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tv   Asia Edge  Bloomberg  April 5, 2015 11:00pm-12:01am EDT

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coming up. far from home, a special report . that and more in this easter monday edition of "asia edge." our top story, samsung, top mover in seoul. reports are that its sales will be way ahead of expectations. >> shares rising on this optimism. there is a report today in the "korea economic daily" saying that managers have revealed that their operating profit in the first quarter is likely to rise more than 5% from the $5 billion u.s. seen in the fourth quarter. this would be well above analysts' expectations, looking for a roughly 3% gain.
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this would of course slow that samsung has been powering ahead. it's been a difficult couple of quarters for the tech giant as apple introduced new products and samsung raced to catch up. it did so in march introducing the flashy new s 6 and other mobile devices. other divisions we can't ig new york the chip, semiconductor segment of the business doing quite well. very profitable area and then the consumer electronics ands mobile business. rishaad, all these results out tomorrow. we'll be covering them from top to bottom but today, investors very optimistic. seeing samsung perhaps returning to some of its old glory. rishaad: in record -- regard to that s 6 you told me about, and as it tries to take on apple,
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not just on the high streets but in the courthouses as well mblings. well, apple could actually benefit? zeb:yes, samsung and apple are competitors but in many ways customers of each other. in this latest leg battle. -- separate from their four-year battle with patent technology a texas-based company is suing both over its patent-based technology. smart fish says apple infringed two of its patents having to do with mobile payments. appal was awarded a jury verified ordered to pay some $530 million. it has not yet, it's going
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through the courts. this last week see -- we see a judge and the at that time -- u.s. patent and trade office taking a look at whether the texas company's original patents were valid in the first place. a recent supreme court decision says a very limited number of areas can be covered by patent law here. smart lawyers may mean apple doesn't have to pay that half trillion delarkss a huge bill indeed. rishaad: and sharp looking for help in spinning off parts of its liquid crystal display or l.c.d. business. reporter: yes, looking for help from the i.n.c. zpwrrvings -- i.n.c.j. remember it because it is important.
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it has helped other companies before. now, sharp, the l.c.d. business hasn't done well for some time. it's been in competition with companies that haven't really gone very far. reports out this weekend that it's looking for help from the i.n.c.j. according to one newspaper sharp is looking for an $843 million investment -- rishaad: spin it offer as an investment basically? reporter: yes. it's a big business by -- but sharp has been heading for its third loss in four years. so it really is looking for ways to turn its business around and considering, quote drastic reform. rishaad: all this ahead of management stock coming out next month, right?
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reporter: yes. people talking to bloomberg about the story as well and saying it's considering options for fundamental structural reform including the l.c.d. bits but no decision has been made yet. it's planning to put out something in the near medium term, around may. rishaad: thank you. and nikon, prflt to fall 41% but ahead of what analysts have been calculating and indeed ahead of earlier company forecasts, too. toshiba announcing an investigation into possible accounting problems. shares plunging 9% since the open. the most since 2012. accountants examining the
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reasonableness of estimates used in certain accounting practices. and allegations of corruption and abuse of power at sri lanka airline. the board said it had found evidence of corruption running into billions of dollars. also major security breaches and the recruitment of unqualified staff. well indeed we had that jobs report to come out, of course, on friday. u.s. markets reacting to that. we're getting some of the follow-through in this part of the world, aren't we? reporter: we are. japan is now closed for lunch. markets closed in australia, hong kong, taiwan, and clearly the one to watch will be australia. may see a rate cut. rate cut to a record low 2%.
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so keep your eye on that dollar. but today, asia is working -- waking up to the u.s. jobs report friday, which was disappointing. 126,000 jobs added in the month of march. the figure was even below the lowest forecast. weakest since december 2013. the interpretation from the markets is with that being so weak it's a conservative economy but it also means perhaps no reason to raise rates this year. hence you are seeing the market gains in jakarta, singapore and malaysia. the nikkei before the lunch break was down 1%. the dollar being weak and the yen being strong.
