. Mgm one of the better performers in the space. Its been quite a year. January 1, thats what the new data comes out of macau on the gaming intake. We are expecting roughly a 9 increase year on year. Another group of socks we are watching, ipos in china trading. We have to on the mainland. One in hong kong. Which onesf obvious are those listed on the chinese mainland and which one is a really is having a really good session here in hong kong. Weve been checking these guys a reasonable day. My dont even know what these companies theres not anything against the companies. Thats exactly what we seen every single day. 2016 was another ipo extravaganza in china. Sherry has details on how much we are talking about here. The surges we have our mind line. Yes. the best return weve seen since 1994. You can see that the only comparable year was last year, 290 gain in the first month. No ipos in 2013. Trying to impose a moratorium. Iposan see the number of in green. More than 200 Companies Going public this year since 2011. Rishaad wise demand so high or priced ridiculously low . Its a little bit of both. A weak market, the shanghai composite dropping 13 this year. Shares are very tractive. But as you said, they are rice very low because we have seen guidance withtory the evaluation limits 23 times earnings. So they have to list their shoulders their shares at levels below their peers. Rishaad people must be turned to buy their arm off over one of the stocks. Shery like winning a lottery. The odds are one and 2500. So we have these new regulations one in 2500. So we have these new regulations. To 0. 04 percent. Thank you for a much. Lets take a look at what is going on in the world. The automotive world. The wesley the worlds leading carmakers are in a battle to find buyers and talent. Manufacturers, especially japanese ones, are finding a hard to attract i. T. Experts. Of thigngs are they doing to deal with this . 2016 was a race to hire i. T. Talent because of the race to autonomous cars. There is a war in hiring i. T. Talents. Announced it will tech talent. Offer a moreg to for theiralary system ai. Rishaad the thing is, either things get better get worse before they get better. Are they searching for the right people for the job . Thecomposition competition for hiring i. T. Individuals is already hard. It is probably going to get tougher Going Forward. The Auto Industry want i. T. Talent. Almost every industry moving into iot want the same type of skill sets. We are really in the age for connectivity and for ai. Japanese auto makers want to lead the automotive industry, they have to find a way to cope in japan. Alreadyy leads in a shortage of i. T. Talent. Echoad thats the speaker. A lucrativeeres market for it. Betting big on the success of virtual assistants that response with commands. It started with amazons surprise hit, the echo. Championshipsmany has dan renault wondering . Zero championships. Well played, murray know. Amazon sold more than 3 million devices. And it was cheap, selling for 180 a pop. But the real payoff was in amazons core ecommerce business. They think it is one of the faster growing businesses for amazon. It adds into the ecosystem that amazon has, where they already have a lot of traffic coming to their website and but this is a chance for amazon to grab the traffic, which is not online. Owners are spending 10 more time on amazon. Com after buying the smart speaker. And amazon stock popped more than 70 since the echo came out in the u. S. So as no surprise google wanted in on the action. Credit to the team at amazon for creating a lot of excitement in the space. About our thinking own approach. That was google home. With theth elephant in the room. Tois use has been limited the iphone. Owners of smartphone use it on a weekly basis. Apple would be insane not to get out there with a similar product. Back in september, bloomberg reported that apple is pushing ahead with an a costyle competitor. With an echostyle competitor. Rishaad december is shaping up month. Intendos worst that is despite to the release of super mario run, the smartphone game that was supposed to jumpstart growth. Super mario won in many super mario 1 was a gamble. They priced it in a an interesting way. It is not a premium game. Nintendo almost treated this like a conslole game. Unlock all th0 to e levels of the game. Price. E balking at the it looks like you can finish the game relatively quickly, in about an hour or so. People are not responding well. It was a risk. Best gamble nintendo could have taken. But we will have to see. Super mario brother is a beloved game for the maker. And hes got longevity. Things will pick up and we will see how things go. Rishaad even so, why would this and why would this disappoint investors ultimately . Back over the summer, we had go. Mon meant to do was avoid involved in that, but it was, as we know, a breakaway hit. That really did raise expectations for super mario