Transcripts For BLOOMBERG Bloomberg Markets Asia 20170103 :

asia. a brand-new trading year gets underway in hong kong and china in just under 30 minutes. singapore and taiwan just starting theirs. for a look at what it's going on, here is david. david: the regional benchmark is flat. if you take japan out of the equation, of course. a positive start to 2017. that being said, australia is at the highest level so far this year. tos goes all the way back june of 2015. that market momentum seems to be filtering through into 2017. we are not looking at any sort of volume there. at this time of the trading day. 2031 is the level for the south korean benchmark. japan is closed, but futures are's ill trading. still trading. singapore 120 points to the upside here, .9%. as soon as japan is open, we will be getting a decent bench for that market as well. three markets opening today, malaysia, taiwan, singapore. somen have a look at how of these benchmarks are trading early on. the tie index had a very good 2016. a lot of that comes down to the apple effect, and how it trickled through to a lot of the main components of that benchmark, up 11% in 2016. singapore was flat. malaysia down about 3%. toe is the initial reaction the gdp numbers. we will be talking more about those numbers later on with sophie. it really comes down to the .hange the economy is at the mercy of these massive swings in global trade. next, iat currencies just want to point out oil for you. $54 in west texas. keep your eye on that level. unchanged. .5%. we go, poin let's call this flat really, 698. i will just rounded up -- round it up. rishaad: thanks. news get to the first word . here is heidi. pictures have emerged of the istanbul nightclub moments before a gun man killed 39 people celebrating new year's eve. clubttack at the famous was on the waterfront. the killer escaped and his identity was either unknown or has not been released. tos shows turkey's inability keep the violence in syria from crossing its border. kim jong-un says north korea is closing in on the launch of an enter -- intercontinental missile. says theseoul, korea north shows no signs of a launch. donald trump just tweeted that a north korean nuclear weapon won't happen. selling a 20% in a shanghai commercial bank, the australian lenders says half of the stake is being bought by china's cause go shipping. taking a look at how shares have been trading, higher by one point 7%.ne deutsche bank's former ceo is restarting his career at a much smaller firm. he is joining as president, help oversee ho expansion. intolped build deutsche europe's biggest security firm in decades before her stepping down in 2016 with mounting legal -- beforetory stepping down in 2016 with mounting legal and regulatory problems. this is bloomberg. rishaad: thanks, heidi. the economy expanding more than anticipated in the fourth quarter and services rebounding. tell us what happened. take us through the numbers. >> 2016, gdp grew one point 8%, the fastest pace in over three years, driven by a rebound in manufacturing and services in the fourth quarter. on aw gdp growth 9.4% quarterly basis, a reversal of we saw inction of 2% the previous three months. earliere ministry's range for growth was 1.1%-1%. even the most optimistic forecast of economists polled by bloomberg was exceeded. we will be getting december pmi at 9:00 p.m. the estimate there is 50.1. not necessarily over here. the prime minister in his new year's address said the government is keeping a close eye on the labor market. singapore's policy makers are also looking for avenues of growth. said ame minister i committee will share recommendations for longer growth strategy to maintain competitiveness. it comes to designing how singapore is going to continue, there is growth momentum. rishaad: it was not the only data out of singapore today, was it? >> we also got home prices from the urban redevelopment authority. prices fell .4% in the fourth quarter. this is a softer drop than the 1.5% decline that we saw in the previous three months. that was the biggest quarterly drop since 2009. big picture, private home prices fell 3% in 2015, compared to a 3.7% drop in 2015. are expected to further pressure prices and rents in 2017. the picture we have been seeing propertyhe weaker market has fed into softer inflation. china's official indicates strength on the back of sentiment. our chief asia correspondent joins me now. what does that tell us? is a reasonably bright spot. policymakers are exactly where they want to be. growth is well on track. the pickup in prices is flowing through and that has helped confidence. manufacturers are going to have the confidence to step back and initiate reforms. the economy is, in a relatively sweet spot. that does not mean there are not challenges ahead and that reforms are not needed. rishaad: looking at this, you can say we have problems with debt and the housing market. >> certainly have. even if they want to maintain housing prices, there is the multiplier effect on construction and the wider economy. the same goes in other areas. you can't go to hard on the .hakeup certainly, no shortage of challenges ahead. debate: what about the over the growth target? being open to slow or growth if it means reining in excess credit and debt. dea an adviser said china should lower its growth target. nowe is certainly a view that the growth target is a little outdated, and if china were to do more to be more sustainable and less reliant on cheap credit, the economy would be in a better place. let's be clear. even though there is some debate , we seem to be a long way from growth out right. rishaad: thank you. how fukushima is using wine to lure tourists back to the region. ♪ rishaad: we are just opening the trading day in singapore. that is the scene at the moment, relatively flat. no trading today. it is a public holiday. up -- the the move cost the index is on the move up -- kospi index is on the move up. samsung has urged the company to learn from costly failures like last year's flammable note which cost samsung more than $7 billion and pushed smartphone profits to a record low in the third quarter. three car companies have been fined after an investigation found a fabricated emissions s.st increasedare facing to scrutiny following all of these scandals. south korea's biggest carmaker is protecting sales will jump filings. according to had 8.2 5 million 2016 and isn planning 10 new models and to revamp their existing models. the u.k. gets a new year's present, postponing the price hikes scheduled in the next two weeks. tesla is raising prices in the u.k. back to the asian markets and opportunities for the year ahead. of asia equityd and credit at ubs management. he is in singapore. let's start with the data we had over the weekend. tell us what that tells us about the state of play for the chinese economy. >> it is pretty much what we expected, not necessarily pointing to an excel a ration. we are still seeing a slight deceleration on the gdp -- acceleration. we are still seeing a slight deceleration on the gdp side. things are getting pulled out a little bit. the rest is very stable. overall, the data is encouraging. especially service industries are doing fairly well. sometimes a bit overlooked in china. one thing we are waiting for axt week that i think will be key piece of information for equity holders in the stock market is the ppi index. we expect another increase or acceleration of the increase as in thet of consolidation sector. this is probably the most positive piece we are looking for in terms of earnings acceleration for china. we think it is going to be a fairly constructive start of the already on theen weekend. and will continue to be next week. rishaad: what does this mean when it comes to the ppi side of things? four months of deflation. aboutk we will just t get the yuan fixed. there we have it. i don't have it at the moment. will the pbc be injecting more money into the system, providing more liquidity with reverse rebates? we have the yuan reference right. 6.9498. i'm not sure how that compares. still around 6.95. we had reports over the weekend that we have further moves in strengthening capital controls. how does this all tie-in together? >> we're looking at two thanks. -- things. one is the composition of the basket, which is changing a little bit. the other is domestic sectors. in terms of domestic sectors, we will still see outflows. i think we will see more evidence of reserve numbers coming out. looking at the basket, i think it is an interesting determining factor for the outlook for the next couple of months all the way through the year end. we are looking at about a seven exchange rate by the year end. most of the incremental weakness we still expect over the next couple of months, really. the reason we are seeing that is because we arguably also have a contentious view on major currencies. things like the euro and the yen, for example. when we think the dollar is about to flatten up or that we need to retreat against the euro or the end, that's a substantial part of the currency -- yen, that's a substantial part of the currency basket. we will probably see less pressure on the euro-yen than the chinese-yen. in the currency basket, they have shown in the past that they don't always do that. they allow for a little bit of appreciation to factor in. then we get a little bit more, very modest weakening over the next 3-6 month, and then flat from there. rishaad: this is the weakest the one has been since december 20. we had a guest on earlier who had a pretty lent -- blunt excess men -- blunt assessment of where he expects it to go now. possibly before the lunar chinese new year, 7.3 by the end of the year. the key thing is we expect ongoing, gradual depreciation of the currency. the key word is orderly. this is probably the only policy the pbs he can use to effectively stabilize the chinese economy and help grow the underlying stability -- p to effectively stabilize the chinese economy and help grow the underlying -- pbc can use to effectively stabilize the chinese economy and grow the underlying economy. >> this is really against the basket, which includes other currencies than the dollar here in asia as well as europe. if you factor in the contentious view that those currencies as far as asia is concerned no longer depreciated substantially against the u.s. dollar and currencies such as the yuan and in doubleould be digits until the end of the year and rebound against the u.s. dollar, then you arrive at different results. we will be studying the pressure on the yuan. rishaad: great talking to you. have a happy new year. now, there will be a fallout from the phone call by donald trump. that continues to swirl around china and beijing. did it cross the line? we had life to taipei. head live to taipei. ♪ behind a chinese conglomerate is a friendship that has lasted 30 years. as they told heidi, the philosophy behind their business is the same today as when they