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that with the u.s. jobs report, may have a bit of a stronger yen. and reaction to gold the last two days, not so much today, but it's obviously quite relevant as a safe haven in this period here because of the shock, the surprise i should say, of the u.s. jobs. that's the picture as records the commodity score and also the look at the market. pick one of the markets, i can take the goss pi, now trading, as you see, i do this imaginically and it comes up. a lot of green, consumer goods. health care. seeing gains. japan, industrials were seeing declines bch the break. financials down a percent. insurance stocks banks falling
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1.5% in korea. so the banks leading the kospi lower. rishaad: ok. we'll have a look at the reaction to the weak job numbers out of the u.s., raising the question of whether the federal reserve will hike the cost of bore owing the >> should they raise interest rates it's really going to backfire on them in terms of a potentially lower rather than higher long-term yield as money flows into instead of out of the dollar and of course a stronger dollar, playing havoc with predictability of companies. people say higher interest
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rates would be good for the deme, but i say no it wouldn't. the economy will never be ready. rishaad: and saying that the u.s. run will come to an end and companies will use the data to look elsewhere. >> in the next few months you will probably see the u.s. stock market go sideways or have a downwards bias. they've had a very, very strong run. the corporate earnings could actually decline in the next several months because of the decline ever president u.s. dollar. so we think that the markets will be going sideways possibly even downwards over the next few months. the region we like the most is europe. rishaad: but jason ambrose says there could be surprises acrowned the corner as the data shows a turnaround.
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>> don't make money by being consensus. up make money by being in surprises. and i think what the potential surprise is for the second and into the third quarter is that u.s. macro economic data does finally pick up and continues to stimulate the only currency that's in an interest rate rising vimplet, the u.s. -- environment, the u.s. dollar. rishaad: coming up later on the program, a building boom in indonesia. why property stocks are bernanking attractive investments. but up next, will those disappointing jobs figures cause the federal reserve to delay a decision on raising rates? we'll have more analysis. ♪
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rishaad: let's have a look at some of the news making headlines around the world. iran said it could be ready to resume its nuclear program in three months. and the government says it is gaining ground in aden after the how thies took the capital and forced the president to flee. information now shows that the co-pilot prealt increased speed before that germanwings plane
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crashed into the ground. the information says he put the plane into a descent and raised the air speed several times before the crash. and the odds of a federal delay of a right hike has risen. so how should rate investors position themselves? sam, let's talk about this. does this poor data, and it was quite a shocker, just another excuse for the fed to delay doing anything with the cost of bore owing this year possibly? >> it's become something of a sport. will the fed raise? when? it is having? imply cages to the asian economies. you see some of the crurns -- currencies are really moving. i expect again, we're not going to speculate but it would seem that the consensus is pushing rates further down the road. and it's interesting i think
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whether you look at something like china you saw significant capital outflows in january and february. haven't yet seen the march number but maybe some of those capital outphillies that left the country will come back with soft payroll numbers in the u.s. rishaad: yeah, so what happens next? is it just a situation leer in the u.s. economy that this horrible winter particularly in the knost -- northeast put a lead on the momentum? do we have to play catch-up in this next quarter? >> we're always looking at the next starter point. really i think it's got to be the accumulation of thall -- all these data points whether the fed rises or not the so let's look forward to the next key data point and really isolating that one payroll is a little bit too myopic. stretching it out, saying when
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will the rate raise occur -- rishaad: people are dissatisfied -- are obsessed by this, aren't they? >> it's become a sport. like the cricket -- rishaad: well, that wasn't much of a sport when i went to watch it, the final. what is your read whether it comes to investment? you are very selective? does this have an impact an -- on what you choose and are looking at? >> i think what's really clear is what people do in china. we believe it's not enough discussion points on what that is going to do. we're look at that and believing there is a lot of positive sentiment coming back into carolina. so for us we're really bringing it back to which corporate sectors are going to benefit the most. we've just gone through around
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half the earnings and we're really focusing on chinese insurers. we're really entering the golden age of chinese insurance. lots of positive sentiment coming back into carolina and again i think there will be a lot more liquidity. rishaad: and liquidity also abroad no doubt. essentially a precurseo so -- well, to opening the economy up isn't it? >> it's an interesting one. the -- it will be a hot topic the third and fourth quarters of the year. i think at the moment they're going through and working through how do we have the right controls? they don't want a flood. rishaad: they can control the sluice gates at the moment, can't they? that's the point. >> easy. it's how you do it, in a sclow -- slow, tempered manner.
