Transcripts For BLOOMBERG Bloomberg Markets Asia 20171208 :

moving into the thick of things as we move into these markets opening up in the next hour or so. in the asia-pacific, it is friday. let's get a sense of how we have done so far this week. looking at one of our functions on the bloomberg terminal, a flow of the money into and out of different etf's around the world. over thehe net flows next week or so. the u.s. has obviously seen a fairly topsy-turvy ride and where we are. getting weakness come through earlier on in the japanese currency. ,he yen solvency also there reacting or perhaps getting offered up on the back of the gdp numbers coming out of japan. that inbe talking about a few moments. we are looking ahead to the data coming out of the chinese mainland. around this time tomorrow, the all important inflation. ppi numbers coming out, so it is .airly big lots of guests coming on the show to tackle these topics, including bitcoin. 30 minutes away. that's on the open up markets here in hong kong. sophie is tracking all the market moves for us. and what is that? ofhie: we have a little bit an unusual move, korean bonds jumping, so the yield sliding 25 basis points. we wait for the financial ministry to release its monthly economic assessment report. the korean won will be in focus job the government has offered to dampen enthusiasm for the currency's rise. willok rate hike, that feed into the economic outlook for south korea in 2018 18, so with that, we do have the korean won under pressure, extending losses out a two week low. gaining ground, though little changed. we have asia stocks looking cheerful this friday, checking the broad-based rally. for the best set week in september as the u.s. tax bill is making a fairly good progress ahead of friday's u.s. jobs data, plus the demand to itrow dollars is rising as has done every year since the fed began its tightening cycle in 2015. you can see this on the #btv 3202. you can see the anticipated rate hike was has fallen to a 2008 flow as the tenor shifted. take a look at equity markets. gher, leading that hi following the solid upward revision to third-quarter gdp. tech shares being led higher by trend micro. chemical makers continuing to gain ground. this has risen to a fresh high. it may be its full-year profit forecast. november asbing to the city upgraded the stock on expectations for better returns. just one note on a decline, we have it fighting as the unit does shopping for u.s. deals to meet cybersecurity's demands. take a look at some stocks in taipei. november revenue report due this afternoon. shares have fallen 7% three morgan stanley downgraded the company. stock getting pop for the before the november sales report. the semiconductor sliding even after reporting 8.4% rise in november sales. climbing despite reporting a drop in sales for that month, dave. david: thank you for that update. we will be getting a two sophie. let me get over to ramy inocencio and a first word news. democratic senator is quitting congress over alleged sexual abuse. more than half of all brenton's colleagues demanded he stepped down to make clear that mistreatment of women is unacceptable. franken is the latest high-profile man brought down by a shift in culture that increasingly treats sexual misconduct zero-tolerance. franken: i, of all people, am that i am leaving while a man who has bragged on tape about his history of sexual suits in the oval office and a man who has repeatedly preyed on young girls campaign to the senate with the full support of his party. >> to the meatiest, and clashes palestinianss territory in response to president trump transmission recognition of jerusalem as the capital of israel. his decision came despite warnings from regional leaders and u.s. allies, and sets the stage for renewed violence. the leader called for a new intifada. it is not clear if there is appetite for a third uprising against israel. the brexit talks expected to continue all night in brussels as the so-called deadline of deadlines lose on friday. the two sides are trying to reach a compromise on the status of the irish border after the split so talks can move on to trade. the e.u. says progress is being made, but the u.k. will not confirm any deal is near. they declined to say if theresa may will go to brussels later. closer to a step new grand coalition with the social democrats, saying it is worth exploring how far chancellor merkel will go to accommodate their demands. the spd leader, martin schulz, urged party members to drop their reluctance in order to revive the alliance and end months of political deadlock. spd officials say they don't expect to form a coalition until next year, in march. and washington has again managed to dodge a government shutdown, but only for a couple of weeks. the senate followed the house in voting in favor of a bill to fund federal agencies through december 22. speaker paul ryan had to quell a revolt by some helps conservatives -- house conservatives who wanted a longer stopgaps. the bill goes to the white house for the president's signature. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ramy inocencio, and this is bloomberg. david: time to put it back to china and have a look at what is happening. it should bring us the latest trade demers. we have seen at the fx reserves did and where we stand as we move into the end of this year. we're looking at 3.1 2 trillion u.s. dollars, just over $10 billion for the month prior. look, this is the 10th month of this flight pickup. we had the pound, the yen, the euro, rising in u.s. dollar terms. that helps. the big story is one of stability. the vast contrast to the start of the year where these reserves seemed to be on a one-way track down as pressure was very eminent. that is no longer the case. it is stability. next year, we could be rebuilding those reserves. david: we did manage to sort of see a floor of the 3 trillion. hopefully, we don't get there. at some point, we all remember what happened last january. hopefully, we get the trade numbers coming out of china. both sets, remember the, dollar --renminbi in dollar terms. >> the year on your number we are looking is -- year on year number is the export front. again, let's strip away from the numbers and get to the big picture here. exports have been a real reason for growth for china. it has been somewhat of a virtual circle because that strong export performance from ofna has created a lot strength for other nations as well. trading partners like south korea, taiwan, and others so that is working quite well. next year, things look like they could be different. things are not going to fall off a cliff. so the import demand in china the cost of your on your offense and less infrastructure investment. surveyed economists are looking for a 5% increase in imports next year, they're different from the 15% were there about increase we have seen. less of a growth boost for china's big trading partners. david: it is not exactly falling. the hope here. inflation comes out around this time saturday. we will obviously be in bed, hopefully. give us a sense of what we're watching out for. movement inre is core prices in china. nothing to alarm the pboc. while below this government 3% desired level. the cpi number we are looking for is a very tight 1.8%, and the ppi picture that has been the most interesting stories this year, we are looking for some moderation. they are looking for 5.8% increase from a year earlier. this reflation at the factory gate has been pivotal and helpful to helping chinese companies who are really theired in china reflate profit producing. they are able to pay back their debt. it looks like it is continuing to the end of the year. david: certainly want to watch, debt servicing. you have a great story on that, the ability for a lot of these companies to service that that. this is a big part of that. thank you for wrapping all of that for us. trade numbers come out in one hour's time of the national bureau of statistics. three days before futures trading takes off on bitcoin, warnings abound that the move could have been may be rushed. more on that later in this hour. next tuesday to the deputy furia, danny murray, about the challenges ahead for the chinese economy. ♪ david: this "bloomberg markets: asia is "bloomberg markets: asia ." i am david ingles and hong kong. the economy spending more than reported. a fasterrowing at pace. for more on this, our japan and korea managing editor joins us live out of tokyo. another positive surprise out of japan. spectacular surprise for japan's economy. it really puts an exclamation point on the fact that after seven three quarters of expansion, it is in its longest period of sustained growth since 1994. the numbers were strung across the board. business investment of course was the big driver, sharply upwardly revised. figure usestoday's a new way of calculating private consumption. is there anything we should know in particular about that change? malcolm: that is something to watch going forward. in number was not changed the latest report, but the new way of assessing private consumption puts a greater aphasis on sales data and slightly lesser emphasis on the survey, which can be volatile from time to time. we had bad weather, a lot of rain on weekends, and we think that may have weighed on sales, but the new data, the new way of assessing it, should incorporate the impact from record numbers of visitors coming to japan i'm a driving sales, retail sales, and that is a trend we expect to continue ahead of the rugby world cup in 2020. david: if i asked governor kuroda whether he thinks inflation is a thing of the past, what do you think you would say? would laugh almost certainly. he would do his little chuckle and then he would probably try to find a way to avoid the question. weean, it's fair to say -- have had a consecutive quarter of growth in prices. not anywhere near the 2% that mr. kuroda has said he wants to target, but it has been fairly consistent and sustained. i think now, a lot of people in japan are thinking we are getting ready to turn a corner. there is a lot of talk that mr. kuroda, if he is still in his year, will be looking to normalize policy sometime within the second half. the first step would be to raise the targets for the yield curve. and very quickly, brian, a key takeaway, if any, for policymakers? brian: it's very good news. of course, the pressure is still there for mr. abe to come through with his side of the thing, which is fiscal stimulus. we expect a few details that will put more money into subsidizing education for kids and also, there should be some incentive that will further spur capital investment, and that will feed into more growth in quarters ahead. david: brian, thank you so much for wrapping all of that for us. brian fowler, live for us in tokyo. our next guest says japan's growth may be weaker. currency mayronger take affect. annamarie, global head of research. daniel, very nice to see you. japan has been punching above its weight for several quarters. ut gap has been inflating. windows inflation hit 2%? -- when does inflation hit 2%? daniel: we are a little bit away from that in target. the bank of japan has raised its policy staff in terms of wanting to see inflation overshoot the 2% target. the bank of japan remains committed to ongoing easy monetary policy regardless of what is going on in the rest of the world. that is an important support for the rest of the economy. david: implications on dollar yen. i would imagine everything, all else equal, the boj essentially on course for the first vehicle future. -- for the foreseeable future. daniel: it is natural to expect the end to weaken when the bank of japan seems committed to fed ison whilst the contracting and the ecb is looking to reduce the pace of its expansion. think it is completely natural. we penciled in quite a wide 125 for nextto year. it will not be a collapse at the end. that would be equally a negative. we expect some controlled devaluation. david: what happens when they step away? this might be a story 