Transcripts For BLOOMBERG Bloomberg Markets Asia 20170505

The new health bill scrapes through the house. Ant financial remains optimistic despite fears the u. S. Regulator will block the deal. Rishaad a new era of competition, the maiden flight of a plane designed and built in china. That allimportant jobs report about 12 hours away. Significance given the weakness in recent months. Series of promises by President Trump as to how many jobs he will create. Need to. 5 million a year to reach that target, projected by that green line. We are not there yet. It would depend on sturdy wage and salary gains. Trend has been losing momentum in recent months, but gains in employment in march overstated that weakness, revisions as well. Sixmonth average is a bit , 163,000 jobs. It doesnt compare to last year, 237,000 created every month. Haidi thats right. That nonfarm payrolls number what the market is focusing on, also six fed speakers, including janet yellen. Fromll get more nuance that previous policy statement, the weaknesses transitory, whether that is still on message. Just getting used breaking news, miss, core cpia rising 3 year on year. The Consumer Price headline amber is 3. 4 , i miss miss. Taking a look at that month on forh figure, up 5. 2 philippine Consumer Prices. The Deputy Central Bank governors saying they are to 6. 9 g growth at 6. 8 gdp growth over the next couple of years. Its get a check of the first word headlines. The mission to replace obamacare has staggered to the house. Republicans mustered just enough support for the new bill. The vote since the bill to the little where it has chance of passing in its current form. Itublicans there are wary would cost millions to lose health insurance, but trump said obamacare is dead. Has been a catastrophe, and this is a great plan. I think it will get even better, and this is a repeal and replace of obamacare, make no mistake about it. Withe public will now see they gave their name to hear it they put their name next to you paying more for less. And we will make sure the public is aware of that. Rishaad the leaders of Frances National front accepting that Marine Le Pen faces defeat and sunday selection after failing to land a decisive blow in wednesdays debate. Even winning 40 of the vote would be a success. Macon 20t vote putting points ahead. Of statesecond round owned enterprise reforms, 10 companies proposing to sell stakes. Aims totional nuclear become minority investors. Air china and China Southern proposing to consolidate freight units in a new company. Beijing air quality in and central and northern china hazardouscially amid a lingering storm. The u. S. Saying the air quality index topped 900 thursday, and is 400 at the moment. The internationally accepted safe level is 25. Millions of people have been warned to take cautions or stay indoors. Apple were a bond fund, it would tour its rivals. It has 148 billion invested in corporate debt. That is enough to buy all the assets in the Worlds Largest fixed income player. Transferringisted money it earns a broad back to the u. S. To avoid corporate taxes. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Rishaad 24 minutes from the start of the session in hong kong and china. Other markets coming online. The big story is the commodities route that continues. We are having a look at massive e. Lls taking place in iron or some people have pointed to the strengthen the dollar. That is one factor. When you look at how these prices are falling, and these of the contracts on the chinese exchanges. As far as iron ore is concerned, down 6 . Traders are avoiding taking positions because of the uncertainty over prices. That creates a vicious cycle. When you look at the steel mills , they have been increasing output so they can bring down those perunit costs, so it comes back to the cycle. We have come from very high levels. This is a threeday chart. 23ave come back by renminbi. You see the lofty levels, trading about 700, taking you down about 32 , so the story still has legs. We will get more detail on what is happening here. In metals is route one part of the story. There is another, and it would not be good news for saudi arabia. Which is why a lot of the commentary, especially from weopec members, likely will need to see that extend beyond the year. Look at oil, rent at the moment. This takes you back to the time when they did, with that first agreement. Index atberg commodity the lowest level since the u. S. Election. , philippinelation estimates. Il missing 3. 