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tv   Asia Edge  Bloomberg  January 3, 2016 10:00pm-11:01pm EST

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japanese carmakers. new delhi ordering half of its vehicles off the road today. , if you fresh start could call it that, to the trading near. take a look at the lay of the land, same story. , we are coming off a second straight declining year. disappointing economic data. vietnam moving to weaken its currency. not the best start, we are on track for the worst start to the trading year since 1998. also worth noting that most markets are still seeing thin volume. the chinese markets acting up again. shanghai down 3%.
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take a look at what is happening at the shanghai composite. a fairly important key support level, 3419 is the level of that 100 day. are seeingar why we this. one possible reason that was brought up by galaxy securities, investors are just getting out of equities at the moment. regulators may soon lift this ban on fundraising. that is perhaps one story. athaps a more rational look reaction across foreign offshore, look at the
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rmb. the sharpest decline, sharpest weakness against the u.s. dollar going all the way back to august. speculation that the pboc might allow it to grind lower further. perhaps assist the ailing economy at the moment. of course, all speculation, i have to emphasize that. rishaad: take a look at oil prices, on the way up again. this terrible row that is taking place against two major opec players. saudi arabia and iran. iran pledging divine revenge for
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the execution of a shia cleric. >> brent is higher. this price rise driven by tensions between saudi arabia and iran. saudi arabia has cut ties with iran and on sunday, it gave them 48 hours to leave. protesters in tehran attacked saudi arabia's embassy protesting against the execution of a shia cleric. he was a critic of the saudi arabian ruling family. rishaad: what is the longer-term hope when it comes to oil prices?
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start pumpingto oil as soon as it can. the u.s. has proven to be resilient and its output also. we saw the first shipment of u.s. crude leaving the port just a few days ago. opec still producing quite a lot. plenty of supply in the market. we do not know what will happen in the middle east. there could be further ratcheting up of tensions. much.d: thank you very new year, new optimism. it does not seem as much as change in china. we have manufacturing weakening,
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services strengthening. .e have the official numbers drivers andthe old the new drivers, different pictures. let's bring up the manufacturing pmi, a survey of private sector .maller manufacturers in china let's start with the official. 49.7. better than that three-year low we saw in november. the fifth month in a row of contraction. since 2009.streak a lot of pessimism globally, china being the manufacturing of the world. we are seeing similar things in
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the old drivers of growth. much further below. 10th consecutive month in a row for the private sector manufacturers in pessimistic territory. it is not great. rishaad: something optimistic now. , the highestmi since august of 2014. governmentt the wants to encourage as part of the rebalancing effort. 54.4, a nice shot in the arm for the services sector. rishaad: going to check on some of the other stories making headlines. homeowners in sydney may have
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had their worst quarter in years. house prices down in the three months. dented asity has been well. the average home value in sydney has doubled since 2008. limit rising by the today, up 19% in tokyo after japanese automakers considering a joint effort to help them. that might include investment. slumping.d kia they have been forecasting the weakest sales growth in a decade. combined sales of a .1 million vehicles this year -- 8.1 million vehicles this year. in 2015sed their target for the first time in seven years.
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taiwanese harde rocker who is hoping to shake things up on the political scene. what lies ahead in 2016 despite the belief that most forecasts are futile anyway. join him right after this. ♪
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>> more shooting is reported an indian air force space near the border with pakistan were at least 11 people have been killed in clashes with an armed gunmen. comes a week after the prime minister modi held surprise talks. pakistan has denounced the raid. much of eastern china is
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starting the new year through a blanket of smog. air quality readings were eight times internationally accepted safe levels. a change in the weather is expected to improve things today. shanghai is reported to be moderately polluted today. south korea thinks the north may be preparing a nuclear weapons test. pledgeder kim jong-un to increase ties with seoul. consolatory -- conciliatory tone, he said north korea remains prepared for war. remain: the focus will
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on the chinese slowdown. >> i think this is going to be one of the key themes for 2016 and 2017. the china manufacturing sector that has been so kind to the global economy, it is in a fairly significant slowdown. manufacturing production is weak and that part of the chinese economy accounts for about 50% of gdp. our next guest is watching commodities. >> everybody agrees at some stage the commodity price needs to stabilize. think about production cost, trading so deep into the cost curve and it is clearly not sustainable. in the short-term, we could
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still see prices drop another 10%. looking more into the second half of 2016, a changing environment, especially on the energy side. the u.s. is heading into its seventh year of recovery. janet yellen made the point in december, policy is still loose. by the end of the year, another 1% higher. a clear signal that it is going up two or 3% over the coming 12 months. from that point of view, the normalization process has clearly begun. rishaad: that is the word from asia on the year ahead. a negative start to 2016. what does that mean for the year ahead?