10 years from now, like when you look may be 2025. let's put it there. what happens when the boj steps back? i'm assuming demographics are much work. can it goldilocks -- stand on its own feet without the boj? daniel: there's a lot of good things going on. last year, we were able to report japan looking good under the head. really, actually, that explains what's going on in japan which is that we know that the demographics and the debt overhang act as long-term constraints on japanese growth. we know there are important structural changes going on underneath. the labor market is subtly changing and positive shifts in terms of corporate governance are also very good for the japanese economy, so lots of good things going on underneath. david: let's leave it there for now. lots more to discuss with daniel murray, deputy chief investment officer, and global head. you can catch all of those is one with- there daniel that you may have missed. interactive tv from 10 on your bloomberg, tv . dive into any of the securities and charts. daniel stays with us over the next few minutes or so, next to 10 minutes or so. send in any questions you may have for him, bottom left of that tv function. stay with us. more, coming up next. this is bloomberg. ♪ david: this is "bloomberg markets: asia." i'm david ingles in hong kong. an update. the proposed share sale will help cut that. two korean ratings companies say that might not be enough in the long run. the shipbuilding industry is facing orders due to overcapacity. slow down and scrapping rates across the industry. aims to raise $1.4 billion. short-term debt is more than seven times its liquid assets. let's look at bain capital, ready to spend $900 million by digital advertising companies in asia as it revamp japan's number three asian seat to better compete with rivals. it says it has acquired 87% and it intends to do the company by march of next year. withlan is to -- technology and expertise. it is a fast-growing digital market. speaking of tech, youtube. the company is said to be planning a new paid music service in the new year. we are told warner music has talks aregned on and underway with sony and universal with a consortium of independent labels. spotify and apple music have helped the industry grow again after two decades of decline. youtube has been criticized for underpaying labels. i am guilty of that. i want music on youtube. but who doesn't? let's give it back to the broader picture across markets. we have this do out for november. we are looking for volatility in payrolls and wages. the dramatic storm swings for the months passed. global head of research at the fts at management. so, is there anything that you can see between now and the next two weeks that my prevent the fed from moving? daniel: the short answer is no. markets are pricing it in almost with 100% probability. it is way over 90%. i think it is a done deal. i think it is being well taken. i think, you know, there is no significant data that is likely to change their mind, even if we see it slightly weaker on the payroll ember, which we are not expecting to read the other supporting data has been several best that actually, the fed is well justified in tightening policy. david: we practically get someone from the fed and fed officials to speak every week here. is there at all a risk that we do not see a sudden tightening coming? or is that really just telegraphed? daniel: i think there is a balance of terms of central-bank policy that they want to communicate to market, so there are no nasty surprises, so markets can adjust to any changes in the monetary policy stance, but at the same time, they need to be able to surprise markets and surprise the economy to bring about meaningful change, so it is a sort of trade-off they have to take into account. at the moment, the balance is much more on communication and making sure people understand what's coming so they can adjust their behavior. david: you guys have come out with essentially a rough figure of how much the fed balance sheet has to come down to raise -- to see the consequent move up in yields. what is the relationship? daniel: what we use, based on a meta-analysis of the impact of fed balance sheet expansion -- wouldery $100 billion, it result in an increase in the ten-year treasury, around five basis points. these are very uncertain. these are cross currents. next year, the fed balance sheet might contract by 300 to $400 billion. exactly. it might be 15 to 20 basis point, upward pressure on the 10 year treasury. withis really just noise all context. we don't expected by themselves. you have to take it into context and everything else that is going on in the economy and the impact in markets. david: harmony rate hikes for next year? daniel: two. david: when does the next one comes next year? daniel: march. david: then we will see. daniel murray stays with us. of course, we are looking ahead to the market open here in hong kong, shanghai, and in manila. this is bloomberg. ♪ david: less than a minute away from the open in hong kong. beautiful friday. that's a look at construction pure those two things not going well together. that is the construction ahead across where we are at the lines coming few out. we have the fixed income from the pboc. galaxy entertainment coming out with some lines, saying the company met with president duterte. they were applying for a casino license and at the moment, a casino or resort at least in the island, paradise. let's see how that plays out across the stock and other things we are following your the big thing this week has been the drop in the likes of tencent and a lot of these chipmakers. we saw a little bit of a comeback. eight days of decline into thursday. two as we going to the weekend, and sophie is standing by as we look at the open. a look quite a bit take at what is happening with chinese stocks. they are under pressure for the most part. large cap slighting .2%. marginal gains for small caps ahead of chinese trade data, which is anticipated to show moderating import growth. shanghai shares extending, set for a fourth weekly loss. that is gaining ground, climbing about .4%, rising for a second day while they chair gauge -- the eight share gauge is -- the h-share gauge is climbing. let's take a look at some equity movers. to buy forthe stock the first time. we have the stock rising the most since august 25. that is over at ubs. cost structures that the company up for profitability recovery in 2017 and 2019. flipping the board for the new debutante to hong kong trading, 1697. the ticker, shandong falling, as much as 12% in the market. taking a look at what is moving in, hong kong and the hang seng, a t tech gaining ground, extending gains. at daiwa.d to buy at --ad real estate investment slighting, rated neutral at cimb. energy stocks being led lower by sinopec as well, so we have a mixed bag. the hang seng on the up here this friday. now, we0 minutes from might get the latest trade numbers out of the chinese market. let's give you an update of your first word news with ramy inocencio. ramy: thank you very much. clashes erupted across palestinian territory in response to trump's recognition of jerusalem as the capital of israel. his decisions came despite warnings from mideast leaders and u.s. allies and set the stage for renewed violence. a leader called for a new intifada. it is not clear if there is popular appetite for a third uprising against israel. brexit talks are expected to continue all night in brussels as the so-called deadline of deadlines looms on friday. the two sides are trying to reach a compromise on the status of the irish border after the split. on to trade.d move the e.u. says progress is being made, but u.k. will not confirm any deal is near. they declined to say if theresa may will go to brussels later. washington has again managed to dodge a government shutdown, but only for a couple of weeks. the senate followed the house in voting in favor of a bill to fund federal agencies to december 22. paul ryan had to quell a revolt by some house conservatives who wanted a longer stopgap to avoid giving concessions to democrats. the bill goes to the white house for the president's signature. bill gross has been warning about the damage low interest rates cause for banks and savers and is now saying the fed is likely to be cautious about new hikes. note,g in an investment he says there is little room for error, and should a crisis arise, the ability to offer protection would be impaired. the fed is excited to raise rates x week with more hikes in 2018. , with more-20week 18. dialogue with the united states. interfax says sergey lavrov spoke to rex tillerson this thursday and says russia is ready to act as intermediary if any talks do happen. interfax also says kim jong-un is keen to raise the stakes in the nuclear standoff before any potential negotiations. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am ramy inocencio, and this is bloomberg. david. david: thank you for that update. the relative -- deleveraging and that, the most popular words when talking about china. certainly, it had gains traction. warninge been sounding bells. what may have gone unnoticed is that many companies have already reined in borrowing. curran andwith enda our corporate finance reporter. we'll start with you. are the debt fears overblown? >> according to our data, that's true. we looked at three key metrics for almost 4000 financial companies listed in china. the coverage ratio means the companies ability to service debt, that is not at the record best of 18 times. we look at debt leverage, which is that the record low of one time. that is the best ever. and also, the margin is that the strongest in five years. so all those metrics are showing chinese companies are in the best shape in many years, which defies some of the views held. david: i want to get to you. what is the policy drop back here? -- all the awesome track in got some traction. lianting: enda: -- enda: it is projected to increase from 260% to over 300% by 2022. luckily, one of the biggest issues for the world economy next year will be just how china manages its deleveraging campaign. can they balance the ring in credit without hurting the economy? having the best synchronized upturn in about seven years. there is a view that just like lianting mentioned, the world economy is in good order. imf tolooking at the keep going down the reform. there is a sense it should be done, and now, it is time to do it. david: i guess when you look at these rising bond yields, and rising lowering cost across the board in china, this does not mean it will be so much of a problem? theting: if you look at balance sheet, they are in the strongest shape in many, many years, providing a big cushion to absorb higher interest costs .as we talked about in the show , corporate bond yields are at the highest in three years. if you look at the aaa rated five bonds, they are at a very high yield. we are not expecting any panic for the corporate sector. seen with it was only 22, compared to 29 last year. david: that said, stable growth, obviously. does that mean they take their foot off the pedal when it comes to reforms? enda: if you look at the party congress, we have had a string of warnings and actions. warning us every other week about how to tackle china's debt leverage. we are seeing positive flow through effects from what is happening. cutting that excess capacity, that flowed through factory prices. of course, bringing down the cost of debt. even though there is a long way to go, and china recognized they have a lot to do, we are seeing positive spillover effects from the earlier steps, tackling the overall debt positions. david: interesting topic. daniel is still with us. we were just talking about a lot of these borrowing costs and moving parts in china. a lot of what we have seen is obviously self-inflicted with yields pushing up. does this get to a point that might be hard for beijing to sort of contain and what would you describe as that scenario when it looks to be getting a little out of