started. >> to improve your way of living in a contemporary world, the only way is to learn how to improve the lives of others, and provide services for others. our initial aspirations for a startup or to help the livelihood of our own families. continued, it became clear that if you want to achieve a goal, you have to learn to help others improve their lives, and help customers do the right thing. the logic of these two things is connected. >> do you look back over the time you spent together, the financial crisis, the regulatory political upheavals in china, what has been the biggest challenge? >> we having countered some problems in business development, but i think this can help us grow. just as a person comes across problems as they grow up. the benefit for us is because we started this business as a team. when we encounter problems, we can quickly recognize them and work as one to find answers accordingly. it always feels like we do have our challenges, but they are not ones to give us too much pressure. they are ones that can be solved. >> today, we are feeling the changes within the entire industry. if you look at the mobile internet, no biz the internet of things and how it might change is theitional -- next up internet of things and how it might change up the traditional industry. for us, it is important to completely integrate with the internet of things and the future of artificial intelligence and find a way of surviving. i think this is very challenging. >> who is the boss? who makes the ultimate decision? [laughter] >> you mean i make the decisions? [laughter] well, that is inevitable. you must have someone making the final call. but we have never had a so-called one man, one vote kind of thing. nor was there ever a power play over who has more shares. i don't think that's the best way to resolve issues. the best way is sufficient communication. , sometimes decision-making isn't about right or wrong. if every decision were about that, decision-making wouldn't be so difficult. >> you started as friends. do you still have time to do what friends do, have a beer, have a chat? have a reallywe strong chemistry between us because it has already been some 20 odd years, 30 if you include our school days. it is a camaraderie. although we don't see each other that often, we have phone meetings every day. >> our partnership is the same. initially, friendship bound us together. we were drink together, talked together. men have that kind of relationship. sometimes this partnership becomes amelia, like something in your blood. >> what milestones are -- somethingmilial, like in your blood. >> what milestones are you setting for the next 5, 10 years? >> continue to work toward a world-class investment group, build a wealth-health-happiness ecosystem. those are the targets. rishaad: the three founders speaking to my colleague. australia, korean, singapore looking like this. coming out with growth numbers better than expected. still, investors are unimpressed and markets are putting much flat. coming up, looking at oil prices and supply cuts. not every producer will comply, it is feared. ♪ with the xfinity tv app, anything with a screen is a tv. stream 130 live channels. plus 40,000 on demand tv shows and movies, all on the go. you can even download from your x1 dvr and watch it offline. only xfinity gives you more to stream to any screen. download the xfinity tv app today. i've spent my life planting a size-six, non-slip shoe into that door. on this side, i want my customers to relax and enjoy themselves. but these 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gdp numbers out and a stellar 2016. 92.36.ex index at 9246. still the worst performing market in 2016 down 13% depending on which benchmark you look at. the hang seng index just below 22,000. not a lot of action. 9400 and philippines stock index startpening up flat to off this year. let's have a look at some other things. had 695 on the renminbi. let's focus on the ring bit death ringgit start off this year. -- ringgit. if you look at the spectrum today you are looking at southeast asian currencies mostly on the back foot. the kiwi dollar also on the way up. the dollar-yen stronger against -- lower one -- 1/5 of 1%. aret of sector groups falling. you have new stories out there and the casinos. some of these names, we will talk more about this in a moment but a nice pop thereof 4%. -- theo sell its stake real estate for about $4 billion. mrs. on the back of the latest -- this is on the back of the latest. let's have a look at the line chart. chart, a five-year you're on your change a percent was the latest read. limbo.s a time of this is where we are at the moment. we're seeing positive change in the amounts, that is the way to look at that. let's get you up to speed with some of the first word headlines. >> singapore's economy extended more than expected in the fourth quarter although it is still growing at the slowest pace in asia. the first major economic data of twice 17 showed annualized growth of 9.1% against estimates of 4%. the city states government and economy has been struggling in the face of soft global trade andthe city states government ad economy has been weak energy pr. china's latest official pmi data strongte -- indicate a and for 2016 with the economy stabilizing. the factory index was at 51.4 in december near a post-2012 five. economists had expected a reading of 51.5. indicating a pickup in inflation expectations. pmi was 54.5, slightly down on november. an adviser to the pboc said china should set a more flexible economic growth target for 2017 to allow policymakers to ramp up reforms. economist -- and economist proposes a target range of 6% to 7%. he says the long-term objective of 6.5 percent growth yearly is an average rate and work needs to be done to reduce the number of zombie companies in the economy. by getting parts of northern china forecast to last until wednesday. meteorological center extended and orange alert. fell.eturned as night nine provinces across the north and east are expected to be affected for at least the next two days. visibility in some parts may be less than 50 meters. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is lumbered. rishaad: thanks for that. let's look at what is going on with the oil price trading. affect -- cuts going to ,pec and independent producers it should give us an indication of this -- if this deal will be respected and obeyed. the focus is on those cuts. news.will get incremental kuwait has said they have cut 130,000 barrels a day from their output. we will see that move over the month before we get a better picture toward the end of the month around early february. rishaad: we get a better picture of what they say they are cutting. next the market is responding positively. it will be early february whether we know if it is working. whether they are sticking to those cuts. rishaad: people are more likely to believe it when they are. what is the outlook for prices? x it is a slow and steady rise higher. analysts are looking at wti looking at $51 and average, 54 for the second. but not climbing over that mark anytime this year. rishaad: that is when the shale producers come in. they are putting a cap on the oil price. >> balancing the cuts and the rise in prices, anything over 55 seems to attract u.s. shale. we saw the recounts again last week that said -- for nine consecutive weeks. something to keep an eye on while the cuts are taking effect and whether that will bring extra supply into the market. brent crude is up .41%. ties with china are becoming increasingly tense as beijing uses what she calls divisive and coercive tactics. hurt thechina had feelings of the taiwanese people and destabilized cross strait relations. x i do not wish for confrontation with china as things used to be. will not give in to pressure. there are still important principles when dealing with prostrate issues. -- cross-ice-strait issues. the rhetoric has been heating up ever since that phone call to trump. what is she referring to when she said beijing is being coercive and intimidating? we have had quite an eventful month. if you look at some of the things that have happened, taiwan lost one of its main allies in western africa. in addition to that, china has been flying bomber jets around the island and the other day the aircraft carrier failed into the western pacific from the east china sea and did a loop around taiwan and headed toward the south china sea. there has been some jitters in taiwan, a bit of anxiety over what china may or may not do as a result of the phone call. the president leaving this week to attend the inauguration of daniel ortega. there is some intrigue surrounding that as well. explain if you would. >> there is some speculation that she may meet with the u.s. president-elect donald trump while transiting through the u.s. and donald trump was asked about this at new year's eve by reporters and he did not do much to play down expectations are speculation by saying we will see. this is something that china had warned the u.s. against saying, asking them not to let taiwan stock through. there are not any direct flights to central america from here so she will stop in houston and san francisco on the way. you so much for that. joining us from taipei. -- 20%ook at the $.20 stake. it is the latest effort to unwind and asian expansion that has been weighing on profits. haidi: as you alluded to, this latestke sale is the investment unwind. the asian expansion strategy that has been has not delivered on returns. what we know so far, there are two buys. each take a 10% stake in the chinese lender. it was valued at one point $44 billion in its annual report in 2015. we heard from the deputy ceo who says the -- this is a strategy to simplify the as is and improve capital efficiency and grow focus on their institutional is this. -- business. no lender says there is material impact expected when it comes to that net profit number. it had been trading nicely in the session up .8 of 1%. of aad: this is part broader pullback coming from asia, right? the lender had been targeting profit as much as 30%. doubled theit number of corporate clients in asia and almost tripled the number of employees to 21,000. last returns have not materialized. what had his record low ratings. and also requiring capital deductions on financial firms so part of the broader pullback of return businesses has been started by elliott. this began in october last year. of wealth sale management business is to five asian markets. there are more on the chopping thek, more investments with -- and indonesia and holdings in malaysia as well as assets in taiwan and hong kong the could be up for sale. -- that could be up for sale. rishaad: what can we expect from the red -- federal reserve? clues may lie in the makeup of the new federal open market committee. ♪ rishaad: the new year begins with an economic signpost. bonds are getting clobbered last year. expectations and more rate hikes this