run. Especially since it was nintendos first fully developed smartphone game. Thats philosophy had always been to marry the hardware and the software together. Felt byppointment was investors who were hoping for a nice sales bump. 12 decline. For a rishaad the point is it is not available on android. What is nintendo planning . We week, they started taking preorders for the android version. That is sure to deliver someone numbers, some opportunities to see whether this is my to succeed or not. Thatave to remember nintendo is going to release a brandnew console in march. Details will start to come out in january at a preliminary event aired event. This switch did not excite , typically ae nintendo, the unusual format have a machine that behaves as a tablet and a console. Nintendo has two of its own smartphone games coming out by march. Well have to look at those to see how well it is navigating in this shift in its strategy, all while a looming console debut is coming upon us. Info along the hall despite the slowdown in growth. After the china stock market meltdown in 2015, it switched problems with the debt the chinese a cut with the debt. It is the second largest economy in the world. They grew last year at 6. 9 . Whether that is exec writer not . Exactly right or not. The Third Largest economy in the world is japan and has negative growth. The largest is the u. S. With 2 . So i will take six plus percent any day. Iscentagewise, yes, it absolute dollars. China accounts for 35 of global growth. Former Fitch Ratings analysts says the debt problem at the banks is far worse than anyone is reporting, upwards of 22 of outstanding credit in the chinese Banking System will go nonperforming by the end of the year, needing trillions of dollars of bailout. Closer big numbers. The chinese economy is a complex , in our lesley complicated said of things going on, moving from an exportled economy to a domestic demand economy, moving from a consumer savings economy to an expert economy. Are tremendousks earnings engines at the same time. Joint venture,3 the maximum allowed. Would you ever consider given the complexities in this market going it alone, if they were to raise that ceiling, to allow you to have 100 . Or is the joint Venture Partnership the best way to go . You have to live in the world as it is. We like to own and control the bills is the businesses we have in the world. You get the advantage of the local expertise. Its been a Great Partnership for Morgan Stanley. What would be your expansion or headcount plans for asia . Where are you looking to grow . Asia has been on the back foot the last year or two. With rates rising, you will see further liquidity coming out of the markets. There isure accelerated growth in asia relative to what is going on in the u. S. With that said, we are longterm buyers, if you will, of china. We have a terminus operation here in china and across hong kong and the rest of the region. So Morgan Stanley is here to stay. Gc project streamlining where youre bringing costs out of the entire system globally . How do you see that affecting asia where 15 globally you have cut in 2015 . Project streamlined was born in the simple premise that we are a much less complicated company than the one that we were during the financial crisis and turns of business structure. Shut our hedge fund. Purchase. Ted weve made tremendous changes. But area for a structure has not reflected that. Project streamlined to say things like, look at all of our legal entities around the world. How do we simply by that . So we run as a more efficient and noble institution. There have been reports that physicians are being transitioned out of higher cost areas. Is it something your costly doing right now . Thats true. But its not just about cost. We have offshore facilities and budapest, glasgow and then laurentian highend in various u. S. , where we do a lot of our processing, our Technology Support services. We are constantly moving people around. But we still got them and continue to have a very significant workforce within china itself. Gorman speaking to steve engle in beijing. The richest people making a little extra this year. We will show you the money. Rishaad 2016 is the year the populism rish shaved the political system across the globe. Tell us about the big winners here. Good morning. You are right. The biggest winners this year were american. For of the five good a skin is of the year are americans. The biggest gainer is warren buffett. He added about 11 billion to his fortune. Bill gates added 9 billion to his wealth. Fortune has passed the 90 billion mark. The only nonamerican is bernard arnold. This,d just looking at we have jeff bezos is one of the losers. Whos been losing . Losers the big gently. Hinas one he lost 6 billion in 2016. He used to be chinas biggest best richest person. But he has been overtaken by alibaba jack ma. Rishaad tell us about the key themes involved here. Mentioned