hand just in case? isiel: the debt to gdp ratio not massively out of kilter with the international norms. with different in china is that it is a much larger composition of corporate debt, and that component has grown quickly over the years. when that grows quickly, that seems associated with a fall. we have not seen that yet. one of the reasons is that the authorities are able to put more levers in an economy that has a closed account than for an economy that has an. that allows them to avoid the sudden collapse we have seen in other economies that have experienced such rapid debt increases. imf has been need -- the banks may need to raise capital because of the corporate debt. david: do you see that happening that banks need to be capitalized? said anbasically increase in the buffers might be needed. the pboc said "we disagree with you." do they need to be capitalized? -- to recapitalize? daniel: it is socialism with -- that recapitalization with chinese characteristics. remember that -- david: i love that term. isiel: the banking sector state-owned or at least has large state influences. the state will play a large part in the event capitalization -- in the recapitalization and be brought as part of the normal adjustment process. much more smoothly than the west, which is 10 years old. lianting: if you look at the shanghai composite index, it trailed most of the asian peers in the past year, and only announced it worse than that. do you expect that to change next year because of earnings growth? daniel: we'll see the fundamentals make that quite attractive. quite attractive valuations. the foreigners get money to the market and opening up at the shanghai and shenzhen connect will make it easier for foreigners to get their money in. we have to look at the relative valuation between the a-shares and the a-shares -- the h shares, so i think it remains quite well-balanced in that respect. ck forhad another upti the valuation effect appeared do you think as we head into next year with donald trump tax cuts, some talk of more fed rate hikes, what does it mean for the dollar and for china's yuan? next year be a different story, do you think? >> on the dollar, one of the key things this year is despite the fed tightening, the dollar is on average weaker. as you look at market positioning, you see that very aggressively short dollar. in the short-term, one has to be alert to the risks that the dollar is reversed. we are seeing some signs of that over the past few weeks. that can continue for at least a few months, and we would have to reassess the fundamentals. with regard to the yuan, obviously, the authorities moved recently and that reduces the focus on simply the dollar exchange rate. i think that is a positive thing. on that basis, the yuan has been a bit more stable this year, and that is a positive thing, and i think the key is, getting back isthe capital account, that all about the speed, such an enormous pool of savings, opening up the account to encourage throwing money offshore, which in turn would encourage a weaker renminbi. david: you are based in london. what is the number one question you get in china? >> it is about debt, this debt overhang. when is the crash going to happen? i think people don't understand the issues we discuss here today and the fact that actually, the that debt is of owned in china, so they have great control in how it is handled. david: good point, actually. for you guys, tv . this interview will come up soon on the website. familiarize yourself with a lot of these issues and nuances within the chinese economy. live for us in the hong kong studios. coming up, bitcoin. we have to talk about it. latest gyrations here in the we areurrency gets -- looking forward to that. this is bloomberg. ♪ david: this is "bloomberg markets: asia." i'm david ingles and hong kong. we are going to talk about bitcoin. here we are. give aarts and want to sense of where we are. obviously, the price right here. 17,000 on the bloomberg measure, and of course, the other thing we are following is calling based, and that what -- coin- based pure that was almost at 20,000. we are still pushing towards 17,700. you get yourself a 2013 prius with one bitcoin. context.at into we are up $931 since this morning. quite volatile in the cryptocurrency. why is it so jumpy? you look at the spread, the many different variations in prices and exchanges, and essentially, you put it together and you get a spread relatively the same as if you were trading distressed debt. we put the bid ask of bitcoin next to gold, and you barely see gold. bump days back, a massive in the spread, which is why, of course, the prepared to see this dance in the next few days or even weeks to come. this is exactly that. everybody is watching. we put together the price swings in bitcoin next to one of the world's most volatile currencies, the turkish lira. you barely even see the moves in the libra next to where we are for the -- the lira next to where we are for bitcoin. two sigmas. 9.2% is your standard deviation. more often than not, you see a spike higher than that. crazy, crazy times here on bitcoin. now, we have heard yet again from another high-profile investor calling for caution when it comes to not just bitcoin, but the currencies in general. bill gross has questioned bitcoin future, saying that policy has a lot to do with the rise in bitcoin. he spoke with bloomberg's scarlet fu. listen in. surge dependss upon its potential for replacement or else, of theentally use bitcoin as a medium of exchange, a dollar-based type of currency. and you know, for bitcoin to do that, first of all, it has to gain momentum and popularity. it has to serve as a medium of exchange and the store value. the price has gone up. obviously, there is some value there. but it will go up and down, and the volatility may inhibit bitcoin from being a currency such as the euro or the dollar. the medium of exchange that bitcoin hopes to fulfill, you know, has a problem because there is only going to be 21 million of them and they are priced at $16,000 per unit. you can't buy a bag of groceries at the grocery store with a bitcoin. that will be a little difficult. scarlet: i love how you can always bring it back to concrete uses. what does bitcoins will tell us about the state of global financial markets? roots i thinke are based upon an expansion of creditan extension of by central banks first six or seven years. central banks are still writing checks in terms of buying bonds and buying corporate bonds. the ecb is doing that, the bank of japan is doing that still at about $1 trillion per year, although the fed is not only cutting back, but reducing their supply. but this expansion of credit, trillion over the past six or seven years, is really, you know, the foundation for bitcoin, and the foundation for other mispricings and artificial pricing's of not only bonds at a negative yield, but stocks at high ratios. scarlet: is it in a bubble? if it is and does pop, what is going to be the spillover effect into asset classes, stocks, bonds, currencies? bill: the going up does not seem to have affected asset prices and bonds significantly. anytime any bubble pops, however, it is an indication that something else may follow. i think it pays to be cautious in terms of not only buying it, but following it as it moves up, and potentially moves back down, so when bubbles pop, whether they are small and relatively insignificant in terms of the total credit of global credit, you know, i think it is a potential forerunner for other assets, so investors should be careful. david: and that was bill gross speaking with our scarlet fu. bitcoin futures do go live come sunday. coming up on the program here, find out why banks at the peak for ipo listings in hong kong this year and who is at the very bottom of the hill. this is bloomberg. ♪ david: goldman sachs had nearly vanished from hong kong ipo seen this year. the banks worked on one completed listing in the city in 2017. our deals reporter is in with us in the studio. where has goldman gone? ben: they have fallen apart this year. now, they have fallen to 30th place. basically, they have only worked on one completed deal this year. david: 2.2 billion shares back in march. ben: that's right. david: the other thing is the small one coming up, part of this story, this orthopedic device maker. we were talking during the bank. we're are -- we are not used to goldman's name being attached to things like this. ben: so it kind of makes you wonder why are they working on such a small deal? david: what does this company do? ben: they apply three printing -- 3-d printing to make orthopedic devices like hip and joint placement, spine implants. david: what does it tell you about the broader ipo market next year and whether or not we do see a come back of a lot of these bigger deals? ben: the hong kong ipo market has been pretty bad this year. that could be one reason why goldman is taking a bet on a smaller company like this. this deal is not going to make them that much money, but they could be betting that the company has innovative technology and a fast-growing market. when the company gets bigger, they have already got a relationship and they can tap them for future deals. david: top of your head, any names we should be watching out for in terms of the things? ben: next year, there is a lot , somete-owned companies of which have been pushed back from this year. you have a $10 billion deal. possibly cytotec's retail division as well around 10 billion. david: that's massive compared to $64 million. it is the quality, ben. ben scent, our deals reporter. let's get you an update here on some of the things we're following. general electric has the distinction of being the dow's worst performer this year, number one among american companies in cutting jobs. 12,000 positions in its power divisions take losses to more than 14,700, pushing ge past gm with macy's and most of ge's job cuts taking place overseas. the justice department antitrust lawsuit to block at&t from buying time warner will go to trial in march 19, making it impossible for them to close the deal by the deadline. under the current setup, if the deal is not completed by april 22, they can extend the deadline or walk away. if a judge blocks the deal, at&t must pay time warner a break up fee of $500 million. company has lost $270 million in just four months. the taxi company is the largest, and it is in talks of uber about a potential alliance. several weeks into negotiations, nothing has been announced and investors are starting to lose their patience. it is on track to become the worst performer on the index. oning up, in the next hour, "bloomberg markets: asia," we will be getting the senior economist. some point, trade numbers out of china. this is bloomberg. ♪ ♪ japan's recovery picks up pace. washington ofs lords a shutdown, but the short-term deal lasts only two weeks. this roller coaster ride for .itcoin this is "bloomberg markets: asia." ♪ next: as we begin this hour, lots of things to consider. gdp numbers out of japan. we are getting trade numbers out of china, not just yet. we will be watching for the figures, both of the dollar and the renminbi figures coming out. exports andrise in imports 12.5%. when you look at the dollar figures, we are looking for a 5.3% in exports and 13% rise in imports peere. a slightlooking at bonk than exports and a slight decline when it comes to the trade surplus on the chinese mainland. in the meantime, let's check where we are this friday midmorning and asia-pacific. sophie: we are seeing shares on , aussie dollarse weaker, but japanese stocks as the yenity gains the slips to a three-week low. japanese investors better able economicon fundamentals following that reading on third-quarter growth thanks to stronger business spending helped by recovering exports, exporter stocks getting a boost. has the dollar heads for its best week since december, the korean won is set for its worst week, and korean bonds falling 24 basis points. let's take a closer look at the korean won, falling after