year. what is being expected now? >> the bond market is watching the economy, how well is it formed and disinflation start picking up? one reason they are watching donald trump because he is taking over the white house with expectations widespread he will boost spending and cut taxes. it will the -- impelled the fed toward more rate hikes. let's kick a look at how bad this bond selloff was in 2016. down for five straight months. that big blue bar is the month of november. maybe the selling momentum is easing off. if you have to back to 2010 or 2011 on the left hand side of your screen to see a selloff the severe. interesting that the dollar is rising as bond yields rise, prices falling in the u.s., it g7the widest gap over sovereign bond markets in 17 years. what hundred 57 basis points on the u.s. 10 year treasury compared with the average yield of g7 countries. economic reports coming out in the u.s., what are we looking at? >> we're looking at the purchasing index, it has been above 50 signaling growth in manufacturing for eight of the past nine months. also expected to be stronger. let's take a look at the forecast. from nowng out hours in the u.s., that would be up from 53.2% in november. has been above 50 in several months. the past six, only august was a bit weaker. on friday the big report of the week and that will be the u.s. jobs report for the month of december. payrolls are seen at 87,000, plenty enough for the fed to keep looking at rate hikes. wages year-over-year are seen rising 2.8%. that would be up from 2.5%. that is not a huge number but it is acceleration. this is something important. well trump and the optimism we see expressed in consumer confidence reports expressed in reports from u.s. small businesses to my will that confidence boost by consumers and small businesses translate into new hiring? it is another thing to be looking for in that friday jobs report. rishaad: what about the fed itself, how have expectations evolved? >> it did not raise rates as expected. it was unexpected when the fed boosted its outlook. they had seen too. this is something we are looking at closely. this refers to the economic dot plot and forecaster rate hikes even what's -- what each member sees for the economy. they were six dots looking for to rate hikes, you can see it in the middle in that second line from the left. there are six officials who did not see that many. done not necessarily a deal. something interesting, everyone will be talking about as we heard toward the fed meeting. that is the fed voter rotation going for more hawkish -- a more hawkish tilt. here's is how it has worked. there are 12 presidents, four of them rotate the vote every year. 2016 -- in 2016, we had three hawkish fed presidents and ericsther george, and rosengren from boston. just one dove, jim bullard from st. louis. here is what is happening with that rotation. we're going to have two very dovish dubs voting. voting. and rob kaplan from dallas. one more thing here. governors -- they always vote and he is dovish and yellen is dovish. people are thinking maybe the fed might not raise rates as quickly. at the 20 -- and of 2015 they thought they would be doing another rate hike. thank you. joining us with a look at what the fed may do. breaking news, the purchasing managers index coming in. economists have been looking for a figure of 50.9. that is the dividing line between expansion and contraction. when it comes to this index, it was the hsbc markets survey. a quick check of the business flash. spacex returning to launch monday four months after a falcon nine rocket blew up on the pad. we have an investigation that concluded that one of three vessels in the second stage -- the oxygen tank failed. -- accepted the report. vietnam airlines said 2016 was a good year. profit expected to hit 110 million. climbing 3.3's -- 3.3%. rose.ger traffic vietnam airlines anticipates more than one billion shares on the unlisted public company market today. according to the hanoi it stock exchange. a private survey indicates that indian manufacturing has shrunk as that government withdrawal of high dollar denomination bills takes effect. a lowest in the year -- since a year ago. it could strip india of its position of one of the biggest growing economies and threatened backlash against the prime minister. brazil posting its he is trade surf -- surpluses. the surplus rose to $47.7 billion last year. twice as much in 2015. imports were down with exports declining 2%. the brazil trade balances jumped high and falling investments with the economic downturn. this is bloomberg market check. stick around. ♪ to be a 2017 is set challenging year for emerging market credit. higher treasury yields combined with steeper curves and the strength of the dollar likely to pressure the fundamentals when it comes to emerging markets. thanks for joining us. give us an idea of your thinking here, first of all. guest: it is going to be a tough year starting off. a are facing headwinds from stronger u.s. dollar and facing headwinds from rising term premiums, your previous guest spoke above -- about rising interest rates, all these will be clear headwinds for asian credit markets. asia in it -- is in a better place fundamentally and has much better technicals which will support the market but there is no question of hiding away from these tough headwinds we will face over the next couple of months. announcer: from our studios in new york city, this is "charlie rose." >> how is the narrative here changing? guest: when we speak to investors there are still quite constructive on the outlook for the asset class much more broadly speaking. the clear challenge is when you have rising interest rates particularly risk-free rate moving. you cannot have your risk premium being determined as long as the risk premium is all over the place. those are clear challenges for markets. fundamentally if you look at e.m. fundamentals and asian credit fundamentals, they are marginally better than they were last year. when you look at commodity other factors, credit fundamentals look better. go beyond whatot we are seeing in terms of the underlying macro drivers which were -- will impact asset classes. to the extent that we have volatility and the underlying risk-free rates is going to be hard for people to start deploying additional cash into this asset class. once we see the asset class settle down from those macro drivers we do see more money coming in. when you speak to international investors they are still very bullish and they want to put more money into the asset class. we will get more of the strategic flow coming back into the asset class. what about this capital donald trump?post-- guest: there will be some money in investments to be made in emerging markets. we are a lot more nimble in tactical. we think there is the -- value in asian financials and high-yield. we're staying away from the sovereign space and where underweight some of the hybrid space. there will be -- there is opportunities to make money but the strategic call will happen later in the year. great talking to you. after the break we are looking at what is happening with gold and we will be talking to our guest to says the big factor influencing gold is dollar strength. ♪ rishaad: it is almost 10 a.m. in singapore. is bloomberg's asia headquarters in hong kong. this is bloomberg markets: asia. scientists -- offering the highest reading on record. singapore expended more than anticipated in the fourth quarter although it is still showing the slowest pace of growth in asia. out, the -- sales latest attempt to unwind asian expansion. asia started its first trading day of 2017. let's have a look at what is going on. we have a mixed act. generally we are pushing up. .avid: it is the same story a smaller scale because we do not have any volume today. southeast asia again, markets are getting hammered with the outflows do seem to be continuing. you're not getting any [inaudible] across these markets. japan has closed and new zealand and thailand. they will be spared of the pressure we are saying. hang seng index, shanghai composite, and the kospi. start. the pmi the highest level on record since that name change. look atetting a australia. cold mining stocks should be on the way down. and a few other things are falling to the upside. the broad-based rally when you look at australia. we're looking at 70% of stocks being up. 1%g seng at one third of better. nothing specific where following across the gainers. as far as the hang seng index is concerned. ever grand is one stock we are following. i do not have to point out on this chart when the data came out. start here has reversed their loss following the data. ticker, 3333hk. is planning 13% of one of its holding -- holdings. this comes down to 4 billion u.s. dollars. five hong kong dollars a share. one last thing i want to point out. the malaysian ringgit. we are dollar strength against emerging-market currencies, this one is getting hammered again. we're past the psychological level. it looks like we will be headed to 450 on the dollar ringgit. the last time was back in 1998 during the asian financial crisis. this is underscoring my point that it is not -- the dollar and yen is lower. rishaad: we had a few moments ago the survey of manufacturing and the gauge coming in more than expected. the highest reading and i must three years. this tell us about the prospects for china and we also looked at the unofficial thai shin record. guest: all the emi's are pointing at editor sentiment and better mood. held bythat has been the factory gate prices. it is starting to flow through and together with other data we are seeing the china -- the china economy where it by the factory gate prices is -- hs wanted. there is the view that may be authorities can take their foot off the stimulus panel and push through the other reforms that are needed. better are probably in a spot than we expected to be a year ago. the economy has so many challenges it is facing at the moment. guest: we do not know where the donald trump administration will go. is there a trade war that will hurt both sides and with fed rate hikes, goes are down on pressure and domestically we have the story, the pressure to get money out. china does not want money leaving the economy at an unstable pace. mention property bubbles remain. rishaad: what is the latest debate on the growth target? some ways have been saying that it will grow on the first of february or january. the president has said perhaps it will tolerate slower growth, taking their foot off the pedal. maybe they should lower their growth target. near the point yet that china will drop the growth target but the view that they should lower and focus more on quality and sustainability then heading -- hitting targets. you.ad: thank the latest on the chinese economy. let's get over to sydney and join haidi lun. sellingnz said they are a 20% stake. they said the stake is being bought by china cosco shipping and says it sees no material impact from its net impact from the sale which will boost its capital ratio around 40 basis points. shares have been trading to the upside, still up 1.7 percent. career at ang his much smaller firm. he is joining [inaudible] as president where he will oversee expansion. helped held deutsche into the biggest securities firm in a decade. a step down amid mounting legal and regulatory problems. said engineer -- indonesia is less foldable to a global selloff. goldman does not expect them to depreciate significantly from its current level. this was asia's best-performing currency following the yen. if you're going to be in next pat, perhaps move to switzerland. earn the annual equivalent of $188,000, the highest in the world and a must the global average. switzerland topped career rankings for a second year. it ranks close to last in cultivating relationships. the cost of living is also notoriously high. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am haidi lun. this is bloomberg. rishaad: and providing a surprise earlier, singapore's economy expanded. services rebounding. with the details. 1.8%, at the fastest pace in over three years. looking at it by sector, manufacturing grew and construction 1.3%. services .9% and looking closer at what went on in the fourth quarter, the economy extended on a quarterly basis. this is a sharp turnaround from the near 2% contraction in the three months in september. this performance marks a path to estimates but also that of the trade ministry. officials had forecast a range of one point -- 1% to 1.5%. they're looking at 1% to 3% growth this year. we did have the prime minister caution that the labor market is something that government is closely watching. the property market is down for three years now. it is unusual that you have this slight recovery taking place in growth but the property markets are still in the doldrums. >> uppity markets are in a downturn. we had flash estimates this 4%.ing showing a slight of the government had not budged on the property curves that were introduced seven years ago and for 2016, private home prices are down 3%. vacancy rates have climbed to the highest in over 11 years. home value tumbled 11% from their 2013 pete. we are expecting more pressure when it comes to prices and rents in 2017 as the government remains reluctant when it comes to the property cooling measures and facing a surplus in new homes area -- homes. the latest on these singaporean economy. still ahead this hour. behind one of china's most equivalent -- inquisitive conglomerates. we will hear about their secrets to success. the fed signaling three rate hikes this year. we will talk about the outlook for gold with our guest. that is next. >> samsung warning of [inaudible] and currency fluctuations. the co-chief executive used his new year's speech to urge samsung to learn from costly failures and recover its pride. the flammable phone fiasco cost profits. banning the sale of some cars made by nissan, bmw, and porsche following revelations and fabricated emissions tests. carmakers and component suppliers are facing increased scrutiny following scandals that cap any -- companies including volkswagen, mitsubishi, and takata. predicting sales will jump 4.7% this year and that is according to regulatory filings. they are planning a -- 10 new revamped models between them. they face uncertainty about trade policy and the new and incoming president donald trump. -- taking aok at bit of her cover a when it comes to gold. nearly $1157 an ounce. -- thisiction for gold was tracked f by bloomberg. there is the inverse relationship and the dollar moves because of interest rate -- interest rate moves. only game in town gold investors? guest: happy new year to all of you. [inaudible]n on the everyone can agree. -- gold is slightly up and i the two factors at a two-timeld prices, rate hike for the federal reserve. half andy in the first the second will be somewhere in december. is likely to be the bright spot for this year. should lead tote a firmer greenback. that would be one of the key drivers for bearish gold this year. sentiment orisk on the risk after it we have seen due for for the year is a job. isot of the uncertainty still felt this year. we should look closely at the triggering of 2015. 2017 is likely to be a year of uncertainty. gold thrives on uncertainty. the best case goal would be a bearish case. especially for the first half of this year. what are the events that could be events to lead gold to be the haven play? that is what we are watching out for, i guess. year. i mean for this let's look at the first half of this year. march 2017 if true, the plays off triggering of article 50 by britain. this is one of the key events we're looking closely at. knows if it is a soft or hard brexit. the other thing would be the election, it is the first round mother likelihood [inaudible] screams of brexit all over again. especially if marine le pen gains popularity. the trade policies that he may be proposing for 2017 and the trickr downside risk to ims and prospects especially for asia itself could be a very key event to watch. august should lead to a rise of risk off sentiment and gold priced on such events. looking at the move from oil to gold, one of the targets because we have these cuts that they all agreed to. they come into play now. they say in kuwait they are complying and that has met -- helped the markets. is there a cap on oil prices in your view? guest: i think the markets have been celebrating the oil production cuts. 57 have seen brent rising to dollars as of this morning, that is very encouraging. let's just reminder cells this is the first day of the trading day -- remind ourselves this is the first day of the trading day. it is normal to see markets during the first week of this year. going forward at lease the first half and second half of this year, look closely on the u.s. production cues. that is one. we have seen oil for the ninth consecutive week. some incentive to ramp up production. also look at opec production. opec producers have a long-lasting history of overproducing rates. we know that the specific quarter for each country, but going forward to this year, i would look closely on them to see if this -- if there is and a rise to oversupply. we are looking for a higher oil price. this is very much predicated by the rebalancing story but the [inaudible] basead: let's look at oils. anything catching your attention? -- closelyo look for on the china gdp that is coming up two weeks from now. we're looking at 6.7%. base metals is still a chinese-centric story. another key thing to look at and of -- ishe question the effect on the health of the chinese economy. this is still a very healthy note. the pace of the slowdown could be good news or bad news at least for the base metal story. if the chinese do slow down, this could mean a more downside pressure for base metals. rishaad: thank you for that. have a great year. coming up, shane elliott has been winding back the not so profitable businesses in asia. we will hear it for about the latest move from sydney. that is on the way. ♪ gains,: the yen had generally what we're seeing is the dollar retreating after some strong gains and this is the first full trading day of the new york getting going. and unwinding some of those gains that have been spurred on by the prospect out there of the higher u.s. interest rates. let's take a look at what is going on here in hong kong. this is the position for the hang seng moving higher .6 of 1%. data.ore, we had that gdp it was flat but we have decided they have decided for some positivity. and the straits times index moving higher there .2 of 1%. australia is the star as it is the big -- biggest benchmark. highest levelhe in 1.5 years as well. one constituent of the market is the anz. it is selling its stake. here's the latest effort to unwind asian expansion that has been waiting on profits. in's go to over to haidi sydney. she has a look at why we are getting this turnaround. haidi: as you alluded to, the 20% stakes are out and asian expansion strategy has not delivered when it comes to returns. what we know so far, china customers shipping and [inaudible] will be the two buyers. price is bang on that. saying graham hodges that this reflects a strategy to simple if i the business and improve capital efficiency and redirect resources to focus on its institutional business area -- business. expect anydoes not material impact on its next profit. we have seen shares trading on the upside up 1.7% at last check. of this is this part broader pullback we are seeing from asia? yes, potentially more to come. they had targeted profit as much as 30% to come from austin -- outside australia and new zealand. the number of corporate clients in asia and almost triple the number of employees it had to about 21,000. returns have failed to impress. we had the record low interest setting environment putting pressure on margins and had new regulations that require capital deductions from minority shareholding's and other financial firms. this is on back of a pullback of lower turn. businesses that were started -- [indiscernible] they sold that after dbs in singapore. also on the chopping block, holdings in malaysia as well as assets in hong kong and taiwan. certainly more to come in terms of this about-face when it comes to the expansion strategies here in asia. thank you for that. china says the president crossed the line. way next. its ♪ ♪ i and sophie kamaruddin with first word headlines. a survey of the chinese economy shows strengthening, manufacturing came in at 51.9, 50.9.of the prediction of chinese pmi data also indicated a strong and to 2016. in factory index was at 51.4 november. saysvisor to the pboc china should set a flexible growth target for 2017 to allow policymakers to ramp up reforms. it proposes a target range of 6% to 7%. he said china's long-term objective of 6.5% is an average rate, and work needs to be done to reduce the number of zombie companies. singapore's economy expanded more than expected in the fourth quarter, although growing at the slowest pace in asia. the first major economic data of 9.1%nualized growth against estimates of 4%. the economy has been struggling in the face of soft global trade in week energy prices. kim jong-un says korea is closed to the launch of an intercontinental ballistic missile. says the north shows no signs of an imminent launch. president-elect donald trump has suggested that he could meet for talks. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. rishaad: well, this is "bloomberg markets: asia". i am rishaad salamat. we will have a latest look at the markets. bank holiday in japan. here is david. david: thailand opens up 30 minutes from now. ok, let me get started with crude. have a look at this. prices, thats oil is continuing well into the halftime of tuesday, $57 on crude.