technology. Technology billionaires have made strong gains this year in spite of the worries that a Trump Presidency might introduce policy that might hurt their business. On the flipside, Wealth Creation in china turned negative for the First Time Since we started tracking wealthy people. Chinas richest lost about 11 billion in 2016. That is also partly because the yuan the client against the u. S. Dollar. Rishaad thanks. Come. S more to a full market roundup at the top of the hour. This is Bloomberg Markets asia. Almost 10 00 a. M. In singapore, 1 00 p. M. In sydney, and 9 00 p. M. In the evening in new york city. I am rishaad salamat. This is Bloomberg Markets asia. Rishaad japanese stocks falling on the last trading day of the 2016. Big winnerdays for the best today performance since listing. I coast the cold war, obama punishing russia for hacking the election. Moscow says it will strike back. Straight to the market action, a mixed bag, Hong Kong Opened higher, the case still. Nikkei on the way down. Jakarta getting underway. Here is sophie. I want to check on the currency space, the dollaryuan, to 6. 9310, this as the pboc set the fixing stronger versus yesterday. Just to mention here, china will change up the yuan trade addingd basket by a 11 more currencies. Against theging greenback. Markets are thin going into the new year holiday, we will have more ahead for the euro later in the show. Third dayimbing for a against the dollar, the Options Market showing a pickup in bets on further yen strengthening. As we have noted, governor kuroda saying policymakers can relax here. Looking at the equity markets, a mixed bag, and in the southeast asia, some buying action some sailing in the new Zealand Space buying action, some selling in the new Zealand Space. Oil set for the first annual gain in three years. Lossinggit, Fourth Annual in a row. That is the picture so far today. Rishaad nice one, sophie. Sophie kamaruddin n there. David the Obama Administration punish russia for allegedly hacking the president ial expelling 35 officials. The president elected said he will meet with intelligence officials next week. Russia rejects the accusations and says that had no choice but to respond in kind. Is heading for its first annual gain in three years ahead of Global Production cuts. Geste to seeing its big fullyear rise since 2009. Opec and 11 independent producers have agreed to cut starting output from this coming sunday. The boj governor has admitted tot japan is in no condition reach 2 inflation targets. Governor kuroda said policymakers cannot relax and confirmed the yen strength is being corrected. He does remain optimistic, saying japan and other economies are entering an upbeat and favorable time. Banca monte dei paschi di siena to the tune of 9 billion. Eu rules say banks with a capital shortfall are not allowed to benefit. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Rishaad asian Foreign Exchange, big jump in the euro against the dollar driven by a surge of algorithmic by orders. David, how much was that thin liquidity a factor in this fight with the euro and the yen, i think. And the yen did spike. The timing could not have been liquidity, a thin liquid day, but the timing happen just as america is closing and asia begins trading. It was like 7 40 a. M. Hong kong time, thin liquidity, so when the trades kicked in, it was the worst of both worlds, big orders, a vacuum developed, hence a huge spike. If this had happened one hour or two years later, it may not have been such striking moves. Have euro options expiring today, likely to be one of the dominant tears, isnt it . Absolutely, if you are an options trader, options expiring 104 andnd the euro at 105. Your grandma exposure is very high. You dont want any movement at all. You want the market to sit still and do nothing. If you have to hedge it, you hedge it the wrong way. As a rallys high, you have to buy it back. Fight has crossed them within a matter of a few minutes. Vice a versa comey have to be gamma, then you have a little bonus. Rishaad we have seen that yen come back. At what level do authorities in japan get touchy about how high it goes. We were at 100 earlier this year . It has been a wild ride for the yen, 120, 100, and now where we started at 117. We have always said we dont target a level. 