tv First Up With Angie Lau Bloomberg February 14, 2016 6:00pm-8:01pm EST
♪ angie: the case for stability, the governor says there is no basis for continued depreciation of the one -- yuan/ chinese markets returned from the holiday, looking more expensive against their peers, and london calling, hsbc says they will stay based in the u.k., the asia remains the heart of the strategy. welcome to first up, i'm angie lau, coming to you live from bloomberg's headquarters.
our main story this monday morning here in asia, china has stepped up its efforts to restore stability in the economy, saying there is no basis for a creationist -- for appreciation. >> where did you go, joe? that was the question. i have been asking this repeatedly. since august, there was not a lot of comment. he had his deputy give a press conference at two days after that in august, or is in -- as in 2005, the architect of the yuan liberalization was on state media within 48 hours of that big the pegging from the dollar in 2005, this time, he was kind of silence. he had maybe a few comments of the g-20 meeting, he was not a davos.-- double --
joe resurfaced in a time magazine article where he basically went down a long list of concerns. , there is no basis fall, theing yuan pboc has been sending it since that august evaluation. he says balance of payments are good, he says outflows are normal. exchange rate is stable, even though it is down 1.25% again. -- there is outbound investments, there is .lso flight of capital also because there is no need to worry about short-term decline,
he says china has ample holdings for payments and for defense of stability. noteds a quote from a economist at the university of california at san diego, he says joe is desperately trying to make sure that his work does not go to waste. angie: if everything is ok, why ?id it take so long to speak up >> that is the big question. that is what christine lagarde said, maybe this is just a promise -- something the chinese authorities -- there was a lot of turmoil in the markets before then, begging for this kind of thing. amongst all of this noise, is basically -- ample liquidity at
home. pboc had been pumping cash into the financial system for quite some time. , we that is out later today will get aggregate financing that will show an -- a significant uptick in basic liquidity in the market. the aggregate finance data is out today. this chart is telling. as the fx reserves have clients to a four-year low of 3.3 trillion u.s. dollars, and one, the money supply has risen. here is foreign-exchange reserves. this is where liquidity is going, money supply is rising. they have been doing something right. that has been lost because nobody has been talking about it. angie: he is talking. it is the first day of the trading week after that lunar holiday. we will be seeing whether or not we will see the yuan rate.
>> the markets open up as well. .ngie: very good, thank you you can get more on all of the day's top stories at our digital destination, bloomberg business bringing together the best of bloomberg news, bloomberg television, and new digital content all at one address. russian prime minister claims his country is in a new cold war with the u.s. and its allies. plus the world health organization says an indian i a tech company is leading the way on vaccines for the zika virus. that is on bloomberg.com/asia, check it out. last week was one that asian investors probably for -- prefer to forget. with the regional benchmark closing at its lowest since 2012. the fray later, haidi lun is here to take a look at what to expect. i think we are optimistic, we have futures when
he to a higher open, at least outside of china. this is largely on accounts of the yen calming down. started to play out in the final -- friday session. we are seeing the yen declined so far. as such we are seeing a slight uptick when it comes to futures for japanese stocks. let's check in on the aussie stocks. australian and new zealand markets are turning to trickle in. we are looking at not much movement for the aussie dollar. but the -- the index was down 5% last week. equities japanese which were the worst performer. japanese stocks are down the most in seven years. that was largely due to the and. -- due to the yen. chances are we will see the markets in terms of japanese markets come down.
in terms of other markets trading around the region, all eyes are on china. in asia they had the last week since 2012. it was down by about 7% over the past week alone. certainly regionally tracking that bear market we saw global stocks falling last week. angie: china markets open at 9:30 here in hong kong. haidi: on the one hand, you think perhaps they miss the worst of a selloff, globally, on the other hand they have a lot of catching up to the. -- up to do. one good thing to come out perhaps is that a lot of analysts are saying, with that wraps that happened last week, the global equity situation is not only due to china. you see why i had an editorial. other hand, this is potentially a bear signal for chinese stocks. after last week's selloff, it is a whole lot more expensive. shanghai is down 22% year to date. it is still up 31% over the past year.