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let's ask our next guest. all generalizations are faults. --false. giving predictions, i think you said, they are futile. >> what do: economist making a prediction -- what do you call an economist making a prediction? and the answer is wrong. expecting i'm volatility in every other financial market. if you look at the backdrop, china is slowing and is continuing to slow. things will get any worse -- things will get even worse this year. the u.s. is raising interest rates, so you have ships moving and very different directions. supertankers moving in very different directions. how much is too much in terms of rate rises?
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the chicago pmi number was the worst since 2009. rishaad: we knew we were going to have this debate. we knew would we be talking about the next hike. >> how does this not lead to volatility? you have that backdrop. fx will continue to swing. probably more down days than up. and then you have the political backdrop, which will be a roller coaster, too. we have the presidential election in november. rishaad: in the run-up to it, people will be taking all sorts of positions. michael: if you look at how many minefields are out there, it is
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a lot. but it all together and it looks like a very volatile year to me. risks to keep the crosses and to key markets, you can price in that it will be the same old same old. let's leap forward to november. the market is not thinking that you could get a candidate that is not on the radar. the market is not pricing for that. i think we can see that play out in a wide variety of different markets. rishaad: let's look at the asset classes as well. some people say, watch out for the circuit breakers kicking in.
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what gives? michael: we will continue to see that pattern. if you look globally, china is slowing, and with the u.s. raising interest rates, i do not see how we have a particularly positive backdrop for equities. rishaad: what would be a positive backdrop for equities? michael: the fundamentals get that much worse, they can be as bad as you want granted that you throw money at it. what goes on in china? do we see this much wanted deleveraging taking place? across the board. michael: up until now, we have not seen deleveraging at all. an enormous amount of talk about it. figures,ok at the debt
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they continue to march higher and higher. 2016 is the year where they cap the increase and try to decrease debt levels, they will grow exponentially. rishaad: thank you very much. next, the- up services industry in singapore helping to lift the economy. ♪
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edge." wehis is "asia are looking at singapore's economy. services, to offset failing -- falling demand from
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china. late than never. we take whatever, whenever we can in these tough times. 1.9% the quarter before. for the year, growth coming in at 2.1%, pretty much in line with the government's estimate. services,sted by especially from the financial sector. also construction, they compensated for exports. it has been a roller coaster ride. swings inerable to global trade. is the biggest export market. we have seen eight straight months of export declines.
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retail sales have risen almost through that period. today's numbers pretty much estimates. a final report will come in february. -- what whatever people are people suggesting? haslinda: it is going to be challenging, subdued for singapore in the coming year. the prime minister sounded a note of caution. the economy is slowing and is in transition and will face even more competition. we cannot expect the year ahead to be easy. the monetary authority of singapore will be focused on the key driver for inflation. most expect no change at all. at the policy meeting in april unless there is a systemic shock. challenges remain for the lion city.
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the troubles are not over yet. rishaad: thank you very much. bank of vietnam cutting the dong. market-basedre methodology. the bank saying the rate will be based on developments at home and abroad. says it missed 2015 growth targets because of the global slowdown. tax revenues fell shy. the economy grew from a year ago. inflation also fell shy, the budget deficit. south korea saying it wants to boost growth to 3% this year and targets tol maintain
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sustain the recovery. they will frontload spending to prevent a decline in the first quarter. a half billion hotel development on the site of its sydney casino. let's get more from paul allen. is there a casino war in sydney heating up? for ait has been brewing little while. back in 2013, crown got its gaming license for new south wales. had ail then, star had monopoly, which they had enjoyed very much. billion-dollar
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redevelopment plan going on down at the harbor. a 200 meter high, 360 room hotel on your existing site. the ritz carlton will be the operator. ritz-carlton is understood to be keen to get back in the market. australia is enjoying a surge in tourism, mainly from china. the timing is important because at the end of 2019, directly on the other side of the harbor, james packer's new casino development. that is an impressive development indeed. highroller rooms. competition has come to town. the casino market in sydney will look very different.
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rishaad: that is paul allen for us in sydney. let's have a look at the indices. seoul started an hour later than usual. 1.4%. seeing declines, have a look at what is going on in hong kong. shanghai posting losses of 4%. weaker than expected data when it came to manufacturing. that is what we have. the nikkei. they are coming back on stream. traders and investors are leaving their desks for lunch.