2015u think back to summer when it started reaching levels of 125 against the dollar, suddenly the rhetoric did change. Ifwill be interesting to see as that progress is next year, if it does reach those levels again, do we have the rhetoric changing again that the yen may have gone too far as far as the boj is concerned. Rishaad thanks a lot for that. We will continue that look at the currency markets and the dollar and what it may will do and its impact in this part of the world. Analyst witheap standard chartered, where dollars the dollar go in the next six months or so . Be athink it will still story of relative Dollar Strength once we get back to more liquid markets again. Today, i would not read anything meaningful into those moves we had. What we will see next year is the focus on policy divergence yet again. People will still be excited about the fiscal policy stimulus that will eventually be rising arriving in the u. S. , and the policyy pilots reacting to that and inflation expectations, and that will be a divergence between the euro area or japan, while there is no more easing coming, the boj has the 10 yearpegged jgb yield around zero, while u. S. Treasury yields continue higher. Rishaad in the, as the spread gets wider, it has implications. At what point does the spread look to wide to you . Have had some major moves already. Been more violent than we saw in the taper tantrum in 2013. We can see u. S. Treasury yields as high as 3 , so while we are heading in that direction, we could get more stretched on the spreads before we eventually see a little bit of value considering the idea that the dollar as well as u. S. Treasury yields may well have topped out, but that is probably a good few months into 2017 or longer before that happens. In terms of 10 year would in the u. S. , what the treasury market be baking in with that in mind . Inflation in real pipeline, if not already there . But are is some of that, big portion in the rise in yields so far according to the new york fed is coming from the term premium in itself, and that term premium of ultimately is coming from worries over where you will be seeing longerterm dynamics Going Forward for u. S. Fiscal policy, and its own debt dynamics. We know things will get more painful for the amount of obligations there are from medicare, medicaid due to the aging of the population. Those issues may creep index year, especially if we end up a more than aggressive fiscal package, which admittedly wont get implemented until the end of next year, but the longterm implications for a more aggressive fiscal policy may be good for boosting growth shortterm, but may also cause concerns, and the tightening of monetary conditions on those expectations is already taking place, and that is why we have barely budged our u. S. To gdp growth forecast next year. We think we were only see 1. 5 growth next year in the u. S. Bigaad how much is down to Fund Portfolio managers being underweight before november, and overweight, perhaps shifting Asset Allocation and getting out of the bond market responsible for that route, and yields going higher. Thats right. We are at that stage where we see more and more of our clients and people we talked to talking about the in depth that multidecade trend of lower for longer for u. S. Rates, and if this is really that point where changey ended it, this in policy is like hitting the reset button on expectations, and that has caused caught quite a few people out and led rally andase the shifting assets out of fixed income over into equities. If people are seeing some improvement in the underlining earnings numbers next year, then that would be the only rationale likely in justifying the continued rally in equities, but excitement over where growth could go in 2018 with tax incentives at the infrastructure related clan, that may be something that is also helping on that front on the u. S. Equity side. Around david, stick with us. You are back with us after the break as we take a look at what is coming up later on this hour. The impact in india on the economy. Next, china, what about policy . Will it mean only flat growth in the year to come . We will continue our conversation. A quick check of the latest business flash headlines. China alleging proactive fiscal policy to tackle local Government Debt and diffuse risks while sustaining growth. The statement is in line with the promise earlier this month to rain and threats to the economy, such as asset bubbles. Offshore yuan trading flat after much of thursday edging towards that seven per dollar mark. 25 ,pped as much as widening its discount to the onshore rate to the most in over two years. Meanwhile, china says it will dilute the role of the dollar in its Foreign Exchange weighted basket, just over 26 , now 22 . Ing it to china would be the loser in a trade war with the United States , tensions rising calling the election of donald trump, who has threatened steep tariffs on chinese imports, while accusing beijing of currency manipulation. Chinas beige book chief Economist Says currency is where washington has the upper hand. China on one hand is leading Foreign Exchange. A lot of money moving out of china, people worried about it, and they are taking on the United States as the reserve currency country. Getting 300 billion dollars a year roughly out of the trade surplus they have with the United States. If the trade war goes that far, which no one should hope for, u. S. Cuts that off and china loses and there is no way around it. Tohaad lets get back david. What do you make of all this noise coming