trading in comparison to emerging markets index, still expensive. shanghai trading at a 34% premium. shenzhen is four times pricier than their counterparts. that is the case of a selloff continuing. a lot of analysts saying that is embedded in. we are not quite done in terms of getting chinese valuations down to a little bit more of a palatable level. interesting enough if you want to look at how expensive the stocks are, i want to bring in that chart that shows the rhenium, we have had that divergence. widened to close to 50% which is the whitest -- widest since 2009. that is where we are now. that has shown how poorly hong kong stocks have fared. throughsome data coming today which will be a driving how the markets feel today.
japanese gdp is expected to be lackluster. we also have china trade numbers coming out. exports are expected to fall for something like the seventh month. that slowdown story will continue to play out in the markets today. all eyes on the shenzhen strata. -- trade-off. angie: thank you. checking other headlines for you right now, movies have been a big thing in china during the lunar new year holiday. box office sales were up 80% in the first three years -- the first three days of the festival. it feels like that sometimes. the first three days of the festival brought in a lot of money reaching 158 million dollars, almost as much as the entire weeklong holiday. retail sales and restaurant receipts from february 7 onward rose more than 11%. over and south korea -- markets are signaling an imminent
interest rate cut some investors pricing in a reduction as early as tuesday. the yield on three-year sovereign debt has dropped below the bank of korea's policy rate of 1.5%. interest rate forward sale after exports slump the most in six years. most economist we spoke with seem to be ok staying on hold this week, tomorrow after lowering the benchmark four times since august 2014. australiae betting on easing, despite the governor signaling he a has been in watch and wait move. -- mode a bloomberg survey shows there is a 20% chance the rba will lower the benchmark in march. they expect rates will drop to 1.66% within a year. asy say the rba might act the aussie dollar strengthens. it is currently one of the weakest among t10 currencies. india's sense that -- central
bank governor says the ruby might have to depreciate until inflation is under control his main focus is on bringing prices down, they say the room -- review must weekend to remain competitive. he is watching double spending and inflation to determine if he can add to the forecast made last year. this is a story where monitoring in asia, hsbc says they are staying in the u.k., and will keep the local headquarters in london after much buzz that maybe it would move here. we have background. that is right, they say the signature -- decision was unanimous, it will stay in london. it pointed to the factors it was the redat, including dust regulator environment, future growth, and financial impact. it pointed to the uk's respective framework and legal system. inmentioned in meant express handling complex international affairs, and also the u.k.
important and globally collected economy areas which it highlighted that in the u.k., treasury said it welcomes the hsbc decision. hsbc was keen to underline that u.k. -- asia is important. they said asia is at the heart of its strategy still, and it mentioned the strategy they revealed in june -- hsbc makes most of a profit in asia. it is very key to hsbc. they have been headquartered in the u.k. for 23 years. in discussing this move for in the months, -- beginning they were looking at several areas but as time went along it seemed increasingly more likely they would stay in the u.k.. as an example of how difficult it was probably before the decision was made, they must a self-imposed deadline to decide.
the reason why hsbc would have been looking at moving outside of the u.k., for example, we looked at tax issues, regular issues, and the u.k. government did make concessions that made it clear to stay there, including cutting a proposed levy on hsbc. angie: it was seen as a threat to get those regular season up -- regulators to ease up? >> they have eased up on some regulations on banks and sort of moving forward the hsbc has put -- has said it will no longer review where it will have its headquarters every three years, which it had been doing. it will only revisit the matter if it sees what it calls a material change. angie: thank you. challengesext, the and opportunities facing asia's airline.
>> stories making headlines around the world, taiwan has into the search for people after the earthquake. all that to a be done were found and an apartment complex which collapsed in the 6.4 magnitude quake. the developer and two architects have been arrested on suspicion of negligent homicide. called on the u.s. to formally and on a situation with mark -- north korea. end threed in 1953 to years of fighting, but the two sides are made technically at war. the head of china's foreign affairs committee said he is
concerned about the program, but it's more concerned about american response. india says it is disappointed with the decision for the u.s. to sell weapons to japan. washington has confirmed the $700 million deal includes planes, radar, and or fair equipment. those worried that giving pakistan advance in more play, would tip the balance. powered by over to under 40,000 generalist and a 50 bureaus around the world, this is bloomberg news. angie: southeast asian airlines may have overdosed during a decade of booming growth. the international air transport association says carriers may need to push back delivery of jets in the face of overcapacity and soaring competition. the long-term outlook remains positive with passenger traffic across the asia-pacific forecast to raise -- rise 5% here for the next today gave -- next two decades.