4 . We are still in the range for the central bank. A lot of people will Start Talking about how this plays into headline inflation moving forward. Were down 8 , we or 9 , so something to consider obviously. Haidi happy place. We are there of friday. What else are you watching broadly . Japan has been close, a truncated week, but what if you watching . David australia. We are off the session low, but it broadbased selloff, the big names leading declines, bhp, watch. E, so something to japan and south korea are close this friday. Haidi thats right. Some weird nonprice action with the aussie dollar given the collapse and commodities. , malcolmith australia is meeting with President Trump. We are hearing from President Trump speaking at the commemoration of the coral sea battle, saying australia and america are old friends, and security requires friends you can count on. He is saying that military spending is coming back, and referring to that infamous phone call with Prime Minister turnbull, saying the phone call did get testy, but we are ok and we did not have a rough phone call, so perhaps stepping back from some of the more discordant comments he made following that phone call. We are continuing to watch that is President Trump is speaking, also on the issue of the Asylum Seeker issue, that that has been resolved as well. Still ahead, the details on chinas first ms degree produced jetliner. Its maiden flight is later today. , currencyarket movers trends with j. P. Morgans head of Foreign Exchange strategy for emergingmarket asia. Youre watching bloomberg. Rishaad i am Rishaad Salamat in hong kong. Haidi i am haidi lun in sydney. Chinese smartphone maker xiaomi teaming up with a governmentbacked fun to raise 1. 17 and expand its network of hardware manufacturers. It is working with the Venture Capital arm to put itself on the top of the domestic market. It is now fifth in china. Rishaad the Aviation Business enters a new era with the plane designed and built in china, the iron ore is the latest attempt to break the stranglehold of airbus and boeing on the commercial jet market. The made inind china tag, the reality is the c9 19 uses western suppliers including ge and honeywell. Ferreri adjusted growth to 36 apple, compared profit margin. Former parent Fiat Chrysler manages 3 . Bloombergight, the euro spot index has gained the most due to the French Election on sunday. Traders are expecting a choppy ride. Jonathan, thank you for joining us. There is always that risk of something going in the other direction, but it looks like mr. Macron is well set. You see we could see some choppiness, why . Fomc outcomed the this week, so u. S. Interest rates are trending back up from the bottom end of that range, and as you said, the election outcome is still uncertain. A general sense is that if we do , theeakness in the euro market will be looking to buy that. The European Data looking better. We have positive trends around european inflation. Most people think the european currency is still undervalued, but in the second half of the year, we think that will translate into a stronger euro. Youre also predicting a stronger again, who weaker pound. Is it a function of the dollar or whats going on in these countries . It is a combination of factors. We still have a few more fed hikes this year. That should be supportive for the dollar, but only at the margin. We think the violation arguments will prove to be compelling, particularly the yen outlook. In the case of sterling, it is more around we still have to face these brexit headwinds, so that will drive some modest weakness in the sterling against the dollar through the rest of this year. Rishaad lets go to emergingmarket currencies. I want to bring this up. This is global risk aversion. We have a situation where a version is becoming, people are becoming less and less adverse. There is a decreasing appetite for risk. Is that playing out for the rupiah, the rupee, the etc. . I think so. If you go back to the start of this year, there was a lot more concern around how strong the dollar would be this year, how aggressive the fed would have to be around its tightening policy, so those types, and we are concerned about china, and a lot of fears have been allayed come it so it makes sense risk aversion has come down, but if you look at the first four months, Strong Equity and bond flows into the markets you have been talking about, so while we are in an environment where Risk Appetite remains supportive, but we need to see good news already priced in. This week, we have seen some walpoles in Commodity Markets in particular, so i dont think now is a great time to positive Risk Appetite. It is probably better to be cautious in the current environment. Wobbles, ifhan, the it turns into something more than a wobble and calls into question the basis of the reflation trade, you could see more Downside Pressure when it comes to commodities and currencies. Surprising you that the aussie dollar has not reacted . Well, i mean, i think we have obviously seen from a trend perspective that the aussie dollar has weakened over the past few months. In terms of why we are not seeing reactions today, i mean, terms of our expectations has been more on the hawkish side, slightly, so thats probably helping the aussie dollar a little bit. Some of the action in commodities prices has been recently focused on