out of china the moment. We have been finding out about how much they will be growing next year, at least the target in february, so steady as she goes . What gives . It will be aink steady as she goes policy. We have seen so many repetitions of that commitment to double real gdp that it is hard to avoid doing anything but delivering that and that is what we have seen the last few years. All policy has been aimed at stabilizing growth, not to reignite it again, and thats a difference than what we saw in reaction to the Global Financial crisis. Point 6 , six relatively stable, and they would also like to see the trade weighted basket being stable and all of these things are critical ahead of the National Party congress we are waiting for by the end of next year. Rishaad what about Exchange Rate policy . With is so much going on capital controls. Will we get any real moves towards a freefloating flexible rate . What we have seen so far has been liberalizing in anticipation of getting sdr community,he global and since then, we have seen some moves that have gone back on those liberalizations, at least temporarily. Part of this is because of the dynamics of the outflows, the try verse have not just in the fact we are seeing those expected high u. S. Rates, the rate differential does matter, but also the return on investment in china is not what it was, and so therefore there is this desire on the part of households to diversify more assets into foreign investments, and january is that time when we are waiting to see how much of the 50,000 per person quota that is going to get used up and to what degree that will create more headaches for trying to limit and counter the effects of those outflows. I think it will be another major focus early next year. Be managed, but the timing on when we will see a fully opening capital account and a freely floating renminbi is longer than most people think. From chinats move to india and talk about the currency there. That has been the big story, the withdrawal of 86 of these notes we have at the moment. The thing is, it could work in the longer term, but shortterm pain for longterm gain. Yes. That is a great way of saying it. It is easier said than done, and acrossin is being felt the formal parts of the economy, which is not what it was aimed to do. That so many is parts of the economy run on cash, and the cash flow and the disruption caused as a result of this policy is what has been dragging down growth and expectations of growth. We think the government will continue to counter these policy, takefiscal a windfall from the reduction in the Central Banks liabilities that he could use to support growth, but it is a very extreme type of policy to go with. Whatr at least though, counts the most is that Popular Support is still there for modi and his reforms. It is a bold reform that took a lot of courage, and yes the pain will be there, but if he is able to keep the message right that there are these gains to be had and it can change the way the whole economy works, then that should be something that works out well for the future. The shortterm pain could be quite extreme. To the bigts turn themes of the global economy, particularly this diversions like theconomies United States and the u. K. As opposed to japan, the ecb as well. To what extent is Monetary Policy waning . We know the efficacy of it has been debated and whether it suffers from the law of diminishing returns, but is the ball now out of the courts for the Central Banks really . Stagehink we are at that where Monetary Policy has been spent. We have seen it with the use of the continued experimental types of policies that have been put into place in japan, as well as what we have seen out of europe. Forave been saying this quite a few years, fiscal policy is and should be taking more of a role in trying to support growth, and monetary normalization, keeping rates at , that keeps level the incentives in place for the Financial Sector to operate well , and they should remain in place. You are right. The baton is being handed over. The other thing i would focus on is that even with this policy, it is only happening to a decent degree in china and the u. S. Seeing it strongly in japan or european we did talk about this a norm us fiscal stimulus number japan was talking about in august, but the true underlying extra spending reality was a fraction of the headline figure, and while that remains an effective stimulus that we get, there is not much in terms of growth from fiscal policy in japan, and not much in the delta from europe either next year. Have a fabulous new year. Up next, the United States hitting russia for allegedly hacking the election. It is seen as a throw back to the cold war. Trump says it is time for the u. S. To move on after president obama punished russia for its alleged hack. Russian sanctions, expulsion of spies, and newly released fbi evidence. Those were the main actions that