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down in the25 points.session by 492 the reopen in tokyo is next. ♪
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edge." this is "asia escalating tensions in the middle east. weak economic data in china. the shanghai composite leading the way down, oil jumping amid escalating tensions at the heart of opec. saudi arabia cutting ties with the run. china's latest factory reading coming in lower than expected. was 48.2.cturing pmi
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that is down from 48.6 the month before. the services industry ending last year at the highest in 16 months. mosta shares surging the in more than a year. japanese carmakers may step in and help the embattled airbag maker. postponed their demands for price cuts. honda says it is not planning to invest. it is not the best start to 2016, looking at losses across the board. david: that is right. value is emerging. we are entering the lunch break
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for the shanghai composite. we are off by 4%. there we go. , wholy, it is unclear knows why, but one of the theories is a lot of investors are paring back long positions ahead of the possibility that regulators may soon lift the ban. that is another reason. levels, we are at the 100 day moving average of the shanghai composite. we have -- we were able to compile some forecasts from analysts.
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the nikkei 225, lunch break obviously. forecast is 22,250. you do the math. quickly.will do it come on, david. about 20% from where we are. hang seng, the forecast there is --23,600. am i doing that correctly? about 10% from where we are at the moment. it is my job to give you the forecast and my job to tell you the forecast will change. you for that.
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we know what his birthday present is. a calculator. a bad year for casino operators. revenue dropping to a five-year low. at -- tell me how bad things are. -- half full or half empty. the half empty part, those numbers that just got released on the first. december was down 21%. that brings the quarter down 27%. if you look at the peak we experienced in early 2014, revenues down by about half. clearly, that is the problem. the slightly good news, the half-full part of the story, the drop we saw in
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december was the smallest decline we have seen all year long. if you look at the start, the white line is macau gaining revenue, 6.8 billion quarter is still four times larger than vegas. rishaad: vegas just carries on in its own sweet way. >> vegas is a different business. revenueout non-gaming driving profitability. that is the shows, restaurants, the whole kit and caboodle. it is a very different structure. even on the mass-market side, the mass-market based business in macau is bigger than vegas. rishaad: casino stocks last year had a shocking time last year. can get -- can it get any worse?
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>> never say never. they have gotten pummeled. if you look at valuations, a little bit below 10 times .orward ebitda down the most to the 2011-2012 lows. a lot has been priced into these stocks, especially as we think about, do we see a stabilization and an eventual recovery? rishaad: what are the operators saying themselves? do they see things bottoming out? they become much more favorable. are clearlyrisons easier if you look below the surface of that total number.
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you have to breakdown vip versus mass-market -- break down the ip versus mass-market. those operators that have a mass-market bias, that have new resort exposure, are those likely to see better operational performance. .t leads you to look at galaxy rishaad: this is a developing story, said to be planning an offer to take its china arm private. the company is controlled by the hong kong millionaire. shares for the two companies are suspended and the announcement is expected later this week. 2016 may bring a change of
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fortunes for airbus. it has not won any new customers in three years. a what take delivery of the willsna in 2018 -- ana take delivery of the planes and 2018. a 2018.s on shipping 17,000 cars for the fourth quarter. tesla did revise its estimate in november, the guidance changed as tesla ramped up production. china is stepping up the challenge to u.s. maritime dominance in asia by building a second aircraft carrier. wasing's carrier
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commissioned in 2012 and built from the ukraine. the new vessel is under construction. when we talk of china, we immediately start talking about pollution problems. the two highest red alerts issued in beijing in the last month. but the worst day in the city cannot beat the pollution in new delhi. take a deep breath, here are the numbers. ♪
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♪ let's bring in our renewable energy correspondent. what is the main cause of this problem? what can be done, if anything? >> the main cause of the problem is the fact that delhi has more
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than any other cosmopolitan cities put together. delhi is a landlocked city. their agricultural waste. it is banned, but implementation is a problem. this winter was the most severe. the impact on delhi of crop burning is almost like singapore indonesiafires from come to singapore. as desperate measures, the delhi government has brought in this even-rule. rule.n-ought -- even-odd rule. plates on even date and odd-numbered plates on
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odd days. that has helped to keep the air --an, public transport people have to make all kinds of compromises. it is a desperate measure. it is an emergency measure. given the alarming levels of pollution, the residence of delhi -- rishaad: this is an experiment. it has more to do with them doing something that anything else. >> exactly. india is time responding to pollution, making it an agent for proactive
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measures, good for the public and government. it is not like people can pawn it off and say, the government has to make a policy. it is making people step out of their comfort zone to do something. change their habits. clean air can only start from the individual. there are a whole lot of policies the government needs to take. banning open combustion of agri-waste. sus but i think -- subsidizing fuel. it is a pollution menace. india needs to adopt better in laws.n laws -- emissions rishaad: ok. what happens after this experiment? do they have a continuity plan in place? >> after this experiment, i
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think the government is talking about ramping up the public transport system a lot. there are a lot of talks about more buses, increasing the number of metro frequencies. the continuity plan is an aspiration that other states in india that also follow suit, take inspiration from this bold step the delhi government has taken. talk is also a lot of between the center and the state. the larger aspiration is all states would do something on their end to fight the pollution menace. it is not just delhi. , the mostin india polluted cities in the world.