the largest defense show took place in asia. has haslinda amin was there for us. amin: in the airline space, china is going to investors. they are expected to order more than 6000 planes over the next 20 years. $950 billion worth, double the amount of the gdp, that is a big amount. not the same story for the rest of asia. you talk about southeast asia. some airlines have gone bust. we heard about king fisher. others have delayed deliveries of their planes. inre are those mired financial problems, the likes of thai airlines as well as tiger. andrew joins us this morning. what is the story here? of what iscrepancy happening in china versus what is happening in asia. >> we have to recognize the air travel demand going steadily.
i think it has been boosted by affordable airfares. going forward we expect demand to grow 5% to 6% among across the region. within that rosy picture, it is a competitive market. we do see failures. there are winners and losers. with the compared carriers in north america, they honored it by $21 per passenger. >> this is a competitive industry worldwide. we have seen profits take out strongly in the last two or three years. that has been led by the u.s. carriers. european is behind. asian carriers are growing strongly. it is a mixed picture. we have very profitable carriers in north asia, japan, china, from parts of the rest of the region. by the same token as you mentioned, there were some carriers that have to restructure because they are not
competitive. haslinda: does it have to do with the u.s. dollar? it is weighing on carriers and is part of the world. >> it is a fact that the dollar is strong so other currencies are weaker. -- carriers are weaker. that does affect some traveler behavior. in general, we see strong travel demand despite slow economic growth within the region. one thing airlines have to worry about is balance sheets. the translation effect of a stronger dollar affects the balance sheet. haslinda: we have seen how oil has been slumping. yet airlines have not managed to bring down the prices. is this a story of that hedging to my airline? -- done by airlines? wethat is one of the reason are seeing growth above trended 8% because price has come down. it is true that airlines have -- hedge a lot of fuel.
when you hedge at higher prices and the prices fall, it is a losing bet. the ones who did not hedge so much for one reason or another, are clearly benefiting. in the end, it all evens out. in the end, the price of fuel is in the ticket price. haslinda: tony has said he expects asian characters -- carriers to delay plane delivery. what trendy is the? -- what's trend do you see? >> i think you see a number of airlines growing rapidly. they obviously anticipate .urther growth they will be delivered over the next 5, 10, 15 years. overall i don't think so, boeing and airbus have massive order backlogs. the rate at which new aircraft are coming to market pretty much matches the growth in demand. they will shuffle and defer,
that is part of the normal way in which the industry works. haslinda: in southeast asia there was euphoria because of the agreement taking place last year. that has not happened. some countries yet to rectify, including indonesia. is there reason to be optimistic? >> they have a number of milestones, but it is a process, not a big bang event. what happens is you have a succession of liberalization moves. it certainly helped broaden conversation. some countries are faster than others to about new terms. overall it has been beneficial, i expect that process to continue. talk aboutow do you open skies, the unlimited lending? >> you can have open skies, but if you do not have enough terminal and runway capacity, it is a problem. the growth has outdone
expectations in many markets in asia. we do see a crisis of interest structure. -- crisis of infrastructure. one thing we will be talking about is how they work together with the government. has linda: a journey, not a destination. angie: there for us all day today. thank you. we will have more from the singapore air sure this morning -- show the morning. we have tony tyler joining us to discuss the outlook for aviation and 2016. and then an extended issue of asia edge, christoph mueller talk to us nine months into his turnaround plan. biggestp, australia's gold producer takes a hit to the bottom line. we take a look at new crest mining, when "first up" continues area ♪
angier australia's largest gold producer is reporting a steep decline in first half profit, down 55%. let's take it down to paul allen in sydney. goals recent rally has come a little too late? paul: it has, angie. ony are blaming the result the gold prices, they had been low. australian dollars, the gold price has been strong the last few months. the firstt profit for half, down 55% to $81 million. revenue was also down to 1.5 5 billion. down from 1.7 8 billion for the same time year earlier. production was a bit of a mixed bag. gold production of 6% to 1.2 million ounces while copper down 23% to 38,900 tons. angie: thank you.