president obama announced against russia thursday in retaliation for Cyber Attacks aimed at disrupting between 16 white house race. Americansma said all should be alarmed by russias actions. Disclosuretheft and activities could only have been directed by the highest levels of the russian government. Any involvement, but said it would retaliate back. The Treasury Department targeted gru, russiashe military intelligence agency, and included three top cheese. Has been linked to the hacking of the dnc. And also targeted the fsb are expelling 35 russian operatives working under diplomatic cover, two compounds in new york, and maryland will also be shut. The fbi and department of Homeland Security released a report with evidence to prove russia was in fact behind the hacking. Meantime, congressional leaders reacted quickly with Chuck Schumer tweeting, we need to punch back, and punch back hard. The ryan praised president s actions, and john mccain said the measures are long overdue and that stronger sanctions are still needed here it four hours after president obama announced sanctions, president elect donald trump released a statement saying it is time for our country to move on to take her and Better Things. Nevertheless, in the interests of our country and its great people, i will meet with leaders of the Intelligence Community next week in order to be updated on the facts of this situation. A Current White House official said mr. Trump could reverse mr. Obamas executive actions, but suggested he may not want to let russian spies come back to the United States. Up next, chinese ipo posting record gains, but only the lucky ones were in on the action. Uraid lets talk about nom announcing a threeyear campaign to eliminate wastes. The project was likened to the eventually sink if it takes on too much luggage. Has years restructuring trimmed 700 million of expenses. s publicrime minister Approval Rating has risen to a threeyear high following his visit to pearl harbor. Rose to 64 , the highest since 2013. 84 agreed with his decision to visit pearl harbor, with only 9 opposing that decision. Kimh Korean Leader jim killed is said to have 140 official so far. He ordered the death for disagreeing with him or failing to implement his policies. Killedy people have been for helping defectors are even watching south korean tv. Killed or purged is 340. The data recorders on the russian plane that crashed in the black sea show no signs of an explosion. The captain reported that a special situation had unfolded soon after takeoff. ,he aircraft crashed soon after all 92 people on board killed, including members of a worldfamous army choir. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Rishaad this is Bloomberg Markets asia, a look at whats going on market wise. Sophie kamaruddin looking at japan as we head towards at lunchtime break. Seeing aapan certainly lot this year, set for an annual loss with the topics and nikkei with the first annual loss in five years, despite the topix climbing more than 25 . Final trading day of 2016, new season kicking off their new year holiday, closing in the red, clocking its fifth straight annual rise. Losing some steam after hitting yearly highs this week, and the shanghai composite turning positive after three days of declines. Foreign companies will find support when it comes to listing and issuing stocks in china. Me not toe remiss of bring up some of the vix stock stories we are watching in asia,oshiba, a come back kid here looking to gain after three days of losses there. Takata hitting the upper daily limit, reports it is closing in on a settlement with the u. S. And lenovo rising on higher trading by hymns, shares in the computer maker have slumped nearly 40 year to date. Thank you very much indeed, sophie kamaruddin. Tough year for stock traders, but not for those who can grab a slice of an ipo. The firms that went public posted some iwatch ring returns in china. Iwatering returns in china. 92 surge in the first month after listing would be the best return since 1994. That would be on the average for more than 200 firms that listed in 2016, almost 400 . This chart is only comparable to last year, because back then, new stocks jumped by a median 290 in the first month. This is the best return since 1994, which is when bloomberg started compiling data. Take a look at this function on the bloomberg, ipo go. Thats in green. Is in thevalue which blue bars, the average ipo size of 106 Million Dollars this year, and as i said, more than 200 companies listing, the most tense 2011. The most since 2011. We were talking about this Regulatory Guidance from chinese authorities, and they have set the valuation limit at 23 times earning. Sellompany has to shares against the levels of listed peers. We have the shanghai composite the overall market not looking that great. The shanghai composite plunging , so valuations on an average of 400 gain in the first month, that is very attractive. Rishaad how do we get in on the action . Easy. Is not the ons are stacked against you. It is a one and 2500 odds that you will get a slice of an ipo. This year rules set that basically allows people to subscribe for new shares without prepaying, so what that has done is taken the odds of getting an allocation down 2. 