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it is not just policy measures, it is a limitation. -- it is implementation. rishaad: how is it today? skieshi is seeing blue after a long time. we still have 10 days to go. rishaad: thank you very much. next, getting back to the subject of interest rates. it is our group discussion on "asia edge," next. ♪
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>> hong kong police have opened a missing person investigation into the disappearance of a bush
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up owner. protests were held at the weekend over the disappearance, a major shareholder of the shop. hong kong's cable television says he told his wife by phone he was assisting in investigation. china has created three new military bodies to modernize the army. the changes come as beijing becomes more assertive in the south china sea, increasing tensions with its neighbors. it is the largest army in the world. tensions escalating rapidly between saudi arabia and iran over anchor at the execution -- anger at the execution of a prominent cleric. saudi arabia has collected lamonica relations with iran -- has cut diplomatic relations
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with iran. rishaad: welcome back. now ,haidi, michael, and steve. further contraction when it comes to money. seeinghought we were stabilization of the data and now we are getting the pmi much worse than expected, 48.2. how do you think the slow down is going to affect pboc policy going forward? >> did we really think there was stabilization? rmb policy and interest-rate
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policy will be lower in 2016. rates will continue to fall. i do not think we will get any change on that front. depreciationurther the pboc will allow the yuan to go? >> i think the number seven is the number people will be talking about. >> how messy is the deleveraging prices -- process going to be? michael: i do not think we can isolate china here. any large economy decides it is time to deliver, you have a recession unless you can manage to push her currency far enough to export your way out. or inflate your debts away. they have deflation rather than
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inflation. in the meantime, they keep talking about deleveraging. >> do you think there will be any major decided -- surprises from china this year? knowel: yes, but i do not what they will be. [laughter] what are you expecting? michael: in terms of how much more the currency can move. cold months ago, -- 12 months ago, people did not think we would start -- end the year with 6.60. >> do you think there is money to be made there? michael: if you are on the right side of the trade.
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i think potentially, money can be made there. i am just describing events as i think they will play out. i think the pboc will be very anxious. it is something china needs to do in its own best interest. >> that sounds like it is going to be competitive devaluation. what does that mean for other currencies? michael: that is the $64 trillion question. thate already seeing happen. it will be accelerated. the fact that people do not want to talk about this, is why people are doing their best not to talk about it.
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strengthening your currency does not help. you can do something that might help a little and makes the matter worse for everybody else -- or you can do the right thing. >> happy new year. he has used a different sort of stage. find out how this heavy-metal rocker is hoping to strike a chord with voters in taiwan. ♪
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rishaad: this is "asia edge." from the opposition says taiwan voters want change because the ruling administration is not listeningt.
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to improveng government efficiency. china, itrnings from could collapse if the new government rejects the one china framework. stephen engle met another candidate who is quite literally rocking the establishment. >> perhaps best described as full metal -- folk metal. ♪ occupied by japan, wars with china, the polarized angst of today. he is not only the front man of the metal band, he is a loud new voice on the political stage, proselytizing for an independent
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taiwan. protectwant to stay to our freedom, democracy. normalize -- >> china will never allow independence. do you think conflict with china is inevitable? >> may be, but every democracy has difficulties. >> lim grew up pro unification with china, but grew disillusioned. he is gunning for a powerful seat. disaster.he biggest they do not want to listen to
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the people. >> young people are having more of a voice. a lot of the taiwanese grew up under japanese role. my generation grew up taiwanese. >> the presidential candidate says he gets the message. >> we should do some reform. >> but it may be too late. polls suggest a sweeping opposition victory. you are not as handsome as tom cruise. i say, maybe tom hanks? lim is is exactly what doing -- running. history may not be on his side, but the millennials are. that is it for this
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edition of "asia edge." trading forrn to the first time. ♪
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