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think think that's prudent, setting the course for a lot of things the government is doing at the moment. yet you will see significant amounts of liquidity continuing to be put into. rishaad: stimulus is usually the name. but how many more bridges can they build? that's the thing here. >> you look at investment, the budget deficit was set for 2.3% a little higher than other people think. it's going to be rail, a really interesting sector and some other infrastructure. but we've had in 2008, a large blank check, they're going to be far for -- more selective. and one thing they will continue to defend almost at all costs is the property price. rishaad: this is the biggest problem, right? perhaps it's sort of bottomed out. >> the p.b.a.c. recently
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changed the numbers for second mortgages which is going to make it easier. it fits back into the fact that the biggest owner of chinese property is in fact the chinese government. so they need a stable property price. they can't afford given the tax revenues that they generate from land sales, a falling property price. if the price keeps coming down, just expect more positive sentiment in terms of changes in policy. rishaad: stick around. we'll have a second discussion in about 20 minutes. coming up, a special report on asia's migrant workers and the people they leave behind. ♪ dd
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rishaad: right well, welcome back to "asia edge." millions of people travel abroad to earn a living the it's economic necessity because their home nations cannot afford to keep them there. but it's not easy not for those who go or those who are left behind. a special report. >> they keep their heads down and go to work, usually barely
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noticed. but mike rant workers make the economies tick. look at indonesia and the philippines. southeast asia's two most populous countries. both have done well but beneath the glitzy headlines, there is a problem. their own citizens do better elsewhere. >> find willing -- finding a job is quite hard, especially if you are not educated. >> i came here for work to help my family. i have more brothers and sisters. it's a struggle for me, leaving my baby back home. but i have to to be here for her. >> it's estimated about 6.5 millionnesians work -- indonesians work overseas. 80% tv -- are domestic helpers.
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the philippines presents an even more dramatic picture. about 10.5 million are estimated to be living overseas of which the majority of o.f.w.'s, overseas fill in -- filipino workers. monthly remittances back into the country have gone to over $2 billion this year. that's every single month. that is just part of the tidal wave of money that makes its way back on shore across southeast ashea. >> remittances are extremely ornt to these countries. from an individual perspective, they send money home to support their families. and from a national perspective it's highly important. especially in the philippines, it makes up about 10% of g.d.p.
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it plugs a hole in the current economy. >> these human exports, for lack of a better way to describe them, do provide a main economic boost but at a huge social cost because for every person that leafs, a family is left lind. >> well, it is common for people to look around for a better option. but it changes completely when that number goes from a few hundred to a few million who see it as their only option the david ingles bloomberg, hong kong. rishaad: of course we're looking forward to the afternoon's business in tokyo. the equity markets will reopen after their lunchtime break, after this break. ♪
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fast in the hallway. i feel like i've been here before. switch now and get the fastest wifi everywhere. comcast business. built for business. rishaad: in the money, reports say samsung profits jumped last quarter. and reports that sharp wants help in spinning off its l.c.d. business. toshiba tumbles the most in three years after possible problems with its accounting the japanese equities back in the mix as the traders get back to their desks after the lunch
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break. news out of japan -- >> this is the yen, by the way. that was a reaction to the u.s. job report on friday. 126,000 jobs added for march well below even the lowest forecast. if the job market is weak it does implie that there is no reason to raise rates this week. nikkei traders returning from the lunch break and there it is back into action. it actually opened lower. magic red pen. it's since recovered gradually. so quite a significant recovery from the morning's low. the stocks we're watching out for in japan the yen, and you
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can see the car makers are down toyota, mazda. honda, a slight gain and toshe i shall -- toshiba, we pointed out, accounting yisheds there maybe. and cubota and toto two other exexporters. yamaha and also yahoo japan. quite a mixed picture for japan. i'll leave you with the map if i can today. the magic map. markets are closed for china, new zealand, taiwan and open as you see, the nikkei in japan is low, but off the low today. kospi also seeing gains on the idea that they may not be raising rates in the u.s.
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because of the u.s. jobs market being quite weak. volumes are really very low because of the easter weekend. rishaad: thanks, john. property stocks are increasingly attractive. let's bring in our correspondent has linda amin. they say what must go up must come down. valid in indonesia's case? haslinda: not really right now. investors say property stocks in the country still looking pretty commeap. the only way is up. take a look at what analysts are recommending. they say five property developers in the country, i want to show you this particular graph of how the indonesia property index has done the twice the gains
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reported by the j.p.i. the benchmark and more gains coming. the markets looking for a 14% increase in the next year because they're trading at a 10% discount compoird to other stocks on the j.p.i. the upside really not bad at all, rish. rishaad: i guess i want to ask who is driving this property boom? is it he will mements -- elements within indonesia or people from abroad too? >> well, both. overseas and local investors. singapore's world fund has been pumping in money. g.i.c. and its partner both invested millions in property projects in indonesia. and indonesia's own state pension agencies have also been buying placing bets on
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affordable housing. demand from low-income workers is expected to rise fivefold. planning to spend $400 million in the next four years to boost infrastructure. sump projects will support the property boom. people will pay to stay in areas with better infrastructure like public transportation. so you can see why indonesia's property market is so hot right now, rish? rishaad: thanks very much for that. that is of course haslinda amin joining us from singapore. other news palm oil hurt by falling prices.