being impervious to the dollar's rise. softness, iturrent is not seen passing 1100 a dollar. to that asving a nod a weaker of yuan fixing continues. it had been holding steady and has not weakened past the 100 day moving average since late may, and the 100-day and 50-day lines are converging, reinforcing a major cushion for the cnh. major stock movers falling this friday. that stock extending losses after plunging thursday waiting on that report from a major creditor potentially next week. samsung heavy falling for a third day. shipbuilders have been following its cut in ratings. one company adding the most since october, and ubs upgrading that stock to buy. japan display rising 9%. other stock movers in hong kong, the hang seng gaining .6%. that is trading at a november 2015 hi. it was rated a new byuy. -- buy. david: thank you. checking china data, not yet. meantime, let's get a check of first word news and data with japan punching above its weight with paul allen. paul: japan's economy extended its expansion in the third quarter as the export recovery investment and inventories. it expanded 2.5% compared with a preliminary reading of 1.4%. business spending rose 1.1% and private consumption fell by .5%. clashes erupted across palestinian territory. president trump's decision came despite warnings from middle eastern leaders and u.s. allies and sets the stage for renewed violence. the hamas leader called for a new intifada, although it is not clear if there is a popular appetite for a third uprising against israel. brexit talks continue as the deadline of deadlines looms on friday. two sides are trying to reach compromise on the status of the irish border. the eu says progress is being made, although the u.k. will not confirm any deal is near. they have not confirmed to say if theresa may will go to brussels later. germany is a step closer to a grand coalition with the social democrats saying it is worth explain how far angela merkel will go to accommodate their demands. party members were urged to drop their reluctance to the alliance. talks could start next week, officials don't expect to form a coalition until march. washington has managed to dodge a government shutdown for a couple of weeks, the senate follow the house voting in favor of a bill to fund agencies. speaker paul ryan had to stop a revolt by some conservatives who wanted a longer stopgap to avoid giving concessions to democrats. the bill goes to the white house for the president's signature. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. betty: thank you. -- david: now to china. we are checking. not yet. waiting for the trade numbers for november, due any minute now. usually we get the renminbi figures, then dollar figures after that. asiannior emerging economist for one analyst is here with us. are you excited over trade or inflation? >> probably both. positive for the chinese economy this year, contributing to economic growth. are importantly, it created conducive window of opportunity has referred to by by the pboc governor because you have this external backdrop conducive offsetting the negative cyclical impacts from reforms and emboldening beijing to carry out the reforms so far this year. trade is important and we do expect it to carry through into 2018, although it should decelerate slightly. david: we talked about trade. , weother subplot this year will talk about that later on, has been the resurgence in producer prices. midyear we had the lopez affect, and then it just stayed up. do you see this continuing into next year? the co-relation with industrial profits has been strong. how long do see this inflation at the factory kate continuing? >> the reflation of ppi is coming back on to underpinning drivers. we do see a rebound in demand. the housing market has been strong in terms of real estate investment. we have also seen infrastructure spending can be at a high double-digit rate, said demand is therefore industrial goods. the other big part of the supply-side reforms the is toment is caring out reduce these excessive capacities in these industries, so you have the strengthening of ,emand and reducing supply hence the bounceback of the ppi. expect the supply-side majors to continue over 2018 and in coming years because the government has a remaining quota to demand in the coming years, although the incremental asuction will been not significant as in the last two years. the other part is demand. i do think the infrastructure spending growth is likely to decelerate on the back of some of these shadow banking clampdown as well as controlling of local government financing. i would imagine ppi growth will taper off. we are already seeing sequential deceleration. this weekend we will get the numbers and we will see. david: since you brought it up, they have started clamping down on wealth management roderick's, a favored refinancing option for the public sector. products, at favored refinancing option for the public sector. do you see continued growth? to 6.5%. dissolution -- deceleration to 6.5%. the back ofon tightening financial conditions, but as you touched on, the housing market, we think the housing subsidies for renovation have played a significant role in supporting the market in lessin cities and will be of a growth in polls for 2018, so the housing market contribution to that direct growth will be smaller, so you will have demand coming back down. all things being equal, that means imports should decelerate as well. this year we have double digit growth in chinese imports and commodities, so we do expect that to moderate next year. into this whole base metals industrial story. you are staying around. we wait for the trade numbers, hopefully. come on, beijing. you are late today. you will be staying with us. we will talk about what we can expect and the broader picture across emerging markets. we are looking at bitcoin as well, our interview with the rbs chairman beta this hour. -- later this hour. this is bloomberg. ♪ ♪ david: this is "bloomberg markets: asia." washington has again managed to dodge a government shutdown has the senate follow the house in voting to fund federal agencies through december 22, two weeks from now. jodie snyder is following the story. they kicked the can down the two-week road. >> yet again. congress is good at that. no shutdown for now. they still have to discuss broader fiscal spending issues like defense spending and some broader issues. the can down at the road again and pass something to get them through the holidays. 2018 is an election year and those conversations can be trickier to have as voters pay attention. david: how does this fold into the tax legislation negotiations? >> may have to reconcile these bills. they have to come up with one. they keep saying they want to do that this year, so one would think they do that first and then come back to passing something to fund the government again, but it will not be easy. there is a talk about 22% corporate rate come although 20% is in both bills. david: i want to turn our attention to this investigation by the special counsel. he has played guilty and it makes it less likely the investigation gets shut down. flynn had a plea agreement and will get some lenience for giving up other information, which has the white house worried. ande has been a lot of talk mr. trump i can fire the special counsel. he can do that, but if he was to do that, it has gone so far ahead that first of all it would be politically difficult for him , and also the state and local investigators and other federal investigators have gotten in fault because there is so much information they have come up with with the subpoenas and guilty plea, so those people could carry forward the , perhaps not as well or in such a broad sense as a special counsel come up but there would be investigations going on. we will be following all these gyrations and developments. thank you for wrapping all that up for us. at this point let's bring in our guest of this hour. let's tie everything together. you do,arch you do when how this affects what you do is through the fed and whether they deliver 3-4? we are looking for three rate hikes. david: anything above that hurts? >> unlikely. our baseline case is policy normalization by the fed will an environment for s anding-market emerging-market asia. the market is prepared for what is coming from the fed. secondly, bear in mind we do have the ecb and boj continuing to romp liquidity into the system, so overall monetary conditions will remain fairly accommodative in absolute terms. there is a global trade recovery and emerging-market asia's fundamental internal demand has been strengthened. the whole economic backdrop is pretty conducive, and that will help to shore up some investors sentiment and prevent a crisis scenario from panning out. into 2018,re going you mention japan, southeast asia, blowout growth numbers, on strong footing, but when you look at the growth drivers, a lot are export driven. does that hold, and if not, which stands out as your domestically-driven stars across emerging markets in asia for 2018? three macro backdrop is key themes. the first game tries to answer your question. we expecting given the whole mobile demand will remain solid emerging-market export growth story is going to remain in place. we have acause stellar performance and 20 17th that set a high base effect, also we are expecting china's demand to slow down, and that will have an impact on emerging-market asia, so we expect a gradual transition from external demand to domestic demand. i think the sentiments of labor markets in some of these countries are looking pretty bright. we are going to have elections coming up, so you can expect fiscal policy. >> a lot of guests have come on and given their outlooks for 2018, and they have come out with india and the philippines. are those your top two? >> everyone on the street has been bullish on india for 2018, even the rbi two days ago came out with a very buoyant forecast for growth. reformssome of these have been depressing growth over the past 12 months, --monetization come gst -- thetization, gst recent data has been a mixed bag. we are in this fast track economic growth. we are looking at the growth accelerating am a but not as much as what the central bank is expecting. david: the philippines? do you have a call on that? >> philippines is doing exceptionally well. goodsorts services and and they have been the underpinning drivers this year. global demand will remain resilient. we expect central banks to hike interest rates. at the margin, the monetary support will be there. david: you are sticking with this. by the way in case you missed part of that interview we just like to feature we'd bring to your attention is our interactive tv function tv . watch us live and get previous interviews and dive into securities, charts, and functions on our show. you can become part of the conversation. if you have a question, send them in. this is for bloomberg subscribers only. check it out at tv . ♪ ♪ david: this is "bloomberg markets: asia." let's get you an update of the business flash headlines. san francisco-based credible abs has raised money through stock exchange and values the company at $250 million. it is the largest tech ipo on the asx this year. says going public in australia was the viable alternative to seeking venture capital. cementing its presence in china and signing deals with alibaba and an electric vehicle maker will set up a joint production ofe with the annual capacity 100,000 all electric passenger vehicles. production start september next year. alibaba has signed an agreement artificialgs on intelligence, cloud computing, and also digital marketing. the state-run steel authority of a $930 million plan for the auto sector, a deal in the works for two years now. the deal will be approved by next week. we are told they are in talks for atate governments project within the next quarter. let's talk about and continue the conversation on india. our senior emerging markets economist for asia is here with us. you are still