fox's latest offering, "dead coal" has hit a box office record in north america, based on one of marvel's lesser-known characters. the ryan reynolds film took $135 million over the weekend. that beats the previous $85 million record set by "50 shades of grey." dreamworks, "kung fu panda three" false the second-place. -- falls to second place. -- a programeasing is grinding to a halt. gdp fell in the final months of 2015. the slowdown in china has hit demand for japanese products. adding to that, the yen has appreciated 6% this year, even as the bank of japan boosted stimulus. coming up next, talking trade -- indonesia, the transpacific partnership, and the drive for
angie: it is 8:30 in tokyo, a big day today. gdp figures coming out of japan. 30 minutes away from the open of trading there, as was south korea. you are watching "first appear up." "first the governor has broken his silence on the yuan. he told tyson magazine that china's balance of payments is good. capital normal. exchange rate is basically stable against a basket of currencies. as suspected, china will tighten controls, and s suspected there
are ample holdings for payment. valuations on the shanghai are looking more expensive compared to their peers. global stocks were beaten down last week. japanlia, india, and entered a bear market. japanese stocks and particularly had their worst week since 2008. hsbc has decided to keep its global headquarters in london, saying the u.k. is an important and globally connected economy. the decision was passed unanimously at a board meeting on sunday, following 10 months of debate. hsbc has been based in the u.k. for a third -- 23 years. they say remaining there is the best option for customers and shareholders. powered by over 2400 journalists in 150 bureaus around the world, this is bloomberg news. let's check in on markets in asia for you right now. this morning in asia, monday morning for us, australia equities right now are seeing gains of more than 1%.
we are also seeing a stronger aussie dollar against the u.s. dollar. 71 u.s. cents. to new zealand, we are also seeing big games -- gains. 1.5% higher. the new zealand dollar spot is that $.50 u.s. -- $.66. 25, it lost more than 12.5%. it had a market holiday last week. what does the future hold today on monday? that 500t out, above 15,000 mark to 15,585. weaker yen ishis helping out. maintaining the weakness about -- against the euro and the u.s. dollar. at 113.68.n the losses around the world do not happen often.
inspected to show a slowdown. interestingly, one consistent trend in growth in recent years is the lack of one. david is here with a preview. david: the forecast for the fourth quarter suggests that the economy is hitting a snack. the major components off the economy, this is data things to our folks that bloomberg intelligence. private consumption, biggest component of the economy, 60% of gdp. the point of this is, and i will not go through all of the details. the fourth quarter is expected to show a drop in household consumption. he take a look at the monthly numbers from october until december, also a drop. you have warm weather weighing on things like apparel, spending, appliance sales. that will be a drag on growth. you can see the circle at the end. that is a five-year chart you're looking at. next up, trade, that is the second largest component of the
economy. 18% of gdp we are talking. the point of this here is, this is likely to be a positive for growth in a lot of ways. you have the yen. what you are looking at is a five-year look, imports, exports, trade balance. they can get excuse -- confusing. the point here is, you look at this part here -- the weak yean. in december, the japanese economy managed to eke out a trade surplus, which obviously was not the rule of thumb if you will for the economy. it is having to import more i'll -- oil going the earthquake of 2011. cheaper oil means cheaper imports. managing to get out a little bit of a trade surplus there. and tabletlleagues
-- bloomberg intelligence are telling us is we could be looking at a .3 percentage point bump up to headline growth. very quickly, let me wrap things up with a look at business spending. that is the third largest component of the economy. we are talking about 14%. what you're looking at here is that 10, 10, all industry cap and spending. how much more are japanese coveney's planning to spend? it is a forward-looking indicator. 10.6% for this quarter, but we are expecting a point to percent drop in business spending. -- 2% drop in business the. those numbers should come out in less than 20 minutes. angie: thank you. let's take a look right now at what we are following for you on the -- on bloomberg this morning. haidi: it has taken another turn, the nikkei newspaper says
foxconn may have an alliance with softbank. reports of foxconn would hold the controlling stake, but softbank may take as much as 20%. meanwhile, sing came news saying that they need to maintain staff levels. deputies withding stocks after giving them extra response abilities allowing high-level departures. recently promoted, chief operating officer, the technical officer, and the general counsel have been given equity that will vest over four years. afterook on wider rolls chief executives left in january. they say they have received an offer for ge. wants to buy the 2.8 leanne dollars state. analyst saying that would allow it to be private before seeking an ipo in china.