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they will impose a levy on palm oil. industrial production expected to climb there. it is estimated the output rows 18% while inventories fell to their lowest levels in -- since june. saudi arabia has raised oil prices. but asia's demand for crude is improving. saudi arabia cut prices earlier to compete with latin america and russia. saudi arabia producing a near record 10 million barrels of oil a day. we've got a mongolian new leader and he's been launching a media blitz. what's he trying to do? well convince his people that foreign investment is the only way.
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bloomberg tv reports he has been tracking -- reporter has been tracking the developments. tell us more about the developments this weekend. >> sure. the prime minister said he is reiterated that the country's economy can go nowhere without developing the country's two major projects. he said the government and rio tinto has reached an agreement on owe -- reopening the project's second phase. there are four remaining issues for the investors and the mongolian government to agree on before moving the project forward. he visited a mine site to congratulate them on the millionth shipment. he reiterated how port the
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prorge -- project is for the mine to open. rishaad: everybody has been watching this sorted of old boy project. this is the rio tinto deal. it's been very closely watched. i guess if we have progress on that, the international community will have more faith in investing in the country, yeah? reporter: yeah. you might remember mongolia's world-beating 17% rate of growth in 2011. but after 20 months through which the project has been on old, it stalled. the total investment coming into the country now sands at half a billion from four and a half billion three years ago. the fact that the world's 14
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biggest bankss are also on hold watching how the project with resolve adds even more pressure to the degrading investment climate. so a resolution of the probably means $4 billion u.s. investment and green light for other investors looking into mongolia. thank you, back to you. rishaad: thank you very much for that. from bloomberg tv mongolia the from you willan baltor to what's going on in beijing. we expect for i.p.o.'s as well as 30 new stock offerings to come through this no. our correspondent is cristine, watching all this from beijing the take it away. reporter: hey, rish well, you know companies want to harness
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that money. we've really seen a number of i.p.o.'s this month. 21 in january. 18 in february because of a chinese holiday and now 30 in april. shanghai closed last week at its highest since 2008. of these i.p.o.'s 30 for april, 11 in shanghai. this is good actually because a lot of analysts say that bubbles could form on these smaller boards due to the high level of speculation. the more shares the more evenly the risk is shared. they've -- they expect another $2.9 billion to be raised, coming back into the market. 2012, they raised over $10
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billion over three days and had planned to raise that over 15 days. so the appetite is really high. rishaad: ok. there is also a lot of money tied in with these offerings, isn't there? reporter: well the only thing you need to worry about is when all this money comes back to the market. typically they get held up for about a month or so. so expect the $2.9 billion to be mays -- raised from the i.p.o.'s. most comes back to the market in mid-april, so watch the markets around then. most analysts don't expect a big change in the overall trend, which is upwards. another thing they're watching is how much of the descriptions be on debt. stock margin debt has been steadily rising so we really
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want to look at that debt level, because of future bubbles. though no one is talking bubbles just yet. rishaad: thank you for that, christine. other stories making headlines. global reserves declining, $11.6 trillion in march. china contributed the most to that decline cutting its holdings from 4 to 3.8 trillion. greece says it will make a payment to the i.m.f. that is due thursday. the government's coffers are nearly empty but the minister responsible says athens will meet the obligation. u.n. creditors are withholding credit until agreement is reached on reforms. and they must get through a debt auction this week to refinance six-month notes.