04 to 0. 4 . Its like winning the lottery. Rishaad thank you very much indeed. Time take you to india, has almost run out for indian still hoping to deposit rupee notes with the window closing today. 50 days since the currency ban was brought in, what is the evidence and what they have achieved or not . Targeting tax evasion, corruption, illegal use of currency, so the finance minister says they have risen despite the demonic his age and demonetization. The government is keen on reducing reliance on currency. Yesterday, we heard from it hasa modi saying that been neutralized by the currency ban, so illegal activities have been crippled by demonetization. Also, it is a push to a more digitalized Electronic Payments in india, which at the moment is very tiny. Key is definitely the currency in india. There are a lot of people who dont have access to the technology needed to make online transactions. So they are trying to push india in this direction. It is a big bank in ways to help that happen. But it was a brave move will tell of course, shortterm pain for longterm gain in all that, but is Narendra Modis support holding up well in all this . It is holding up, saying it is right to target unaccounted wealth, but also critics are saying it disproportionately hurts the poor, because a lot of the less wealthy do all their transactions in cash. A lot of them dont have bank accounts. It has hurt them to switch their old rupee notes into new ones. Cash, cant get access to and they need to buy things. Rishaad they have to set up a brandnew industry to get around the rose. Working hardeople to get around the rules. For theomic forecast last quarter of the year down to 6. 5 . All this has critics saying this is not helping india at all, but the longterm moving forward into the new economy, Narendra Modi will make a new years eve address to the nation where he is expected to talk about what will happen after this emonetization. On january 6, we get the governments Economic Forecast through march. In some way will be a referendum on the demonetization policy. Rishaad thank you very much indeed there. Next, the growing wealth cap in hong kong. We get thoughts on the problem and how to solve it. Rishaad shares in their strain after thend plunged resignation of the chief executive officer. Partiesall said it had wanting to buy shares, including Significant Players in investment management. Said to be kicking off a formal sale process. Company is working with Financial Advisors and has interest from six possible bidders. Kate spade has been struggling to recover from the recession, and the company told us they have no choice but to look for a buyer. Southeast asias best stock is expected to continue its run in 2017. Shares have tripled this year o, and expected to grow 8 in the next 12 months. That is the highest price since may 2012. Benefiting from a commodity rise inspired by the election of donald trump. The relationship between hong kong and china has never been more strained. Indeed, a widening wealth cap, questions are being asked about how the territory is being governored. We ask li kashing to reflect on the relationship. But recently you faced criticism from some publications in Mainland China accusing you of diversifying away from china at a time of slowing growth. Is this true . There are a lot of Chinese Companies who are looking overseas to acquire businesses, but they keep getting shut down by regulators, including yourself. What is the impact for Chinese Companies in the future . How do they fix this . Is this frustrating . Rishaad li kashing speaking exclusively to and she this year. Up next, super mario and nintendo takes orders, but the company is thumbing to its worst month of the year . Rishaad this is Bloomberg Markets asia. Hit at go has delivered the best sales yet. It crews the lucrative consumer voiceactivated assistance is something that google and apple can no longer ignore. Most viable Tech Companies are all betting big on the success of virtual assistants that respond to voice commands. The race started with the excellent, powered by a digital assistant named alexa. How many championships has dan marino won . Zero. Excellent debuted in 2015, have sold6, amazon more than 3 million devices. It was selling for the relatively low price of 185, but the payoff was in amazons core business. More importantly, it adds to the echo system ecosystem upt amazon already has come at this is a chance for amazon to grab the traffic, which is not online. Are spendingowners 10 more time on amazon. Com. Popped 70 k has since the excellent came out in the u. S. It is no surprise that