bullish in india. what is your sense of which way year?b.i. moves next the last meeting was contentious. you had all three possibilities on the table. what is the next move? >> they missed the window of opportunity to provide the last cut for the economy. economyrward if india's bounces back has the market consensus anticipated and inflation picks up, the next move from the rbi will be a hike. david: the 2017 story for india is one of disruption. that question, when does filter out in the numbers so weak can compare apples to apples and have these reforms structurally increased the capacity for growth? economy andt to the impact to the market, you see a diverting affect coming through. economy, gdp the numbers one of the lowest in recent years, but if you look at india's currency and equity markets, they are flying high. one of the best-performing this year in emerging markets asia. markets front loading the future hopes these reforms will pan out as an dissipated, and to answer your question when will the economic benefits be, that is imminent. , and hopefullyy we eminently get these trade numbers out of china. we will talk more about the china emerging-market story. this is bloomberg. ♪ retail. under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. ♪ 10:20 nine in hong kong. i am paul allen with first word headlines. japan's economy extended its expansion in the third quarter more than reported as the export recovery drove is this investment and rising inventories. gdp expanded annualized 2.5%. business spending rose 1.1%. private consumption fell .5%. washington has managed to dodge a government shutdown, although for only a couple of weeks. votingate for the house to fund agencies through december 22. speaker paul ryan had to stop revolt from some who wanted a longer stopgap to avoid giving concessions to democrats. late-night talks in brussels suggest the u.k. and european union are closing in on a deal that would allow brexit talks to move on to trade. no one has made a formal comment, but the mood is increasingly positive. theresa may is expected to rush to brussels if a deal is made to make a decision -- a statement soon after. reports from moscow say north korea is considering calling for dialogue with united states. interfax says sergey lavrov's spoke with rex tillerson and said russia is willing to act as an intermediate. -- intermediary. jong-un issaid kim keen to raise the stakes before negotiations. the traditional pizza of naples has won international recognition. pizza has put the cities makers on its world heritage list. of pizzahe art throwing is part of the intangible cultural heritage of humanity. italy has been campaigning for it award for years, saying contains know how passed down through generations. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. david: let's get a flavor of your markets. your flavorie with of the markets at this point. traders looking towards flavor for their lunch break, up 1.2%. day,is a second straight but not enough to push japanese stocks towards a weekly gain. higherseeing gains led by i.t. and materials shares, also exporters getting a boost with the yen at a three-week low , carmakers on the rise, and snapping an eight day decline with the shares back in fashion. take a look at the regional benchmark. the region's best performer this friday following the ubs upgrade of the stock in seven years. byh stocks being led higher one company after a six-day drop , moving over 19% earlier this week. i want to highlight samsung heavy falling for a third day while the korean ship building recovery is dimmer. it is bgf the days worst performer, slumping to a march 2015 low. david: thank you. we are waiting for november trade numbers. get a preview of the numbers and where we go from here, especially inflation this saturday. what toke a look at expect. what is the trend next year? >> i think there are some cross forces. on the one hand after many years come a lackluster global demand, now u.s. unemployment below pre-crisis levels, eurozone doing better, clearly good news for the chinese export sector. time, with protectionist sentiment and china by some margin the world's biggest exporter, it is difficult for china to grab more arket share, so we have seen trend where china's share of global export markets peaked and then started to trend down. 2018, we will see these conflicting forces playing out. we will see export growth. this year probably 7.5 percent growth for the year in terms of exports. year mid single digits. david: when you look at net exports, is it no longer a driver of growth? exports continues to contribute to china's overall demand, although a large trade surplus at the same time that grows, thenomy contribution of net exports to overall demand is less significant than it was. pre-financial crisis, you have a account surplus 10% of gdp, now 2% of gdp, still providing a boost, but not that huge bump it used to give. producer prices tomorrow and consumer inflation. which one is more compelling to watch? >> my main takeaway is the national bureau of statistics continues their long-term campaign to ruin my weekends. i know agents are probably sympathetic to that view as well. macro trend,he this year has been a factory inflation story. exited fromcurat deflation and prices are rising strongly, good news for industrial profits, investments, the deleveraging agenda, because now they can repay debt. for 2018 is how much inflation will we see and how strong is this trend going be? our bet is reflation comes from speculation in commodities markets and some of that froth will be blown away in 2018. we are expecting factory prices to rise, but less strongly than this year. david: you had some fantastic research on where you thought debt would be. the objective from president xi jinping to double gdp by 2020. as we approach that milestone, they are looking to pull back their use of debt. can those two things exist, meet the target while not grading much more leverage in the economy? >> reflation makes it easier. china's real gdp growth stayed pretty steady, 6.5%, 7%. nominal growth from 6% to double digits makes of the debt picture more manageable. ultimately there is a trade-off. if you want to grow, you need loans. if you want to deleverage, you don't want loans. how china will come out on that growth-deleveraging agenda will be critical in shaping the growth outlook for 2020. david: something we will all be following closely. thank you for coming on the program. on that note, morgan stanley says it does expect it deleveraging campaign to continue well into next year. tom mackenzie spoke with the of morgan stanley who said the bond market would continue to face a lot of pressure. listen in. advantages and important aspects of this deleveraging policy is really to help the corporates improved and performance, especially roe, and we hope to improve the quality of assets for the financial institution. improved results of this company is good evidence of the result of this policy, so it is good to hear. 2018 and are you expecting additional deleveraging measures to be in post? >> yes, i think that will be a likely scenario, but with that said, the over tightening is limited because the pace of deleveraging will be carried out at a measured pace, increasing new regulations, and we will likely have a grace. e period. eed intoroute has bl equities. without pressure continue into next year? >> you are right. the stock market will continue to face pressure because of the deleveraging effort. that said, even though government is very focused on this, to avoid the systemic risks, at the same time the longer run, the impact on the economy is manageable because the real interest rate will ma n remain stable amid rising core inflation and ppi. your outlook for growth next year and some key themes investors should be looking at? year isorecast this 6.8% and will slow down to 6.5% next year. is very much policy induced as you know because the government is focused on the quality growth instead of the quantity growth for a more balanced economy. the result of that is investment in infrastructure and housing will come down. domestic consumption will pick up. will be twosumption thirds of the gdp next year, which is good news. also exports will generate good momentum as the global recovery happens in 2018. david: that was morgan stanley's china ceo in the asia-pacific speaking with tom mackenzie. let's bring in our guest into the conversation. the one aspect of the chinese economy that a lot of people don't touch is employment week as we don't get official numbers. do you see that becoming an issue? the structure of the economy is changing. you have to find jobs for those people getting displaced. you have 7 million graduates every year. i'm surprised it is not an issue. >> you are right. fromu don't have data authoritative and critical sources, it is hard to make up your mind. reade essentially left to anecdotal reports, newspapers. china is an economy that is rebalancing. economy a part of the growing at a robust pace and part of the economy growing at an anemic pace. if we are looking at the employment situation in those parts of the economy rebalancing away from, we see more dire investment conditions. fromina is migrating away industrial and investment-driven world to services and consumption, they are able to pick up more manpower for the same units of growth compared to manufacturing and industrial. i suspect it is because of the rebalancing of the economy the need the surface that is helping to absorb the layoffs from the industrial sector, so despite the headline growth moving lower to now 6.5% from double digits, we have not seen anecdotally any significant employment issues. is the key risk if you had to fix one for china next year, internal or external? >> internal. we have seen the markets and the various policy surprises from beijing. the reforms and policy actions have been the driver of why china turned around in 2017. policy-driven, multi-action, and economic rebalancing, those are our key themes next year. more successesg on the positive side, that would be a surprise for markets. david: all right, thank you for staying. has been here for most of the hour. the senior emerging-market economist there. we will be looking at bitcoin again. plans for futures trading coming online. can it calm all the volatility? that is next. this is bloomberg. ♪ ♪ david: this is "bloomberg markets: asia." let's get you in the date of the business flash headlines. general electric is number one among american companies slashing 12,000 positions in its power division, taking losses this year to 14,700. passage em.ge macy's is third. the chassis department filed its first lawsuit to block a merger will go to court. agreement, ifent the deal is not completed by april, they can extend the the deal. samsung heavy's proposed share sale may not be enough in the long run. investors say the shipbuilding industry is facing a folder to overcapacity. cheap oil as well and the effect of that, samsung heavy aims to raise $1.4 billion in a new offering. right let's have a look at social media across markets this week. bitcoin, have a look at my charts. aggregator and the price on coin base, which just past midnight asia time was almost $20,000. future start trading on the cboe . boomed $4000, then crashed in a few hours after that. can dampen theg enthusiasm for bitcoin, but there are issues. boom ines seem like the bitcoins popularity has exposed the weakness in infrastructure which may not be used to such high levels of volume. coin base is one of the largest u.s. exchanges saying it has minor issues and you have the --gest that coin exchange bitcoin exchange in the world saying it has been under a denial of service attack. steam, one of the largest video gaming platforms in the world will disable bitcoin payment because of the high level of volatility in transactions has made it harder to support. david: an industry group is worried about what is coming on sunday, futures coming online. why? >> the futures industry