$54 u.s. we are back to the summer of 2015. this is the first time that one of the oil producers is not following through. that is that. have a look at equity markets, some markets closed, most stocks on the way up. philippines 1%, top and bottom there. jakarta with a strong rally to moment6, weakness as the . it is the first trading session, so usually we get a positive start, with the exception of last year with the yuan, but gains at the open of 2017. right, tell me about the interesting movers out there, david. david: absolutely. we were talking about macro data, gdp, pmi out of china, but these are interesting moves. let's have a look at this one right here. this start off with ,wo-year chart, one-day move .3%, guidance is up. that is hyundai motor. have a look at kia motors, there we go. we don't have a lot of details on this, essentially the company is planning to form an alliance with south korean shipping companies, so this might be part of this broader story for hyundai merchant marine. shipping lines have been hit hard in 2016 because of the drop off in global trade. you saw this play out across gdp numbers out of singapore, but that is one to watch. one other thing i want to point out, galaxy entertainment among the casinos falling today despite the positive news. that said, analysts remain positive, and essentially they are saying we will see -- there we go, year to date. year, quitey of the a positive rally, 35% over 12 beths, so the data has to better for this to go up. rishaad: thank you very much indeed for that. the new year begins with key u.s. economic signposts and the countdown to the fed's first policy meeting of the year. let's get over to kathleen hays in new york, bonds getting a , expectations of a trump presidency and stimulus on the fiscal side and more rate hikes. what is being expected? traders,st bond everybody is watching the economy, the federal reserve, how many rate hikes in 2017, and what will donald trump be able to do. year, thearkets last final five months were pretty dismal. is 5489, the chart shows y's fall, the longest down streak since 2010-2011. that big blue bar is november. you have to go to the far left hand side of your screen, 6-7 years ago to see a decline almost this big. the dollar is gaining because gap between u.s. treasuries and sovereign bonds in the g7 the widest and 10 years. that will boost the dollar in 2017. two big economic reports, one hours from now. what are we looking at here? possibly the most important data point at the end of the week. absolutely, this will be seen through the lens of what it means for the federal reserve. the institute for supply management pmi has been above 50 48 of the past nine months. forecast 53.7,e that would mean nine out of 10 for expansion in manufacturing. januaryoted on friday, -- december payrolls, 178,000, the exact same number four november, another for the fed for the path to rate hikes. up two hourly earnings point 5% the month before that, another thing that will help this view of the fed raising bond, but maybe won't help traders, especially if it exceeds expectations. optimismee the trump come optimism about optimism now it seems among consumers and we will see ifl any of that translates into the jobs report on friday. rishaad: we were talking about plot, so what does that tell us? >> no matter how much fed just als say it is snapshot. don't put so much emphasis on the dots. they are asked to have you think gdp will do, inflation, and how many rate hikes do you see in the coming year based on your view of the economy on that particular day. and site of your screen, that is 2017. six fed officials say we will have to hike rates three times, but there were six who do not see that many, and above that line some see an even higher rate by the end of the year. it is not that much of a consensus. the fomc has 12 presidents and seven governors. those 12 fed bank presidents rotate four of the voting seats each year, and there has been a shift ahead of that february 1 meeting, and here is how it has changed. tilt we had a more hawkish because of three of the four, they were all in the hawkish camp. there was only one dove among those four voters, that was jim bullard of st. louis. that17, we will see instead of those 2016 hawkish , 2017, 2 dubsting and two centrists, along with bill dudley, who is also dovish. why people are thinking this is something to watch onsely in those fomc minutes wednesday. foraad: thank you a lot that. let's look at the taiwanese leader. china saying ties that are becoming tens. beijing uses what she calls course of and divisive tactics. in a new year's eve address, president tsai ing-wen said china had hurt the feelings of the taiwanese people and hurt relations. >> i did not wish for confrontation with china, however, we will not give in to pressure. there are still in portend issues -- important issues. beenad: the rhetoric has heating up ever since that phone call to donald trump. what is she referring to when she says the beijing is being course of an intimidating? >> well, interestingly, just as she was giving that address, there was a news report out of beijing citing senior military officials saying that strong measures were being considered for taiwan. the measures will be intended to prevent taiwan from leaning more towards independence. some of those measures we have party seen this month, taiwan lost a key diplomatic ally in west africa to china. china wasted no time rebuilding those diplomatic ties, and also we saw a chinese aircraft sale for the first time from the east china sea into the japann the civic, and reacted by scrambling jets. it did a loop around taiwan and headed for the south china sea, so that cause some jittery feelings for taiwan. rishaad: president tsai ing-wen leaving to inten to attend an inauguration, some intrigue around that. tell us again. some speculation that on a transit stop in the made meai ing-wen president elect to donald trump, and trump was asked on new year's eve whether he would meet tsai ing-wen, and he didn't downplay any speculation by saying we will see. china warned the u.s. not to let through the transit u.s., but it is a long-standing practice because there is no other way to get there from taiwan. it is not clear who she will be meeting with. she has announced plans for major infrastructure investment. how critical is it for the economy? of course taiwan is extremely export dependent for its economy here, and with all the uncertainty that has come about, 's maintsai ing-wen campaign platforms was to join the tpp, but that has been thrown into uncertainty with the incoming president not ring supportive of tpp, so she has to do something to boost domestic consumption, and one way is to boost infrastructure development. roll out aiwan will comprehensive ford-looking plan andarch to spur spending, ultimately private spending, into the sector. rishaad: thank you very much indeed. to build ahow business that lasts. we will hear from founders of fosun on the challenges they have endured. ♪ check of theick latest business flash headlines, a private survey indicating indian manufacturing has shrunk. person touching managers index at 49 point six in december, the lowest since a year earlier. the slowdown could strip india as one of the fastest growing big economies. giving u.k. buyers and new year's president, postponing a price rise for two weeks. beforewho ordered january 15 will benefit from the company's battery network before new fees come in. tesla is raising prices in response to sterling's plunge. non-hairlines saying 2016 was a good year, pretax profit million, revenue climbing 10% to $3.3 billion, passenger traffic on the up by 19% to 21 million seats sold. the at non-hairlines will place shares on the unlisted company market. spacex returning to satellite launches after a falcon nine rocket blew up on the pad after an investigation concluded that a liquid oxygen tank failed. 'se faa has accepted spacex report into the explosion. behind one of china's most acquisitive companies, a friendship that has lasted 30 years, the the three founders of fosun have adapted to events in that time. however, the philosophy behind their business is the same today as when they started out. to improve your way of living in a contemporary world, the only way is to learn how to improve the lives of others and provide services for others. aspirations were to help the livelihood of our own families, but as we continued, it became clear that if you want to achieve a goal, you have to learn how to help others improve their lives and help the customers do the right thing. the logic of these two things is connected. >> if you look back at your time together, the crisis and upheavals, what has been the biggest challenge? encountered some problems in business development, but this can help you grow. the benefit for us is because we started this business as a team, and when we encounter problems, we can recognize them and work is one accordingly, so it always feels like we do have our challenges, but not ones that it is too much pressure, the ones that can be solved. >> today, we are feeling the changes within the industry. if you look at the mobile internet, next up is the internet of things and how it might shake up the traditional industry, so even though you are a powerful player today, it is hard to say if you can survive in 5-10 years, so it is important to integrate with the internet of things and artificial intelligence and find our way of survival. disagreement, a if you want to invest in one asset and you don't agree, who is the boss and makes the ultimate decision? >> you mean i make the decisions? inevitable.s you must have someone making the final call, but fosun has never had a one-man, one-vote kind of thing, nor was there a power play. i don't think that is the best way to resolve issues. the best way to do so is sufficient communication. actually, sometimes decision-making is not about right or wrong. if every decision were like that, then decision-making would not be so difficult. out withys are started friends. is that friendship still the same? a beer, have ave chat, or is it all business? a stronglly, we have chemistry between us because it years, 30 years if you include our school days. it is a camaraderie, although we do not see each other often, we have phone meetings every day. is the same,rship initially friendship bound us together, drink together, talk together, men have that kind of relationship, but sometimes this friendship becomes a medial, like something in your blood -- emilio the next 5-10 years, we have some big targets, continue to work towards a world-class investment group, build a wealth-health happiness ecosystem. these are the big targets. rishaad: the three founders of fosun speaking to haidi lun. one of the largest private car collections in the world, that special report from australia is on the way. ♪ rishaad: this is "bloomberg markets: asia". i am rishaad salamat. the owner of austria's largest car collection is putting some of the treasures up for sale, some 500 cars on display, one