oil. The aussie dollar is focused around things like iron ore, which have corrected, but this latest move is more centered around oil specific commodities rather than the bulk commodities which the aussie dollar has is a big focus point. Such a niceve had run of the again weakness if you are a japanese stock investor, the boj. You expect that to continue like that it does look that they are on message to make june ready for the next hike . In the near term, the risks and outlook are skewed to the upside. I think that yield differential story is coming back into play quite strongly. You could still see a push through 113, potentially 114 come of that type of level in terms of dollaryen. That is the risk in the shortterm, onetwo months, but as we progress through the second half of the year, we are still looking at that valuation story being quite positive for yen, and ultimately thinking the fed will not be able to deliver an aggressive rate hike cycle, and those of the factors that would deliver weaker levels in dollaryen as we progressed to the end of this year. Rishaad jonathan, getting back to the emergingmarket picture. Weve been looking at the world currency ranking system, and at the emergingmarket side of things. Of theican peso is one best performers, but in this world arehe these gain sustainable . Definitely in terms of the context of the taiwan dollar, you have a situation where strength is here to stay. At the moment, we may see more of a stronger dollar, but certainly we will not go back to the levels we saw in 2015 or early 2016. Veryhing that is going much in the favor of the taiwan dollar is the strong current account position. The growth dynamics have been better over the past few quarters as we have come strongly out of week growth conditions. You can see the same situation for the korean won as well. If we do see Dollar Strength against the korean won and taiwan dollar, we would look to fade that and look for stronger levels for the korean won and taiwan dollar over the coming quarters. Rishaad thank you a lot for that. Right, coming up, not once but twice, i look at how a Hong Kong Listed Company Managed to fend off attacks by shortsellers. Details on the way. Rishaad we are counting down to the start of the trading day in china and hong kong. Lets look at the premarket auction. Confirmingutures there. Inare watching fullshare hong kong targeted by another short seller, the stock jumping 17 when it resumed trading. They have managed to fend it off to some extent last week, and another one this week. Shortsellers dont like this. Thats correct. A lot of the shortsellers have been looking at fullshare for a while. Itself,ook at the stock since december 2013 when the stock listed in hong kong, the shares have risen a lot, more than 2000 . Rishaad we got that actually pick you can see the run up on this chart going back four years. Walk us through it briefly. The shares have been rising a lot, and that is why the shortsellers started looking into fullshare last year. We did an interview with the and they said they were not in a bubble despite the dramatic share price rise. What we are seeing is volatility, i guess. It is stock that has a market cap that is quite high because of the dramatic share price rise. We did see the stock fall last week after the most recent Research Report came out, talking about some of the things they were questioning about the company. We did see the stock rise 17 yesterday. We are looking at some data this morning, there was a lot of from mainland chinese investors. Also bought 15 main shares, so that may have helped to support the stock price. Haidi thank you for that. We are live in new york where president is hosting Prime Minister turnbull. The shows about to start how do i look . Like a bald penguin. [ laughing ] show me the Billboard Music awards. Show me top artist. Show me the top hot 100 artist. They give awards for being hot and 100 years old . Well take 2 [ laughing ] xfinity x1 gives you exclusive access to the best of the Billboard Music awards just by using your voice. The Billboard Music awards. Sunday, may 21st eight seven central only on abc. Rishaad we go. Day of the week as we count you down to the start of the session. We are coming to from bloombergs asia headquarters. I am haidi lun in sydney. Risk, it has been a big week in australia. We have that policy decision, no heare expected, but we did from philip lowe yesterday speaking about this issue of Financial Stability and systemic a red hotng through property market. 