daye dimon had to wait one for his bed on jpmorgan to pay off after buying $26 billion worth of stock on thursday. he thought his net worth would rise by 2.2 million after this shares jumped more than 8%. that was their biggest rally in more than four years. that was a look at some of the stories making headlines. i'm haidi lun. hase: indonesia's president had an up-and-down first year in office. he struggled to impose his grip on national politics. he was criticized for some policy initiatives, and very public spat inside his coalition caused concerns. he still. enjoys in approval rating of 67%. speaking exclusively to our south east asia correspondent, the president said the problems were just medication issues -- comedic asian issues. -- communication issues. relationshipgood
with political parties in parliament, there was no problem with the approval and revision of the state budget. overall, politically, the support for the government has been good. >> did you underestimate the influence of some groups? >> know, in my opinion, it is about how we communicate. it is up to you what you want to say. it is important to maintain good communication with political parties and parliament. angie: we also spoke to trade minister about how the controversial transpacific partnership affects their plans to boost growth. >> we have made a fair bit of progress. we still have a long way to go. i think to be objective about it, there are many emerging markets in decent shape. there are certain emerging-market economies that are expressing contractions of minus two, minus three, even minus five. -- percent.
they are pointing 5.0%. angie: that is far from the 7%. >> again, once upon a time -- you don't get their by teleporting. the president will reassure investors that will keep pushing. we will keep pushing and reforming. we will keep modernizing. we will keep simplifying rules, regulations. we will bring them line -- in line with international practice. >> when the president expressed interest in joining tpp, if indonesia -- is indonesia ready, can it stomach the likely long road towards fighting interest groups for instance? >> i think a lot of the mentality comes more from certain business elite. why should we -- why should we be so afraid and resistant to
change? grexit where our view in this reform specifically? indonesialf said would have to execute one of the sharpest u-turns in terms of policies. >> i would say we are probably only 10% or 15% into it. i think what we have done in a last six months is change the tone. change the mindset. , thee the way, certainly executive branch of our government thinks about our positioning with the rest of the world. ask world bank and a lot of trade experts, over the last 10 years, we are probably the most project -- protectionist regimes. we have made non-terrorist measures. now to change people's mindset -- that is wrong, we want to be open to qualify for trade agreements with europe, tpp and the like.
>> hello, and welcome back, these are the stories making headlines around the world. civiliand nations said casualties of violence from afghanistan have hit the highest record since 2009. more than 11,000 people were either killed or wounded. mostks have grown since u.s. forces end of their official combat mission at the start of 2015. security has deteriorated as the palestine expand control. david: maritime security and the south china sea is expected to be on the agenda.
leaders meet with president obama in california later. they intend to press the issue to stress the need for freedom of navigation. there is an arbitration case questioning china's claim to a string of violence. beijing has refused to recognize or participate. formerre claims that the vw chief was told about the emission problems as early as 2014. the newspaper said a vw staffer wrote to the ceos to say to the economy that the company could not provide an explanation for elevated nitrogen oxide levels. u.s. regulars should probably investigate. they admitted last the timber, that engines had been affected. over 24 hundred journalists in 150 bureaus around the world, this is bloomberg news. i'm david and when.
-- david english. angie: welcome to stock exchange. we are taking a look at the openings in japan to in south carolina -- korea. new week, new tally. a company that runs supermarkets, convenience stores and -- in japan. income will that it be 80 -- 88% lower. that is mainly on the cusp of dying. revamp.e been trying to generally consumer companies ate this have been looking struggling us here. -- this year. have a shirking population. -- ranking population.
-- shrinking population. e-commerce, it has been badly battered, in comparison to even how bad japanese equities have done. missed expectations by 11%. price targets have been cut. -- smb see has been maintained. off are trying to sell their online shopping site in thailand which is a huge investment. they are focusing on malaysia, indonesia, and the singaporean market. that is a failure when it comes to emerging-market strategy. 13 buyers on the stock. no cells and seven holds. 28.ays is about angie: that is the verdict from the stock exchange. stocks reported are based on
angie: breaking news, japan's fourth quarter gdp figures just crossed in. david: worse than forecast. these are the luminary numbers for the fourth quarter. -- preliminary numbers for the fourth quarter. a contraction of 1.4%. this is more than we were expecting. the median forecast from economist was a drop what .ontraction of .8%
as far as the quote" a figure, .4%le what was expected, contraction, we were expecting a -.2. as far as nominal gdp is concerned, -.3%. gdp later coming in below forecast at 1.5%. on your screen as you can see, the annualized figure -1.4%. again we are back in two the negative. there is not a -- the only consistent take away his they lack a consistent theme for the japanese economy since abenomics. it has been here or there. checking in, dollar yen, a third of 1%. quite a disappointing set of numbers. angie: david, thank you. let's get some immediate reaction to this disappointing data coming out of japan. joining us now from tokyo is takuji okubo.