association, bankers, brokers, theseaders, they said contracts were rushed through without considering the risks. they put out concerns that exchanges would not be able to police manipulation, trading limits, stress tests. a lot of things in their opinion needs to be more carefully thought through. it does seem like there has been this contest to get the first bitcoin futures into the market. it does seem like because of that that this has been rushed through. david: thank you so much. let's have a look at one point of view. listen in. >> i am afraid this is irrational exuberance. this is as greenspan's famous phrase. of course he then found the heket cap going up after said it should stop, but this is an unusual market. not in a normal two-way trading market we normally have. usually in the biggest rises you have people trading in and out, so we are an unusual territory here. that normal rational market analysis can illuminate this. >> you are the most qualified person in the world to talk about derivatives in wall street. he made regulation work in the united kingdom. should the cme and cboe, the american derivatives market, make a formal market in this thing we are seeing on this chart right now? i would counsel them not to do it at this point because i am not sure they know enough about what the underlying is about the nature of supply and demand for the underlying asset, so it would be a very risky move and reputational terms to go in that direction right now. >> there are futures. the cstc are looking at stress tests, limits, and clearing before these contracts are given the greenlight. could futures put an end to bitcoin if it does not go well? >> i suppose it could, but i don't know how you would price a future at this point, but the normal way to price a future would be difficult to adapt to this instrument. chain?do you see block if nothing happens with bitcoin, the underlying technology could be used in another way. >> i think block chain is much more interesting. some banks are cautious about the security of it, but i do distributable of ledger, which makes transactions systems cheaper is a good one, so block chain has life in it. david: that was our davis d davisg to -- howar speaking to bloomberg. debt restructuring deal to avoid not paying their obligations, stay with us. this is bloomberg. ♪ ♪ david: this is "bloomberg markets: asia." noble group has been struggling, significantal deadlines as it wrestles with more than $3 billion in debt. these weeks are crucial for their survival of what was asia's largest commodity trader at one point. let's bring in our asia corporate finance reporter into the studio. give me a sense of what the problems were for the company. >> they have $2.5 billion in debt they are wrestling with. nobles biggest issue is to get creditors to agree to some kind of plan. theyis challenging because have different creditors with different objectives. that will be the major objective. time is running out because they have a bond maturing next year, so that is putting urgency on them right now. at the same time, it has been difficult because their shares have fallen to the lowest level since 1999 and they have to survive as a company, which means making sure counterparties are confident trading with you and retaining key staff. those are the main challenges. david: you really are the bearer of bad news, aren't you? >> i try not to be. david: that is the nature of the story. what is the latest in these discussions? no latest we know of is they have been holding discussions with creditors in hong kong, and this is a continuation of discussions held in london a couple of weeks ago and so on. basically its creditors are doing due diligence on noble. david: very quickly, what are the key deadlines to watch for the company? >> the main deadline is december 20 when they have a waiver coming out. these vendors have agreed to waive these covenants to december 20. after that if they don't agree, there could be a technical thatlt on the loan, and would be a problem for noble clearly, so it is crucial they agree or that noble wraps things up before then. david: 12 days. >> i guess. more or less. david: joining us live with the latest problems and challenges of noble group. lots more coming up in the next hour of bloomberg markets. hopefully beijing comes out and says, here are the latest trade numbers. not really late, but they should be out by now. we will talk about that. ♪ david: it is almost 11:00 here in hong kong. it is david ingles. we are waiting for the trade numbers to come out. we will get them to you once we do have them. welcome to "bloomberg markets: asia." ♪ david: japan's long-running recovery picks up pace, corporate spending smashing expectations last quarter. deleveraging is a keyword in china. businesses may have already taken a lot of action. avoids an yet again shut down. but the deal only last two weeks. a busy 60 minutes coming up. from tokyo, we are looking at those numbers. when you look at the debt problem and the progress a lot of these corporates have made, given the growth outlook in china, it is not as big a problem anymore. we will talk about that story. a great piece on the bloomberg. the ability of chinese corporates to be able to service a lot of debt on their balance sheet. we are also waiting for trade numbers coming out. take a look at my bloomberg chart. we get these variations, month-to-month. whata step back, this is the big picture looks like when you talk about trade in china. these other renminbi numbers. top panel is your trade surplus. no longer back to levels of 2015. what a lot of our guests have brought up, the synchronized global recovery. all these growth numbers from southeast asia, countries like korea, taiwan, comes back to the fact china has picked up exports and imports. that is the bottom panel, the upward sloping line for imports in white, exports are up in yellow. it --expecting for this for this set of numbers, a slight moderation in growth. a lot of guests say it might be a blip. the key thing is the debt issue and how they handle that and whether or not they allow disruption to get in the way of a single recovery. let's get you your first word news with paul allen. a it across palestinian territory in response to president trump's recognition of jerusalem as the capital of israel. warningsened, despite by leaders about renewed violence. the hamas leader called for an intifada. clear if there'll be a third uprising against israel. theington managed to dodge shutdown, for a couple of weeks. the senate followed the house in voting on a bill to allow federal agencies to fund through december 22. paul ryan had to quell a vote, they wanted to avoid giving concessions to democrats. the bill goes to the white house for the president's signature. reports from moscow thing north korea it is continuing quelling the dialogue with of the u.s. spoke to rex tillerson on thursday and said russia is ready to act as an intermediary if any talks happen. is keen tom jong-un raise the stakes in the nuclear standoff before negotiations. china's foreign exchange reserves increased for 10th month in november as the yuan remainder stable. the world's largest foreign currency stockpile climbed to $3.12 trillion. capital controls of helped rebuild the holding, which fell january,trillion in for the first time since 2011. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am paul allen, this is bloomberg. david: let's get a sense of where we are as the approach of the lunch break in china. it has not been a great two weeks for markets in hong kong. sophie: the worst back to back weekly drop for hong kong given the slide in carmakers and property stocks this week. chinese financials listed. we are seeing some chair for the hang seng rising a second day, climbing with the rest of the region. the stoxx having a fairly happy friday. on the weekly basis, less sure that when you take a look at that picture. elsewhere in the bonds, the space is mixed. the dollar headed for the best weeks since september. snapping a six-day decline. the two day yield sinking over 20 basis points this friday. let's take a closer look at what is happening when it comes to the session in shanghai. we are seeing tech stocks lead gains along with consumer shares. gold miners are sliding as bullion prices have been beaten down. gold is headed for the worst week in several months. the shanghai benchmark, you have energy, financials, leading groups lower. let's take a look at the big movers in those spaces. we have a look at the best performers of the day. drop, theyhree day are planning a $500 million expansion to boost production capacity. a big boost to mining stocks today. today.ading china flipping the board to see the laggards of the day in shanghai. icbc, the biggest drag in the financial sector. real estate leading the drop among property stocks. they have come under scrutiny from regulators. crrc falling for a third day. sinopec sliding among a watershed moment for the debt crisis that sees them seal venezuela's unpaid bills. nomura has improving earnings. david: speaking of oil and gas, we have petrochina and feel producers.-- fuel we are waiting for the latest numbers out of china. let's get a sense of what to expect and what the big picture looks like. tohave our managing editor, take us through what the big picture looks like. >> do interrupts me if they come through, they could come at any moment. let's talk about what is forecast. we are looking at a 5% increase from a year earlier, a 15% increase for imports. that would be moderation on the export front. a fairly strong performance for the year. on the import fine, we expected to come off mixed. this year has been good, averaging 15%, year on year. taking some of the wind out of the sails for big trading partners with china. but we are still growing. david: that is the key takeaway. can we get this chart up? , the chart#btv 1495 we brought up at the top of the show. you get variations month-to-month. you have the trade balance is, the renminbi. you see the pickup since march of 2016. a slow rise higher in imports and exports. we may get a moderation. picture seems to be we are on stable footing as we move into 2018. that is a trade picture. the other thing we are following, inflation. what are we expecting? malcolm: on the cpi friends, inflation heading to the central banks, they can ignore that in their efforts to rein in excessive leverage and wealth management products. we are looking for a cpi read of 1.8%. the government does not want anything more than 3%. there is some pressure building on the core prices. the pork cycle is coming back into play. the domestic demand is robust. moving upward very moderately. pbi funds, they are looking for moderation, 5.8% pace expected from a year earlier. that is down from 6.9% in the prior month. they had been underestimating their run all year. a 5% pace is still pretty robust. and it -- and that is happening -- and that is helping china's companies. david: let's bring up this chart, exactly what malcolm was talking about, this reflation. you see the correlation between that and industrial profits. --mally if you asked me 18's 18 months ago if we follow this --sely, but because of this whether it is commodity prices, it is filtered through the profit picture. g #btv 1882. there on your bloomberg. numbers, not yet. thank you, with the preview of trade numbers, which hopefully come out soon. coming up on "bloomberg markets: asia," bitcoin, yet again. investors getting ready for potentially more wild swings. when they go live this weekend. plus, strong gdp print out of japan. this is bloomberg. ♪ david: this is "bloomberg markets: asia." i am david ingles. let's look at the japanese economy. the gdp expanding more than initially reported. growing at a faster pace. let's bring in our korean managing editor, live in tokyo. why is growth coming so far above earlier estimates? >> it is quite an amazing report. economists in tokyo expected to see a strong report and the numbers exceeded the strongest bullish forecast. gdp at an annualized 2.5% growth pace. companies continue to invest in aia, robots, and automation, in order to bolster productivity and cope with a tight labor market. 