6191, there is no better illustration of the conundrum acing the rba in terms of what policy options they have to prevent this issue, Household Debt largely driven by mortgages soaring, the white line is wage growth at an alltime low. The governor did speak about the potential for boosting productivity, that the economy would need to keep growing for jobs to be supported, but the issue of Household Debt, mortgage burdens on the household, it could weigh on Consumer Spending behavior and does reduce the resilience of the australian economy when it comes to future shocks. It is a jealously guarded economy in terms of being a quarter of a century without a recession. Lets look at the latest Monetary Policy statement for more detail or color as to what the rba is thinking. It is a mixed bag. Inflation and gdp forecasts are little change from last quarter in february. It has increased confidence that inflation will rise gradually. We have seen inflation creep back to within the target of 2 to 3 . Saysencouragingly, the rba signs the slow down in queens land and western austria are coming to an end, however this fair capacity as expected to remain for the next few years. It is that spare capacity, weak wages grow, and unemployment that is the focus of the rba. Have so far. We the aussie dollar little changed on the release of the statement. It would take a while to go through it. The aussie dollar has not reacted today to be fair. This issue of commodities is something the rba will be watching closely, talking about china as the biggest risk when it comes to demand. Paul im just keeping and i to see if there is any commentary on china. Nothing at the moment. The rba does not like to comment on domestic and the International Picture in its statement. Yes, the iron ore is always a big concern, particularly heading into the budget. The last budget was predicated on 55 per time, so the government was fortunate for the of the year much of year. It is expected to help the deficit when we get that final number next week. He will be interesting to see what the forecast for iron ore for the coming year is. Watched,number closely still waiting on the rba to comment on that. Haidi as we wait for that comment on iron ore prices, iron ore falling another 8 in the getese session, so lets more on the markets with david. Oi story onodities store oil, but spreading to the rest of the complex. Were down as much as 8 , now only 6. 5 . I have moved my commodities to the left to highlight that being the Central Market story for the day. Pressure on commodities and across equities markets here. 5 in hong kong. The bond markets are also selling off. As you can see, dollar is on the front foot. Lets break down what is happening. His is the hshares we are bouncing off session lows. Is level you want to watch 10,000. Lets see if we have reached that level. We are 18 points about that psychological level. Only four gainers at the moment across this whole index. Petrochina, icbc, some the big chinese names reading declines. The shanghai deposit, your imf function. Let me see her in on every single sector on the way down, 1 on energy. Much see where we are. There we go. Rest, oil and gas storage dropping across the board. Of course, mining stocks in shanghai, there we go, materials , so an interesting story there. Have a look at the 10 year yield in australia. , but us andse mentioned earlier, yields are picking up across the board in asia. Tenyear year yield is now 2. 68 , some not quite far enough, but last month levels. It is ironic how we were talking about 3 a few weeks back. We fell as low as 2. 4 . Guys. Foraad thank you a lot that. Lets check first word headlines. ,hp billiton under pressure down to a fresh set of activist investor demands. The worlds best performing hedge fund has a added its. Oice to sell swiss saysit beijings drive to influence is promising with President Trump pulling back from global engagement. It says most of the money will india, russia. Rishaad Malcolm Turnbull prepares to meet President Trump , he has been echoing some of the u. S. President s rhetoric at home. We have a budget next week expected to contain and Infrastructure Spending splurge, appealing to voters with nationalists, nationbuilding policies. It could cost the nations aaa credit rating. Haidi the wto has upheld impose plainht to packaging on tobacco products. Said it could usher into a new wave of restrictions after tobaccold producing countries filed complaints. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. President trump has finally met with Malcolm Turnbull in new york. Smiles, handshakes, even talk of the deal. Raimi inocencio has been watching the developments. Infamous phone call, but President Trump is talking down, saying it wasnt a big deal. Ramy that was a surprise in one way, but in the political spin zone, you expect heads of state to tamp things down and say it was not as bad as it was, the medias fault, fake news. You have to look at the smiles and handshakes through the lens of the economy. , ecnt to show this function tr. Number one is china, but number three is the United States. That is so important. Rock that want to relationship, that sevendecade relationship, between the two allies. During the dinner, which i understand is still going on, mr. Trump talked about National Security between the two countries and immigration. He