of the world's biggest. paul allen got a chance to kick the tires. paul: this warehouse north of sydney was once a hardware store. it is now home to one man's expensive private car collection. cars, totalt 500 value $70 million. that is probably being conservative. >> this is a rolls-royce. this is a very rare car. paul: this is an extensive list of instructions on how to start and stop the vehicle. it is not easy to drive, is it? >> it is not easy to drive. also near impossible to drive, this new arrival. no gearbox and, no seatbelts. the entire collection is owned , whoe man, tony denny owned aaa auto, one of europe's biggest secondhand car places. he came home to indulge his hobby. ?re you breaking even how is it going? business, but essentially private collection. paul: some or most of it is for sale? for sale. some cars will never be sold. ferrari, i can imagine driving that on the road, so what do you do with it? >> it is a car that will appreciate. paul: kept the other end of the spectrum, a whole area devoted to the people's cars of eastern europe. v8 two-stroke engine, perhaps qualifying it has the world's most powerful lawnmower. this used to be the ride of politburo members. if this' could talk. in the spirit of the cone of silence, the insurance bill for this vast collection is also a closely guarded secret. quite something there. right, disney star wars prequel leading the north american box office again, the third straight week. it brought in more than $64 million over the new year, about forecast, but it is expected to ultimately generate $770 million globally. what else do we have? finding dori and jungle book helping north american theaters to new records. ♪ kong,is 11:00 in hong 2:00 p.m. in sydney. i am shery ahn. welcome to "bloomberg markets: asia". ♪ strength, 2017's first snapshot of the chinese economy offers the highest reading on record. thanpore expanded more expected in the fourth quarter, although still showing the slowest pace in asia. oil strengthens has global supply curbs come into effect, however, there is fear that not all producers will comply. china-taiwan tensions rise amid charges of coercive and divisive tactics. day fore first trading many markets across asia, but not japan still celebrating the new year. the asian benchmark gaining for a sixth consecutive session, up .4%. let's get a look at the markets with david. david: a good start to the year. contrast from the 2016 version of events, but that said, we will take it any way it comes. volumes are light. have a look at the commodities space. crude oil $54, highest level going back to 2015, brent pushing above $57. markets got a further boost when the data came out of china. have a look at commodity prices over the last 12 months or so. contracts that are listed on the chinese have aties exchanges, look at this. there we go. so just toas well, name a few, over the course of the last 12 months or so. there is the base effect in play, and a lot comes down to higher commodity prices, so substantial gains they are. have a look at the shanghai roughly the best day in several weeks when you look at the csi 300, the best day since the start of november. reversing losses, well above 22,000 come of i am's very thin, 20%, 30%. australia, highest level since june 2015, binds 40% lighter. malaysia, almost no trading their, 80% lighter compared to this time of the session. up,land should be opening but it is on a holiday as well. we are looking at gains. i was talking about some of the pressure worsening across southeast asia. a lot of the markets like philippines, vietnam, indonesia, they had a strong finish to 2016, so some of that being taken off that table in favor of the likes of australia. gold producers on the way down given the pullback in gold. taiwan -- upkorea, 11%. volume is light, but starting in the green. thank you. some other headlines with first word news. selling a 20% stake in shanghai rural commercial bank, $1.3 billion. the lindner says it is being bought by china costco shipping and sees no material impact on net profit from the sale, which should boost its required capital ratio by 40 basis points. co-chiefbank's executive restarting his career at a smaller firm. firm asining the president, where he will oversee trading and the prime brokerage. he helped to build deutsche bank before stepping down in 2015 amid mounting legal and regulatory problems. he will be working for cantor out of london. goldman sachs indonesia's global indie's global selloff, not expecting the rupee to depreciate from its current level. gaining 2.6% last year, the best-performing currency after the yen. if you're going to be a next that, make it switzerland. a survey says foreign workers there are in the annual a clinton of 188 thousand dollars, the highest in the world and twice the global average. switzerland tops the career ranking for its second year. the cost of living is notoriously high. world covered, 2600 journalists globally. i am rishaad salamat. this is bloomberg. years first survey of manufacturing in china has the highest1.9, reading in three years. haidi lun joins us now. what is this telling us about china's prospects? haidi: let's start off with the good. sinces the highest january 2011, the highest since they started compiling the pmi gauge. in terms of what was good and the sixthng, consecutive month of expansion, beating estimates. , so a two also rose and a half year high. this is a forward-looking indicator, so that does not bode well in terms of how factories are feeling and completes the picture of stabilization. at a five-year high when it comes to factory input prices. china finally managed to snap that deflation. services slipping, but comfortably above that 50 level, suggesting expansion. 7% when ited up to comes to gdp in november, comfortably above that target for 2016 from the chinese authorities. that is the good. let's get to the bad. growth is stabilizing, but what are the near-term challenges then? always thingsre to be concerned about. ubs wealth management said stabilization is not the concern. we have seen that play out over the past few months. robust numbersof coming through on the macro front, but they point to the issues in the short and medium term being liquidity pressures. we have seen that on the interbank lending rate. also, concerns over5 regulation. a lot of this has been a reaction to the dollar strength we have seen post-election, but the threat that chinese authorities are battling, capital outflows, reserves falling to a five-year low as they burned through reserves to defend the yuan. capad that $50,000 resetting, suggesting we could see a further pickup when it comes to potential outflows. as a result, you see these pseudo-capital controls. notcy makers said they are capital controls, but there is concern from beijing to see money going out of the country. this comes against a concerning act drop -- concerning backdrop of the fed raising rates faster than we expect in 2017, and whether donald trump will make a good on these threats he has made over trade tariffs, punitive tariffs on chinese-made goods, and potentially trade wars, so a lot to be concerned about, and also the property market, still overheated when it comes to china. as well as they will be able to cut the supply side issues, over capacity, so 2017 will be a big year for china. it is always about those reforms coming through. thank you for joining us. haidi lun with the latest on china. provided airst data surprise earlier, singapore's economy expanded faster than expected in the fourth quarter as manufacturing and services rebounded. sophie kamaruddin has the details. fourth quarter, great numbers, but what about the big picture? sophie: the prime minister alluded to it in his address. growing 1.8% for 2016, the fastest pace in three years with all three major sectors pushing growth, particularly the fourth quarter when we saw a recovery. the economy expanded at 9.1% on a quarterly basis. performance for the 2016 and fourth quarter surpassing economists estimates and the trade ministry. as for 2017, they are looking at 1% to 3% growth. those numbers are an advanced estimate. we will get preliminary data and january, and with manufacturing supporting growth, it remains to be seen whether that will persist. tonight, we will get clues about how pmi panned out in december. the estimates are for a star softer expansion of 50.1. shery: there are areas of concern. propertyle, the market, another year of declines. how much should we worry about that sector? sophie: prices have been on a downtrend, part of the government's efforts to cool the property sector. said, we have seen private home prices fall for a 13th straight quarter. we got an estimate from the urban redevelopment authority of showing us live in the last three months of 2016, and that is a drop of 3% for all of 2016, a third straight year of declines as vacancy rates have climbed to their highest in 11 years. market isthe property certainly expecting pressure when it comes to prices and rents given the reluctance of the government to ease off property curbs. shery: thank you for joining us. sophie kamaruddin with the latest on singapore's gdp. taiwan warns that ties with china are becoming increasingly tends. we are live in taipei for an update. plus, will a soaring dollar helped fuel opportunities in 2017. ? this is bloomberg. ♪ shery: welcome back. this is "bloomberg markets: asia." isuick check of the this flash headlines. samsung electronics warned slowing growth in key markets and increasing uncertainty around trade and currency fluctuation. used his speech to urge the company to learn from failures and recover its pride. last year's note seven fiasco cost samsung more than $6 billion and pushed smartphone profits to a record low in the third quarter. and the sale of some cars by nissan, bmw, and porsche after an investigation found automakers had fabricated emissions tests. they have been slapped with fines of $5.9 million. carmakers and component suppliers are facing scrutiny following scandals. south korea's biggest carmakers are predicting sales will jump or .7 percent this year according to regulatory findings. hyundai and kia motors targeting 8.2 5 million deliveries in or7, planning 10 new revamped models to counter competition and uncertainty about trade policy under new president donald trump. the rest of today, we have been asking guests for their predictions for the yuan in 2017. senior strategist sees the currency falling fast. , 7.3 byve a forecast the end of the year. gradual expect ongoing orderly depreciation in the currency. the keyword is orderly. shery: ubs wealth management disagrees with that because of the dollar. >> we think the dollar is about to flatten out or retreat against the euro and the yen, and substantial parts of the currency basket. you will see less pressure on the chinese yuan, will they hold a completely flat against the basket? they have shown in the past they , sot allow that