0.5% growth on quarter. japan'srt really shows economy after seven straight quarters of growth, they remain firmly in the strongest period of prolonged expansion since 1994. the boj will start to normalize policy in the second half of next year. david: we have to leave it there. the chinese numbers are out. let's get you an update on what we are seeing. renminbi, 10.3% up. we were expecting a 2% increase, coming off growth of a 6.1% in the previous months, october. november, imports up 15.6%. but those two things together, renminbia 163 billion surplus for the month of november. compared to hundred 40 billion the previous week. saw an increase. we are still waiting for the dollar figures to come out. run through my bloomberg terminal just to see if we are getting reaction across markets. 7516.ussie dollar, . i would not say that is a pop higher. just to recap, 10.3% up on exports, 15.6% up when it comes to exports. when itthose together, comes to the trade surplus. we will get these numbers coming up at some point. the dollar figures, the bottom three rose on your screen -- bottom two, 5.3% up. it is a lot of numbers. let's see what the big picture looks like. our guest, and ing-backed economist. rob, pleasure to have you on the program. great timing, we are getting the numbers out of china. your initial take on those numbers, pretty good? rob: they sound pretty good. you can see more detail than i can. they are a lot better than people were looking for. we were hoping to get the 6.5% year on year range for the import side. in any case, there was a decline on the previous month's numbers, it was still a strong reading. we have something considerably better than that. to predict 2018 as the year where everything will fall apart. there is little evidence for that at the moment. out of china, japan, the news looks good out of asia. david: let me pick back up on japan before we get to china. been talking about their weight for six or seven quarters now. how long do think it will take before we see 2%? rob: i think you could be waiting a long time. i might have retired by the time that happens. i am not planning on retiring anytime soon. [laughter] rob: we do not live in a world with a great deal of inflation these days. you spend money for books on your tablet, watching pay-per-view movies. you do not use up scarce resources. it does not have any impact on the price level. this is the world we live in. we should not be looking for two, the target is wrong. let's think about what the proper target should be. they could be closer to zero. the economy is running fine and it is tight. it does raise questions about the boj. my real problem is, how do they pull out of the qqe program and move away from targeting? they have such a big stock of debt, that success could create its own problems. david: when they did embark on it, they were running the risk of appearing to finance the deficit of the government. it is perhaps a 10 year question from now. what happens when the boj steps away, 10 or 15 years from now? can the economy stand on its own legs? rob: i am not sure they ever can. it does make me wonder what the real endgame for this is. sly, they is fly, -- say you do not have to pay us back for these we are holding. just put them quietly back on that shelf. it is backdoor, helicopter money. people were talking about this more earnestly about 12 months ago. it is something that eventually has to happen. i do not think the debt arithmetic adds up any other way. david: when you broaden the conversation and we talked about the likes of the fed, ecb and boe, you talked about rethinking these nominal levels. do you think that is some point the central banks will listen to what the bond markets have been telling us for some time, that you do not need to tighten as much because there is no inflation there? rob: i hope so. the trouble is, if you look at where the debate is going, i think only 12 months in institute was looking into this. what more can central banks do? their view, which i think was missing the point was, targeting 4%. boj did like when the that. it does not change expectations, and makes them look silly. target something that makes sense, keep focused on the money supply in credit growth. that is what happened -- that is what matters here. if it goes down 2%, it is not a big deal. unless it is having impact on people's wages. it is just another number. david: cannot be an argument to raise rates? i am guessing the counter after fourou look rate hikes, financials are still loose. you could make the argument the rates are too low. rob: you could, indeed. and people would say you should not use monetary policy to target asset prices. but you could be looking at them rate,nd say, the current is it leading to distortions and financial markets? if it is, a fairly strong market for thinking the rates should be raised. it is much harder to decide when to stop when you do not have an accurate pedometer like inflation, giving you a single -- giving you a signal you have done enough. rob, still lots more to discuss and the implication of all the points you just talked about. he will be rejoining us a few minutes from now. if you're a bloomberg subscriber, join the conversation. send us a message, we can ask rob that question for you. are interactive function, tv . there was a link on the bottom left-hand side of the screen. send it in. if we see a good question, we will ask them for you. this is bloomberg. ♪ ♪ david: british prime minister theresa may battling against the clock to come up with concessions to get this brexit talk moving hopefully into trade soon. late-night talks in brussels suggest they are closing in on a deal for the irish border. no one has made a formal comment. but the mood from the two sides is increasingly said to be positive. theresa may is expected to make her way to brussels again, with e.u. president donald tusk to make a statement at -- soon after that. lots of things need to happen, lots of moving parts. let's bring in our guest, rob carnell from ing, joining us from singapore. i have to ask you, it is a complicated story. they have not even moved to the formal beginning of these brexit negotiations. what do you think we are missing? what is the most important part of the conversation and where should it be? wherehe conversation is you have to appease or satisfy some very different vested interests. i am interested to hear it -- hear how theresa may can come up with a deal that no real border restrictions between northern ireland and the republic of ireland. europeanessions on the court of justice, keep her hard brexit members of parliament happy, and does not end up with something that looks more like soft brexit, where the u.k. have to continue paying into the budget, relinquish its controls on immigration, open up agreements. it would end up with a situation considerably worse than what the u.k. had before. i do not get what magic secret or ingredient she found that appeases everyone do and delivers what the e.u. wants to hear. early in case we do that, reports suggest we may be closing in on that. what do you think the initial reaction will be? when you look at sterling, it does not look like we are pricing in. rob: no, sterling has been hovering on the edge. it has been holding up better than you would imagine. it will pop higher on this. it has not been fully priced in. i am still deeply skeptical about theresa may's ability to deliver the goods. i hope she does. i don't think it is priced in fully. a nice move against the dollar from sterling, entirely expected if this happens. 20 seconds or so, i believe that leaves mark carney's hands tied for the rest of the year? rob: yes, the hike they did recently was questionable to start with. there is so much uncertainty over brexit, the hiking of a 12 week pop up again sterling was a strange decision. leave it alone, mark. [laughter] that note, perhaps the most dovish rate hike in history. rob carnell, thank you for coming to the program. this is bloomberg. ♪ in hong kong. i'm paul allen with the latest first word news. japan's economy expanded in the third quarter, more than initially reported. the expert recovery drove stronger business investment and stronger inventories. 2.4%.se at an annualized business spending rose 1.1%. private consumption fell 0.4 -- 0.5%. al franken is quitting congress over alleged sexual abuse. more than half of his democratic colleagues demanded he step down to make clear mistreatment of women is unacceptable. franken is the latest high-profile man brought down by a shifting culture that increasingly treats sexual misconduct with a zero tolerance. i i am aware there is some irony in the fact that i am leaving, while a man who has bragged on tape about his history of sexual assault sits in the oval office. and a man who has repeatedly preyed on young girls campaigns for the senate, with the full support of his party. a germany is a step closer to new grand coalition with the social democrats saying it is worth exploring how far chancellor merkel will go to accommodate their demands. spd leader martin schulz urged party members to end their reliance and end deadlock's. spd officials do not expect to form a coalition until march. on a lighter note, the traditional pizza of naples has won international recognition. ita on thatrgher world heritage list. it is part of the cultural heritage of humanity. italy has been caning for the award for years, saying it involves know-how passed through generations. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am paul allen, this is bloomberg. recap thank you, let's the lines from china. the numbers were out for the renminbi figures. pop in exports, we were looking for a 2% rise. when you look at imports, slightly better than expectations, 15.6%. 12.5% was the line in the sand. surplus, 263 billion renminbi. it is a lot of numbers. i will bring this chart up for you. there are a lot of colors, green and red. monthly, inncreases the year on your figure. in china so far, every single month of this year. it speaks to the synchronize global recovery, or even asian recovery. that is the export picture. imports, 15.3%. we are getting a lot of double-digit increases from stock numbers. you look at southeast asia doing quite well. japan, exports were up. in other words, where china goes, that is where the rest of the region goes. that is the story across economics. where we going with markets? sophie kamaruddin is tracking it. sophie: things looking pretty good out of asia. earlier,rnell told you data coming in better than expected. the demand picture looking good, shipping looking decent. mn ofcheck out this colu green, and japanese shares leading 2%. the nikkei to do five, with the yen trading at a three-week low. let's take a look at chinese equity markets halloween chinese trade numbers. growth exceeding estimates. official pmi at a near five-year high. chinese equities rise across the board. small caps on the up. gaining 0.2%. shenzhen shares also looking good. the region will wrapup of the week on a high note. pboc has met with policy lenders and commercial banks about the bond market. we are seeing china develop bank bonds, set for the biggest event in two months. the yield on the 10 year note, ed fivesis points -- soar basis points. they met to discuss the year supply and demand situation, given the rout that drove the three-year highs. holding around 3.91%. onp in mind, chinese debt the worst losing streak since 2010. a look at the wd function on the terminal. we do have korean debt jumping. the two-year yield sliding over 20 basis points. over 12 bips.