is abenomicsmex -- over? takuji okubo: i would say so. i think it had a pretty good opportunity in the last three years. global economy was growing, u.s. economy was recovering. even in the favor of the environment, abenomics could not deliver. economy ise global at the brink of a global recession, i do think the risk is high. i would put it at 20% or 30%. i do not think it can deliver in this headwind. angie: what is concerning as well in terms of fourth quarter data, -1.4% quarter on quarter that is definitely double than what was expected in terms of a slowdown. this was also happening when the yen was weaker. takuji okubo: indeed.
if you look of the details, you will see the private consumption has shrunk as much as their .8%. that is a very significant drop in the private consumption. if you look of a fundamental, you see why, despite the that they would raise wages, they have not responded. wage growth for the last quarter was 0.3%. in this fundamental, it is difficult for private consumption to expand. that harrynderstand kuroda will be speaking today. what is the expected to say? -- he expected to say? how is he expected to stabilize sentiment if abenomics is shown to be a failure, which apparently it has today. : bank of japan has a negative rate of zero point
1%. actuallyhe problem lies with the boj communication. i think they have basically failed to deliver what it has been promising over and over. they have complained about credibility against the market. they need to everything, the way it is keen to getting with the market. -- it is communicating with the market. angie: what do companies need to do in the face of such headwind heading to japan's way in terms of global environment? takuji okubo: i think for the past few years japanese companies had to readjust inflation. long years until deflation, so some of the company could not adjust to the new environment. now that direction seems to be again going towards deflation, the a comment -- the company i need to adjust higher yen.
angie: the higher yen is what is happening right now. what about restoring? oring?sh did companies lose an opportunity? : despite the promises, i think japanese companies did not believe they could deliver. they were more or less discounting the promise of inflation, and the weaker yen. -- this hasy are proven true, i think they would be sticking to that pessimistic environment. reshoring did not happen in the last three years, it is difficult to see how could happen in the next three years. angie: is there any way for japan, abe and his administration to salvage what is left? get rid of the sales tax increase? maybe more asset purchase program in terms of stimulus?
: there are options they can take. to go all outeed more against the risk of the recession. fiscal policy, the prime minister should cancel what is scheduled for next year. he should actually stimulate the economy. also on the boj side i think they can lower the negative down,st rate to further 0.4. they need to show the market they are aware of the risk. they are doing everything they can to prevent the recession. angie: is not doubling down in terms of a negative interest rate? it was two weeks ago almost, and pretty much it seems negligible, especially in the face of this global route that the markets are even believing that will work.
: again, that is a problem with the boj medication. the markets -- boj communication. ander than giving it up giving it that reality, i think the boj should consistently show the market they can keep the yen back to depreciation. they should ease monetary policy. angie: all right, takuji okubo. thank you. ahead to japan open in a few minutes. let's take a look, nikkei to 25 last closed massively in the red. gains -- or12.5% of losses last week. we had futures in singapore pointing to a higher open. that is consistent with what we have seen in chicago. that weaker japanese yen of
♪ angie: disappointing data, japan's gdp comes than worse than expected, has abenomics ultimately failed? asia extends friday's global rebound as china returns from holiday, the yen is maintaining its klein. london calling -- hsbc says it will stay based in the u.k. with asia remaining at the heart of the strategy. welcome to "first up." we are coming to you live from our asian headquarters in hong kong. let's get straight to the
markets. here we go -- australian equities are climbing about 1% higher than -- higher. we also have a stronger australian dollar at $.71. the nikkei to under 25 left -- last 12.5% last week. they have been poised to pop at the open both in chicago and singapore futures predicting that. that is what we have come close to 2% higher despite that disappointing gdp fourth quarter figure coming out it negative -- out of a negative percentage. japanese yen is weaker, that is helping exporters. cost is gaining 1.25% higher. we also have a strongeryuan. yuan. china has stepped up their efforts to restore stability. -- stephen engle's has been looking at what the pboc had to
say. stephen: we have to look at that rate. cap thee the holiday onshore you one -- yuan from trading. the offshore yuan appreciated, gained by about .5%. there is a diversions -- divergence. after that devaluation in august, there was more weakening biased -- fires offshore. offshore investors saying they would continue. you have seen a change. the white line is offshore. after that, .5% increase over the week, this is onshore, which remains stable after more depreciation in january, so what you will likely see, this is the dilemma that the pboc has, do you match it to the strength of
the -- or the weakness of the dollar. that also sends a signal that they don't necessarily want a stronger yuan. angie: last time we saw massive outflows heading to hong kong from china. stephen: if they said the fixing right weaker this morning, even on the markets of it should be strung there, that sends a signal they will allow it to weaken. a lot of that they will slightly fix it stronger. we have credit suisse expecting a fixing rate at it -- at about 6.52 to the dollar. that would be a slight straightening onshore. -- strengthening onshore. this gap should narrow once we start trading this morning. interestingly over the weekend, where did you go, joe? interview with a magazine reassuring the market after a long time. our financial numbers look ok.