always modest weakening over the next 3-6 months, then flat there towards the seven. shery: a chief china strategist said policy makers will allow the yuan to weaken as long as other markets remain stable. >> since august 20 15, 2 bring rounds of depreciation, and that did not work well for the market, but as the yuan continues to depreciate, markets stabilize. the priority is not to upset the market, even though we allow the yuan to depreciate orderly. this year, we will see further depreciation of the yuan, but as long as the market is stable, the authorities will allow it. shery: that was the word on the yuan for 2017. capitalf strategist at link, happy new year. thank you for coming in. let's stay with the conversation on the yuan. we will see that 50,000 quota for foreign asset purchases renewed again this year. how much pressure will that put on the yuan? >> not that much. the currency markets are so large that these amounts, while -- ofntial spread out course, if it happened in one day, that would be a problem, but that will not happen -- so when you look at the currency situation between the yuan and the dollar, you look at interest rate differentials. that will determine what is happening. as u.s. yields for the 10 year have gone up, so have the the 10 yeargoes u.s. come up goes the 10 year chinese. shery: there is a lot of talk about money markets and the stress they are under. what is your assessment? >> we are doing a lot of modeling on that. for example, you can do something pretty esoteric, clustering, take a look at that, and it is not there. whatever is being reported, i don't see it, so there has been some volatility at the beginning of the last year, and that was pretty substantial. there was significant volatility well, but when you look at it over all in terms of those parameters, to look at the spread between the onshore and not there,y, it is so if your reporters find it, i would like to talk to them. shery: you are not concerned about the money markets. what about the overall emerging markets space? this is a reaction to a stronger u.s. dollar, and we expect the dollar to get stronger this year. are investment opportunities given how much emerging-market currencies and bonds have been beaten up. >> you have to look at one thing. if the currencies weekend, there is nothing wrong with it. rapidly, thereto is the problem of a currency collapse. in turkey, that was a problem for a while. right now, it has stabilized at this point and we are not concerned. there is a similar situation for the mexican peso in response to the trump election actually, falling rapidly, but has stabilized since then. the brazilian currency is probably a good currency to invest in if you want to invest in emerging markets. shery: it is the same rationale behind the japanese yen. past 125.kend we have seen the boj and administration change historically, so what you expecting for the yen? is 120, and that's where we will be by midyear, depending on whether trump and acts and the congress and ask the kind of legislation necessary for tax cuts or infrastructure spending, so generally bringing the economy up. if he does, then the u.s. dollar will continue to strengthen, and as a result of that, they didn't will be in the range of 115-120. shery: i want to talk about that and what it means if things don't go ahead as planned in the u.s. do stay with us for the group discussion. some of thehat biggest newsmakers in business and finance c as key risks in the year ahead. find out next. this is bloomberg. ♪ shery: welcome back. this is "bloomberg markets: asia." i am shery ahn. someberg has been asking of the biggest newsmakers about andyear ahead in 2017, after a year of brexit and trump, it is not surprising that geopolitics looms large. here is what they had to say. the biggest risk i see in 2017 are two. first, expectations being high and the inability of government to move as quickly as expectations. come withents ambitions and expectations, and sometimes they can achieve everything, so expectations being lowered is a big risk. weakening democracies in europe and the united states, a wave of right-wing populism that will sweep away the pillars of democracy if we are not careful. if north korea acts out to get attention by an attack on south korea, that is a risk. india and pakistan, though it struggle between them is heating weapons powers. there is a lot for president-elect trump to think about. >> the biggest worry is donald trump makes good on his campaign , starting to impose restrictions or tariffs on trade. other than that, 2017, the world economy and economic policy are on the pro growth side, so i am optimistic. be better than 2016, and asset prices will be higher. businessy the overall environment and political environment are things we watch closely. those could have big impacts on the economy one way or the other. the other is obviously any time there is any kind of exogenous event, whether a terrorist event or things of that nature, that could impact consumer confidence around the world, so we are always doing that external look and trying to understand those things that would impact government approaches, regulations, things of that nature. of aere is a possibility black swan, some foreign-policy crisis we do not anticipate today, or an economic crisis. george bush expected to do many things, then 9/11 happened. the unexpected is the biggest risk. of thelet's get a check markets and play across the region on the first day of training for the asx 200, and what a way to start 2017, up 1.2%, the highest level in one and a half years, the aussie dollar gaining ground after two days of losses. take a look at the kospi, it is joining in the rally, up .5%, although yesterday it did not do much. policy eye on the boj meeting minutes this afternoon. hong kong also gaining .3%. casinos being sold off. this is bloomberg. ♪ is 11:29 a.m. in hong kong, 12:29 p.m. in tokyo. i am shery and. the first survey of the chinese economy shows further strengthening. reading came in at 51.9, ahead of predictions of 50 .9, and the highest in three years. china's latest official pmi data also indicates a strong and 22016 with the economy continuing to stabilize. the factory index was 51.4, eight high. chiefong's former executive has pleaded not guilty to bribery in the latest move in a case that sees him accused of corruption over the refurbishment of an apartment by a businessman who had matters pending before the government. violating the of city's prevention of bribery ordinance, carrying a $64,000 fine and seven years in jail. two of korea's surviving container lines joining forces, hyundai merchant has issued a statement saying it is forming an alliance with a south korean shipping. the pair has been reassessing their future. a potential tie up with hyundai merchant came to nothing earlier. north korea iss close to the launch of an icbm, talking of progress, well outlining his regime's military achievements over the past year. however, south korea says the north shows no signs of an imminent launch. president-elect donald trump said he could meet kim for nuclear talks good he also tweeted that a north korean nuclear weapon will not happen. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. let's get a check of the markets. trading in the green, including hong kong. we are seeing some concerns over liquidity. david ingles joins me with the latest on that. it is that time of day when hong kong is entering the last half hour of trade, and the rate. on the hibor now, thereh of 10% we go, 10.12%. have a look at the five-year chart, look at that jump. a lot of people will draw , the fact, spiking you have u.s. rates higher as well, money coming out of china. 10%, that is fairly high when you want to borrow for three months in hong kong. markets, a equity fairly positive session. let's get back to fundamentals. thefirst data point was caixin data out of china. top three and bottom three there. shanghai in focus. break, the best day since november of last year. it is a good start to the trading year, vines are quite light for obvious reasons. ,f you put everything together 30% or 40% lighter. it does not help that japan, new zealand, and thailand are closed. some things we are following, casino shares, i showed you they were the worst performers on the hang seng. you had data out january 1 showing a continued pick up in gaming intake, but that said, we have seen these stocks rally substantially. come in and to impress for this rally to continue. kia motors and hyundai here, first, sales guidance for both 4.7% is how much they think sales will go up this year. we were talking about where south korean authorities have ,ind bmw, nissan, and porsche having played around with their emissions tests documents. ever grand group, very complicated, but essentially what they are looking to do is they found eight buyers to buy a 13% stake in their real estate unit, when you peel back these financial transactions, analysts describe a backdoor listing $232 i use the company at billion, bigger than the biggest , previous biggest, chinese developer. very interesting story here, restructuring. shery: thank you so much. new year begins with key u.s. economic signposts and the countdown to the fed's first policy meeting of the deer on february 1. kathleen hays has a look at with what traders are bracing for today. got clobbered last year, expectations for the trump presidency, more rate hikes this year, what now? >> we did have a dramatic selloff in the bond market in 2016, accelerating as the year drew to a close. , 5489,ook at this chart treasuries at the end of 2016 fell for five straight months, on the far right hand side of the chart, that big blue line going down. that is november. smaller's decrease was compare that to 2010-2011, the previous biggest selloff, but this one has been dramatic. ae thing this has done is drop in prices and a jump in yield. that big drop is a total return. the dollar is stronger because has widenedp between the u.s. and other g-7 nations. 