- david: a massive move right out of the gate. sophie, thank you. we talked about data out of china. we spoke to morgan stanley earlier on. the bank said they were -- they expect the leveraging. earlier speaking with tom mackenzie. also said the bond market will feel the pinch. one of the advantages and important aspects of deleveraging policies is to help corporate's -- corporates improve profits. and to improve the quality of assets for financial institutions. there is good evidence of the result of these policies. >> in terms of the deleveraging are you for 2018, expecting additional measures to be imposed? >> yes, i think that will be a very likely scenario. tighteningaid, over is relative. the pace of deleveraging will be carried out as a measured pace, including the promulgation of various new regulations. hopefully we will likely have a great period. that is important for the market participants, like us. in theave seen this rout bond market and that has bled into equities. has that put pressure on bonds for next year? >> you are right. i think the stock market will continue to face this pressure. even though government is very focused on this, to avoid this systemic risk, at the same time we think of a longer run and impact on the economy is manageable. the real interest rate will maintain stable, amid the rising core inflation and ppi. >> your outlook on growth broadly for china next year and key things investors should be looking at? year oforecast this 6.8% will slow down to 6.5% next year. that is very much policy-induced. is focusing on a quantity one. a result, investment in infrastructure and housing will come down. domestic consumption will pick up, it will contribute likely2/3 of the -- it will contribute likely 2/3 of the gdp next year. that was morgan stanley's china ceo. numbers are out, up 12.3% in dollar terms. more than double the rate we were expecting, 5.3%. imports were close to 18%. 13% is what we were expecting. $40 billion is your trade surplus. better than last month. quite good, surprising again. >> no matter how you look at it. it is a reflection of the global story. the best synchronized story in several years. that is what is driving demand. bonnet is at tech glut globally. smartphone upgrades driving demand for phones made in china. all the bits and bobs they go with that. it is riding the ways. david: it is nice. how movingking about into the new year we could see it. it is strengthening. enda: is certainly is strengthening. the question is, how long can it last? there is a feeling the commodity prices have refigured. and it is telling a wider -- and it is telling a wider trade story. david: looking at the brighter side, it does help soften this whole debt situation. it does increase their ability to preserve debt. let's move to that topic. they are talking about their story. when you talk about deleveraging in debt, it does seem chinese corporate sarin the best place. in theese corporates are best place. >> we looked at 4000 companies. we looked atric was in interest coverage ratio, how able chinese companies are to consolidate their debt. that ratio is at an all-time high of 18 times. another ratio is the debt leverage. that ratio has come down to the lowest, and the third one we're looking at is corporate profit margins. it is the highest in five years. all those metrics are showing a healthy picture of the chinese corporate sector, which defies views held by global hedge funds expecting the china debt crisis. david: it does go against the move up we are seeing in bond yields. the higher the rates go, the more risk there is. it is not quite shaping up to be that way. doesn't mean the rising bond yields story won't be as big a problem? lianting: having less of an impact now because of a healthier balance sheet. the bond yields are indeed rising for aaa rated companies with five-year bonds. the yield is up 5.3%, very high. analysts are not expecting any panic because of the buildup been profits and profitability, providing such a nice cushion. seeing 22 compared with 29 default last year. despite the higher funding costs, it was lower -- defaults are lower this year. , the policy backdrop, a lot of the pain is self-inflicted. there was an urgency to tackle the debt issue. is that still how it is in 2018? enda: we are having a regulatory story. we had warnings from top officials, and we are seeing them taking considerable steps to rein in the credit risk. the global backdrop is good. now is the time to push through those reforms. yesterday, themf first comprehensive in five years. we have a problem with the debt, plenty of strength to deal with come a but you have to get a move on, starting now. we are pushing through these changes. the question is, can they get this balance right? can they slow the credit profile without causing a wider shock to the economy? david: will they be testing that limit next year? the sun is up. enda: they seem to be doing quite well at it. than moderating, rather sharp landing. when you see trade figures like this, it bodes well. it is one of the biggest issues for the world's economy, how china manages it. china will be quite happy to roof.he hit to fix its david: what does it mean for global investors? we have not seen this level in years. for a lot of people a might be news, this reality. lianting: a lot of global investors have been skeptical about china's growth story. we see chinese assets including equities and bonds, under owned. that might change going into 2018. they are expecting double-digit growth for chinese equities, driven by the earnings growth, because of reform and capacity cuts. david: looking forward to that. have a look at my bloomberg. this is the story, chinese defying debt. these are some of the metrics. there is interest and expense and profit margins. great story, that is on the bloomberg and the website. bitcoin said to go legit. are investors really ready for currency trading? this is bloomberg. ♪ ♪ first of all, we have to gain momentum in popularity. it has to have a store value. the price is up, so obviously there is value there. but soon enough, it will go up and down and volatility may inhibit bitcoin from being a currency such as the euro owed -- euro or dollar. >> it is only a win for people that are euphoric. markets and on euphoria. that has not happened. the fact we are discussing the problems and risks means we are not euphoric yet. >> we do have well-respected intermediaries such as goldman sachs saying we will clear these futures trades. if there is a way to make a legitimate profit, goldman sachs will find a way to get into the business. and many others will be, as well. staying on bitcoin. is it really ready? three days before the debut of the futures, had one of its wildest sessions ever. have a look at my bloomberg terminal. we have the aggregator price here. a lot of people were talking base. going base -- coin it would almost buy you a brand-new prius. 16,000, roughly and change. that is the price on your terminal. columnist who our has written extensively on this. what do you think will happen, come sunday? you have futures and people can shorten them. what is your sense on how markets are react -- will react? as stronglyot react as people think in the first two days. it will need a little time to digest. not everyone will jump into futures immediately. i think given all the hype, a lot of the smart funny will stand on the sides. we will see volatility, of course. shore,rtunities come to we'll see that play out. it does not mean bitcoin will fall immediately. i think it will need a bit of time to digest what futures will mean for decline. david: let's bring up my chart, 3177. we have put this together with one of the world's's most volatile currencies, which is the turkish lira. you barely see it on a daily basis. g #btv 3177. you know that saying, dancelike nobody is watching? everyone is watching bitcoin. watching --u be what would lead to less volatility? tim: as more and more money -- the thing about , they will be settled in cash. a lot of people do not know how to price them. what is the model we used to price futures on bitcoin? nobody knows. that will be one of the key things. models and more bear see that volatility in theory shrink. to enact about or enforce that is beyond my knowledge. i think a lot of people will be guessing. tim: hope -- david: hoping for that. tim: it is not that surprising, they have been working with , and dhasset holdings has a long list of investors in it. but it -- it is an example of this thesis. blockchain is not bitcoin. in that bitcoin uses blockchain technology. but there are many other uses for blockchain. mn coming outu soon. we talk about the implications for this coming out as technology in the market. david: we are looking forward to it. talking luxuryre goods in china. it is on the up. but where are the top destinations? find out after this break. this is bloomberg. ♪ ♪ this year has seen chinese spending on luxury items on the up. but what are they actually splurging on and buying it? analysta senior china live in singapore with the answers and a look at what to expect in the year ahead. is this rebound set to continue into the 2018? into 2018? >> it looks like it will continue if not be stronger into 2018. we are seeing strong signals that the chinese consumers are buying more high-end handbags in spirits globally. it is interesting we are seeing a strong trend within china, as well. david: catherine, when i lived in china a lot of people did not buy their stuff there because there was an import tariffs. because they have lowered that, how will that affect revenues that companies have in their operations on the chinese mainland? foremost, first and the chinese government has been for basic,xes necessity consumer goods such as diapers, baby formulas, to cosmetics. less the high-end, discretionary items. i would be pleasantly's -- presently subscribe at -- pleasantly surprised if they did lower that. basicant to make these necessities more affordable for the greater population. as i said, you never know. the government does have a long-term plans to repatriate overseas spending within the country. let's see what happens in 2018. david: in the meantime, what countries are seeing the biggest inflows of dollars from china? catherine: this year, japan has been a great beneficiary of increased mainland tourism. next year, i am putting my bets on south korea. a softer stance between the two countries, south korea and china. bilateral ties may improve into 2018. clearly, south korea has always been a popular destination for chinese tourism. that country could be one of the bigger beneficiaries next year, when it comes to tourism. david: absolutely. korea and japan. let's have a look at markets getting under way. it is friday, has not been a perfect two weeks. end. to be a bright and -- just above 33,000. falling in mumbai after missing the second-quarter estimates. a fairly somber note this friday. 3.4% underwater. that is it for this edition of bloomberg markets: asia. the best of this is bloomberg. ♪ bloomberg markets: middle east is coming up next. this is bloomberg. ♪ is this a phone? or a little internet machine? [ phone rings ] it makes you wonder. shouldn't we get our phones and internet from the same company? that's why xfinity mobile comes with your internet. you get up to 5 lines of talk and text at no extra cost. so all you pay for is data. choose by the gig or unlimited. and ask how to get a $200 prepaid card when you buy any new samsung device with xfinity mobile. a new kind of network designed to save you money. click, call or visit today. washington, and you are watching "bloomberg technology." let's start with a check of your "first word news." we will take you live to the house of representatives, where the house passed a bill that would keep the government open for two weeks beyond friday's shutdown deadline. on a vote of 235-193, the bill passing after house speaker paul ryan squashed a rebellion among conservatives demanding a longer stopgap bill. the short-term measure now heads to the senate. that goes through december 22. minnesota senator al franken confirmed today he will resign in the coming weeks. more than half of his democratic colleagues, including several women, demanded he step down after multiple allegations of

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