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and factories employing 90 workers stopped production in vietnam last week to protest pension issues. up next, rates, expectations, could we see further easing from asian central banks this week? more after that -- this very short break. ♪
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rishaad: carolina's begun test runs of a new high-speed rail line. it could ultimately link the southwest yunnan province. the new lines are designed for trains up to 350 kilometers an hour. and scientists are announcing the latest atom smashing. joining me now, zeb, john, issue ofon and someone from
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macquarie. i was going to ask you what dark matter was and how that system works but i don't think i would be able to understand it even if you did explain it to implement china, a lot of weapons at its disposal but everyone's been piling in there to the equities market. is it time to take a second look and maybe get out? >> no, i don't think so. i think if you are out it's time to get in. you're going to see a lot more trip it r cuts. on top of that, interest rate cuts. we've already had two. there's going to be a lot more. i think what we're going to see at the moment is relow inflation. the tool box is very large at the moment. on top of that we've seen some sort of significant
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announcements on the big debt swap. it's one trillion which will be swapped into municipal bonds and save the local governments around about gosh, only just 40 to 50 billion r.m.b. the total is going to be around $20 trillion. rishaad: some people seem to make a big deal about it. others don't. why? sam: people don't appreciate how big it is, the biggest debt swap in history. say half gets rolled that's 10 trill combron. banks will be able to have a greater risk assets razorback combrow. so the capital for the banks will look better. also i think local governments will save a lot of money on
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interest costs. so it's a significant change. remember the market fell a lot on shadow banking, trust concerns and essentially the level of dit. essentially you are going to swap out to municipal bonds by -- which i think is going to be pretty interesting. rishaad: that's the longest answer i think i've ever had in my entire life! [laughter] yvonne:what about this data that's coming out? more than half are experienced investors. they don't have a lot of existing wealth. not so much that is tnt sustainable but does it make it less that predictable what's going to happen? zeb:yes, you have seen the number of new accounts opened up recently, that's significant. the c.r.c. is placing emphasis
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on the margin lending side as well. the asian market does have a propensity to become more of a bubble over time if they don't put in sort of the right sort of prudent measures. i think there is going to be scrutiny on how the asian market goes. we've just seen the c.s.r.c. had another 30, -- i.p.o.'s, there's hundreds more waiting to list. so yes the market's taken off but i still think it's very early days as well. >> even thy say it's taken off, a seven-year high? sam:you look back in 12 months ago, saying what's the chances, people are saying there will be a big rally in china. the reason is we've seen maximum pessimism into the
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chinese -- chinese market we had soft landing, corporate bond, other trust issues as well so i think what you have had is a period where you have had significant holding back in terms of, you know that positive sentiment. we still haven't yet seen the largest asset allocators. maybe from. u.s. and europe, to hit the market significantly. we're still waiting for that big, strong surge in terms of the shares. our goal as far as saying, we're entering the golden period for insurers. very strong tail winds behind them. i saw a document that will pave the way for insurance reform and that insurance will be tax deductible. this is significant.
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only about a trillion but we think that insurance will peg up to 17% by 2020. china is moving itself to a limited liable country. that's a really important concept to understand that it's going to put in place in a number of areas, buffers. insurance is one key area. >> you take a broader stroke. look at the overall corporate environment in china. are we moving to one that's more supportive of small and medium-sized? the innovation economy, not just the factory economy? >> i caught up with them in beijing and they're looking at a number of s.o.e.'s. the steel companies, metals, etc., the banks, the chinese banks are doing it difficult as
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well. i'd go so far as to say they're going backwards. how can we continue to spur the market going forward? underlying all these comments is the first quarter number in china i think will be very soft actually below the market expectations. might ab round 7%. might be as low as 6.7%. that's the type of corporate environment we have at the moment. every one is soft. and the comment is coming from increase in liquidity. there is one very key one going forward. i think still think they've got to map it out. some of the largest are still going to be under a lot of pressure. rishaad: sam, thank you very much for joining us.
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and thank you for coming in on easter monday as well. coming up, honoring the dead. yvonne's been there. having a look at the high-value offerings available in the afterlife.
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rishaad: from smart phones to boats, there is something for everyone as asia honors its ancestors. >> here here marking the chin -- ching ming festival. this is a time where families come together and pay their respects to their ancestors. the offerings usually come in the form of paper money like this that's burneds, kind of like a wire transfer to the afterlife. but in asia they like to get a little creative on the gift you can give. i'm going to show you some of
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the most popular ones including the gadgets, of course. the samsung 6 edge phone here, i think. comes with a camera. this will cost you about $10 or so. how about an i max laptop? if your feet ever uncomfortable, how bay massager as well? the food here, too. the milk powders. dim sung, spring rolls, suckling pig, big mac and maybe you can pair it with some booze. we've got the sports cars, even the multiplain dollar home you always dreamed of. if that's not enough, how about the big, blown-up doll house. come choser and you see it's fully furnished. >> he can get two loyal helpers, a nice furnished building for $230. a cruise for the ancestor will
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cost about 150. >> that may seem pricey for paper but with every detail
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