also talked about trade and said he reaffirmed the tremendous friendship between the two countries. In terms of immigration, they made a surprise deal with regards to refugees. Lets call up this map which places in the South Pacific that hold about 1200 refugees, people trying to get to australia, but have been sent to the United States. We know that infamous phone call with donald trump in late january with mr. Turnbull ended up with something akin to a them deal dumb deal. Mr. Trump said he got a little when mr. Trump was with mr. Turnbull and front of the cameras, this is what they said. Take a listen. We had a great call. Guys exaggerated that call, a big exaggeration. We had a great call. Right . A great call, we had a very, very good call. That was fake news. Exactly right. Best call was the ever come a good call, all those smiles. Spin room potentially, but in this case, it was the smile room. Rishaad i will take it from here. Didnt lookbull particular you comfortable there. How is this being seen . Can it be considered a win for the austrian Prime Minister . Ramy i have been wondering that myself. Or so, the hour optics are pretty good. Everyone seems to be having a good time, talk of this refugee deal between the u. S. And australia. Looking back at the past 24 hours, it has been an interesting time. Mr. Turnbull has been here for the past 24 hours, and mr. Trump came in late to this meeting. They were supposed to have one hour together, then squeezed to 30 minutes. In the meantime, it seems that mr. Turnbull was just waiting for mr. Trump to appear. Also the optics of where they are. They are celebrating the 75th anniversary of the battle of the thel seas pushing back japanese in world war ii. It is happening on an Aircraft Carrier that is now a museum. Last month, president xi jinping met mr. Trump at the winter white house at maralago. Would you rather meet him at either of those places . Probably. When it comes to mr. Trump and the president of United States coming you will take it where you can get it, but optically not ideal. You very much for that. Coming up the sky is the limit as chinas much delayed airplane prepares for its maiden flight. We will ask if it can challenge the duopoly of boeingairbus. Haidi this is Bloomberg Markets asia. Im haidi lun in sydney. Rishaad i am Rishaad Salamat in hong kong. Johnson johnson must pay more than 110 million to a woman who blames her over there in cancer on talcum products. Pay after shest diagnosed with cancer. Johnson johnson faces more than 3000 similar cases. Expectingtas airlines less competition from international rivals as overseas carriers increase capacity compared to the first half. They wont be enough to lift fullyear earnings. Qantas expects underlying profits down from last financial year. Toshiba making headlines, this time turning down bids for its energytechnology units. It is seeking to get a higher price at auction. Tohiba is selling assets avert bankruptcy because of its Westinghouse Nuclear business, which may result in a full year loss of ¥1 trillion. The eyes of the aviation world on shanghai, specifically chinas first domestically designed and built passenger plane. It is a proud moment for beijing, but the comac c919 owes a lot to the outside world. Says that gives potential buyers a sense of assurance. Great to have you. 15 westernn suppliers were used to build this plane, so can we call it made in china . You are right. This is questionable. The key thing to focus on is that the iron ore has developed comac c919 has developed a strategy for tried and tested technologies, engines, and components, and this should give comfortine buyers more in terms of Quality Assurance familiarwhat they are with in terms of the future a craft maintenance of the comac c919, it should not be different from what they are used to. I want to get your views on the delays and whether that. Ill be ongoing it is face the chinese carriers and leasing companies. Is there any prospect of interest from foreign buyers . Foreign buyer interest has been limited, but this will change once the test flight become successful. If you look at china, china is a large enough market for the comac c919. Asia is now the largest buyer of , and china the world accounts for 36 of that. Chinese airlines have under ordered planes, and this will help to drive the demand for the comac c919, and for foreign carriers what will really help y they can these two foreign carriers, easing the financial burden of owning the aircraft out right. There will be attractive financing terms as well for all buyers interested in ordering the comac c919. Haidi it will be a long time before it becomes a threat to the big players. If you look at first year delivery schedule, 50 aircraft, 7 or 8 when it comes to boeings annual production as well as airbus . Exactly. We dont think realistically speaking that the comac c919 will be a big threat to airbus programs, but in the longer