google wanted in on the action. Credit to the team at amazon for creating a lot of excitement in the space. We have been thinking about our own unique approach, and we are getting ready to launch something later this year. Ingoogle home if the market october, 50 less than at go and loaded with googles interface, which means that iri has assistant s been out for five years, but its use has been limited to the iphone. By some estimates, only 23 of u. S. Mark phone owners use voice assistance like siri on a daily basis. There is has so proven customer demand and it is a sexy, new interface for information that apple would be insane not to get out there with a product that is similar, but it is all about the implementation, and also a real discipline is to have not in first. Apple was not first in the smartphone or tablet market either. Is in fact pushing ahead with a competitor, so we can only expect this market to keep growing in 2017, with shipments forecasted to jump 130 to 21 million. Shaping upcember is to be nintendos worst month of 2016 despite the release of super mario run, the smartphone game that was supposed to jumpstart growth. Lets get over to tokyo. What is going on here exactly . Was a bet for run nintendo. It was its first significant foray into the smartphone area after the success of pokemon go, but this was 100 nintendo and featured one of their best and most beloved characters, super mario. That itle nintendo took is charging 10 to unlock the entire game. This is a departure from the model where you let people play for free, then pay for little gadgets and trinkets along the way. Unlock, people a 10 to the game, but the way nintendo as it like a traditional console game. What seems to be happening is people dont want to pay this price. They are used to hang smaller increments on smart phones. Once you issue is that unlock all the levels, all 24 levels of the game, it is relatively easy to get through them all in a matter of a few hours, so this game has not been the same kind of explosive hit that we saw with pokemon go over the summer. Well, exactly, so, the point being here, why would this disappoint investors . To remember that nintendo had stayed out of the mobile game market for a very long time. Guiding sort of philosophy is this sort of close marriage between software and hardware, so they had stayed away from the mobile market, which is geared just toward software and casual games. Now nintendo is getting serious about that market. Super mario run was their first a colbert, and investors were disappointed because this market does have potential to deliver a lot of sales and eventually profit, and that does not seem like it will come through, at least with this game, so there was a bit of a selloff and nintendo is now on track to fall 12 in december. Rishaad tell me something, we onlythis game effectively on the apple platform. It goes to android, doesnt it, but what else is nintendo planning . Announced thisy week that they are taking preorders for android, so that will be another good test to see whether it does catch on. Nintendo does have a lot planned for 2017, the biggest is is its nextgeneration console called the switch. We will get details about it sometime in january. Switch is a tricky product. In fact, the market was not pleased with that either because it cant tell whether it is a tablet game computer or a console computer, but in any see how itve to fares once in the market. On top of that, nintendo has promised to bring more smartphone games between now and march, and we will be looking to see if they deliver upside as well. Rishaad thank you. Reed stevenson joining us from tokyo, nintendo and its future. Lets tell you about some of the worlds wealthy Football Players , the latest to head to china, because wait for this because this is an eyewatering deal. He signed a contract said to earn him three quarters of a Million Dollars a week. Butgure has not been named, he will make 84 million in two years. Questions about how chinese clubs can pay such sums. Can i look away now . I have to go. I am terrified of heights. China has opened the highest bridge in the world. There you go. Soaring some 570 meters above the river valley in the southwestern part of the country. The bridge crosses the gorge between two provinces and is tall as a 200 story building. Began in 2013 and it did have a final price tag of 150 million. Right, up next, angie and david will update you on the big stories of the day so far. We will discuss the prospects for next year. From our studios in new york city, this is charlie rose. Charlie amy schumer is here. She is an actor, writer producer, and as a comedian she plays to soldout audiences around the world. She won comedy tour of the year. Amy i showed up to film this movie and i was like, i think im a model now. I think a lot of girls are like this. We have a sneaking suspicion in the back of our heads. Am i maybe, gorgeous . [laughter]