157 basis points right now, and that is the widest gap we have seen in 17 years, so again, it has to slow down, but that is why economic reports, the fed, and donald trump are so important. shery: we have two economic reports again this week in the u.s., one hours from now. what are we expecting? m, it ismi from the is supposed to strengthen. if we get 53.7 forecast for , it will have been above 50 49 of the past 10 definitelythere seems to be momentum in manufacturing. on friday, the big kahuna, the jobs report. in december, we are expecting a gain of 178,000 nonfarm payrolls , equal to november. bottom line, it is strong enough for the fed to say the labor market continues to improve and we can move towards more rate hikes in 2017, and average hourly earnings expected to rise 2.5%, so something else the fed is waiting to see push spending tour its target. we have seen confidence jumping in key surveys in the u.s.. moretranslates into hiring. i think that will be a topic of conversation as we get the jobs report on friday. shery: right, what are we expecting from the fed? >> they told us already that the consensus view for rate hikes is three. in september, they saw two. plot.look at the dot every three months, they look of gdp, inflation, jobs, and here are how many rate hikes i see this year. from the left, you can see the rate hike dots are all centered around that line that is in the middle. there are six people who see three rate hikes. so itare six below them, is not exactly a strong consensus yet. another thing important to the fed is the way rotates its voters every year among the 12 fed rank presidents. -- bank presidents. last year, there were three hawks. , jim bullard. a tilt and 2017, more doves voting, because you can see doves.will be two the other two voters are centrists. are willing to go along with the majority, but not pushing strong like the hawks last year. the new york fed president is always a voter. the new york fed president gets that extra weight. dudley is president of the new york fed, and he has then dovish , in the same camp as janet yellen, the fed chair. saying why people are this is a dovish consensus for 2017. this is the kind of analysis we will be doing, looking at the minutes and sing with a signal about 2017. shery: no wonder markets are pricing in more than two rate hikes. thank you for joining us. let's head over to tie one, it's china ares ties with becoming increasingly tense as beijing uses what she calls course of and divisive tactics. in her new year's eve address, president tsai ing-wen said china had hurt the feelings of the taiwanese people and destabilize cross strait relations. >> i did not wish for confrontation with china. give in to will not pressure. there are still important principles when dealing with cross strait issues. shery: our taipei bureau chief joins us now. the rhetoric has been heating up 's phone callai with president-elect donald trump. what is she referring to when she says beijing is being course of and intimidating? >> let me put her comments into context. had an eventful month since the phone call with the donald trump. a chinese aircraft carrier sailed for the first time from the east china sea into the western pacific, and it was cause enough for japan to scramble fighter jets. did a loopft carrier around taiwan before heading ,ver to the south china sea putting the taiwanese people on tender hooks. people are not sure of what beijing will or will not do as a result of that phone call. wast at the time that tsai making that speech, senior military officials out of beijing saying strong measures could be in store for taiwan, which could include wargames in the taiwan strait and cutting off of economic ties. shery: president tsai ing-wen leaves this week for the inauguration of the nicaraguan president, so tell us why the timing is so interesting. 's is on her way to visit some key diplomatic allies, but on the way, she will be transiting in the united states. this is something china had warned the u.s. against letting her do, but unfortunately there is not another way to get to central america without transiting through the u.s. there is speculation she may need u.s. president-elect donald trump. donald trump did nothing to play down the speculation when asked over new year's eve, saying "we will see" when asked if he would meet tsai ing-wen. obviously china is not happy. shery: we will be watching that closely. thank you so much. coming up, less than three weeks away from a donald trump presidency. next, the outlook for the u.s. at home and abroad. this is bloomberg. ♪ shery: welcome back. this is "bloomberg markets: asia." . am shery ahn the latest business flash headlines. a private survey indicates indian manufacturing has shrunk as the government's withdrawal of high denomination bills hits demand. it is the lowest since a year earlier. a continued slowdown could strip india of its position as one of the fastest-growing big economies and threaten a backlash against prime minister modi. vietnam airlines says 2016 was a good year with pretax profit hitting $110 million. tosees revenue climbing 10% $3.3 billion, helped by passenger traffic, which rose 19% to 21 million seats. vietnam airlines has placed more than one billion shares on the market today. satellitel return to launches four months after a falcon nine rocket blew up on the pad. concluded ation colluded tha pressure valve failed. that means the faa has accepted the spacex report into the explosion, which eli calls the most perplexing failure in 14 years. , thank you for sticking around. let's continue our conversation on donald trump. it seems the administration is shaping up, and given that he has appointed a lot of billionaire businessmen and investors, should we still be worried about protectionism? think so.on't i can't for the life of me think of the type of people he has appointed being dyed in the wool protection is. rishaad: and it's what made them rich in the first place. you add billionaires to your cabinet and you are expecting change? really? >> this goes back to adam smith. he was the great free trader. why? he made the british rich. what are the risks to look out for this year? , a significantm corporate tax cut, bringing home cash u.s. companies have parked abroad, and massive infrastructure spending, that this will not take off fast enough for people to say it is happening, and that is the risk. not that there is something wrong with that, but something potentially wrong with the speed that congress is willing to an active. there will be so much disappointment out there. >> there are expectations, and they have to be met. rishaad: and on the first day, i understand. >> absolutely. just like fdr. the legislation might not come as quickly as possible, so -- >> i think it will happen quickly because the major person on the tax side, paul ryan in the congress, and donald trump, they see eye to eye on what needs to be done. there are details that have to be ironed out, but on the whole i see no reason why these two guys should not agree. shery: and if they will agree, then what are the factors in the u.s. you are optimistic about? >> right now, the most obvious ones are energy. there is no question that with the oil price going up and continuing to go up, but not maybe as fast as it has, that the energy sector will have new life in it. some of the money coming back into the united states will be invested there. on the epa side, a person now in epage who has been fighting regulations in oklahoma for the better part of his life. rishaad: and is a climate skeptic. and the other part of the story is technology. the united states needs to improve its productivity, and the only way that will happen is to invest in higher technology, so those sectors will be pushed, even though during the election campaign, the tech sector people were skeptic. shery: we saw that huge spike in the sector last year, although it is still seeing an upside. not in favor was of trump. on the other hand, peter thiel was. together, and the basic idea is that in order to push productivity and get the united states back into a competitive position in manufacturing globally, this has to happen. manufacturing seems old hat when you look at the rust measures and how they are calculated along with productivity. we don't have some of the new technology which has been used to improve the way people work given a fair crack of the whip when it comes to these calculations. to take new technology, high technology, then spread it out. that is the key thing that has to happen. it has to spread throughout the population. in the unitedppen states is what has been happening in china. what has been happening in china is the actual application of ip technology throughout society are massive and have led to massive increases in productivity. the same thing has to happen in the nine it states. you go to new york and you are on the telephone and you go through five different companies cutting you off and cutting you in. in china, you can make a phone tol, you sure smartphone make all the banking transactions and all the stock market transactions, while you cannot do that in the u.s. shery: i love that advice to the americans, be more like the chinese. thank you very much. coming up, more than five years on from japan's devastating earthquake and tsunami, how a winemaker in fukushima is using that experience to build something innovative. this is bloomberg. ♪ shery: welcome back. much of japan enjoyed a tourism weaker yen6 has a and relaxed visa rules attracted visitors. fukushima after the quake and disaster, visitors to that region lack behind -- like behind. it is the only winery around in the prefecture. its owner is hoping it will be a catalyst for revival. >> we can demonstrate a successful business model through the winery and encourage local people and business. we hope similar businesses can flourish. >> the region was hard hit by the 2011 fukushima quake, tsunami, and nuclear meltdown. rised not see a noticeable in airborne radiation, but has struggled to escape the stigma. on the was already decline before the disaster and has not recovered. a rare bright spot, hoping to capitalize on japan's renewed love for wine. the winery was swamped from orders by local restaurants, hotels, and markets. grapesroducing wine from harvested elsewhere in japan. it expects eventually to pump out 30,000 bottles of wine each year. other entrepreneurs are now planning their own operations. starting to prepare the vineyards. planting will start this fall. we hope to start building the winery within the next financial year. >> with these green shoots of recovery and wine en vogue, local business leaders are hoping to attract workers, visitors, especially young visitors, to revive the economy. there are talks that the area could become japan's second one have. thet, they need to win hearts and pallets of the nation's wine lovers, one glass at a time. right, bloomberg markets: middle east coming up. yousef is standing by. what you have for us today? and happy newg year's. we kickoff with a closer look at what the region holds for 2017, group thatlls from a will talk us through some of the calls for bonds in equity markets. we will also look at the crude markets with the opec monitoring session around the corner. finally, i look at iron ore, a standout commodity in 2016. can it replicate that performance and 2017? zinc and gold as well. we will get you the conversation at the top of the hour. shery: thank you. happy 2017. that does it for this edition of "bloomberg markets: asia". markets across the region in the region. ♪ ♪ yousef: the killings and istanbul show the inability of keeping terrorists from crossing the border. fearsd: supply cuts, but that not every producer will comply. the rise in crude has consequences for energy. barring fell by a quarter last year. sophierishaad:

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