term, we think china will get there. China became the largest shipbuilding country in the history,y in recent and more importantly, this helps to increase the bargaining position of the Chinese Airlines whoeven the Global Airlines are negotiating to procure more planes from airbus and boeing. Is production and delivery delays can snowball and tend to have a domino effect, affecting the rest of the aircraft orders as they get pushed out further and further, and this may render comac c919 less competitive potentially, or obsolete by the time it is delivered. Rishaad thats just the point. Is it any good . Is it safe . Is it competitively priced . Is it fuelefficient . Does its performance stack up . Of comparing the existing model, it does stack up really well, but we will have to monitor the performance of the aircraft over a longer time to see if it meets its design specifications. In terms of safety, china has focused more on aviation safety in recent years, and this plane will not launch into commercial operations until it meets the stringent regulatory requirements, so we are not that concerned at this point. Rishaad why hasnt it been able to get any foreign buyers . That is the deal. What we need to see is that a lot of the foreign potential certification see before they get comfortable, but if the launch test flight will be successful, it will garner more interest. It tells us a lot about chinas global ambitions at the end of the day. What else are they planning as well when it comes to aviation. Eros faces one key industry they seefocusing on, and we will continual funding of r d and potentially exploring production of a widebody aircraft as well in the longer term. Rishaad thank you so much for joining us. She is the founder and chief executive of crucial perspective. Alibabas financial arm is confident its bid for moneygram will go through. We will hear from the companys president next. Reportedmoneygram earnings ahead of the highest estimates. This is a Company Based in dallas, basically a Money Transfer company. They are at the center of a bidding war between ant financial and another bidder. Upped itsial recently offer, but they fear regulators could block the bid. We are confident it will get through. This is strategically important transaction for us. We need to submit it to voluntary review in the u. S. That started back in january and has been proceeding smoothly. We have Regulatory Approval as well stateside, and the state Regulatory Approvals are underway. We are quite confident week will get through these. You were brought on to ant financial to expand its financial base. It is also preparing for an ipo, so im curious that you needed this deal in order to continue with this ipo plan. This transaction is important for us in terms of international growth. I was bought on to expand ant financial internationally, and the Global Network that moneygram brings to us with accelerate our ability to do things for customers worldwide. Businesses take decades to build in terms of connectivity to banks and other financial institutions, and in one step, this will bring us that connectivity. A critical to expand valuation in order to be appealing to public investors . It would be helpful to expand our earnings stream and vibration. Opportunity to create shareholder value to, but it also connects with the partnerships and asia in india, thailand, also the philippines, indonesia, and korea, and to connecting those users with this network, we see huge Growth Opportunities across the world, and so that will indeed enhance revenues and valuation with it as well. You consider starting another funding round to support some of those International Deals you have made . We are not a capitalintensive business. The Financial Group at goldman sachs, i know what a constraint capital can be. Istunately, ant financial more of a technology company, so we are not constrained by capital in terms of our growth your this business will enhance our earnings stream and give us greater earnings capability, and we dont see an immediate need for capital to grow, but we have been successful in prior rounds, and as we go forward, you may see capital in the next year or two. Haidi lots more in the next hour, including our interview with the Deputy Governor of the philippine central bank. Future ask about the we wait to hear who will be leading it next. This is bloomberg. Announcer from our studios in new york city, this is charlie rose. Charlie we begin this evening with the fbi director james comeys testimony today before the Senate Judiciary committee. Comey defended his decision to inform congress he was clintonng the hillary controversy before last novembers election. Concealed information, he said, would be the death of the fbi. He stood by his actions, comey said it made him mildly nauseous to think we would have had some impact on the election. He also answered questions about russia, wikileaks, and President Trump