depletionor a lasting -- depreciation. he says we will keep it stable. he says balance of payments are good. capital outflows are normal, despite a chilean dollars estimated flown out of the country last year. exchange rate is a sickly stable against a basket of currencies he says despite that weakness of 1.25% against the dollar. no titans capital controls. some saying they need more to stem the outflows. he said no. no need to fret about the reserves. yes, they have been defending the currency since that one off revaluation in august. they have been burning through $99 billion in january. he says, no need to worry about that. we have enough in the kitty to keep stability. victor said from university of california at san joe is saying --
he is desperately trying to make sure that all of his work over the past few years on capital liberalization does not go to waste. and tried to re-instill confidence in the remedy. -- renminbi. angie: as steve said, we are counting down to china's reopen. heidi will take us through what to expect later. first off right now we have japan just releasing preliminary gdp numbers for the fourth quarter. david is here with a recap. david: ok, let's have a look. what you're looking at right now mythat is a one-year -- mistake, that is a five-year chart of gdp growth. the white line is the zero demarcation. we are seeing a 1.4% drop in gdp. in other words, the economy contracted 1.4% in the fourth quarter.
preliminary number is much more than forecast. if you look at the komen it's -- at the components of growth -- private consumption is 60% to me you have exports, and is the spinning. business spending held up well. that rose 1.4%. what will be tricky is going into this quarter -- if you base bojn the survey which the did for the fourth quarter -- expectations, let me skip that chart for you. spending thisor quarter is expected to be at plus 10.6%. obviously these forecast came out, or these plans cannot before the sudden surge in the japanese yen. it will be interesting to see how this sudden surge in the yen, which is an unpredictable factor for japanese corporate's,
which had kept these countries from investing more. it will see -- it will be interesting to see how it affects businessman he. -- spending. the biggest chunk of the economy fell more than expected, 12.8%. we were expecting .4%. this was not a big surprise. in a lot of ways, if you look at the monthly data, this is what -- this is monthly data of household spending in japan. october, november, and december, all negative. together, everything obviously you had a big drop here in household spending of .8%. some of it is seasonal, warmer weather dampens sales for apparel. household appliances. it should be interesting to see how this all plays out, especially now any force -- first quarter. net exports i should add before i go, about 18% of the economy. that contributed less than
expected, .1% percentage point. overall, a lot of those numbers disappointing. angie: thank you. checking other headlines this morning, movies have been a big thing in china during the lunar new year. box office sales were up 80% in the first three days of the festival reaching $258 million. that's almost as much as the entire weeklong holiday last year. retail sales and restaurant receipt from february 7 on word rose more than 11%. south korea markets are signaling an imminent interest rate cut with some investors pricing in a reduction. the yield on three-year sovereign debt has dropped below the bank of korea's policy rate of 1.5%. interest rate forward fell after exports slump the most in six years. most economist we spoke with say -- see it on hold as we, after
lowering the benchmark four times since august 2014. traders are betting australia will ease some of despite the governor being in watch and wait mode. a bloomberg survey says there is a 24% chance the rba will lower the benchmark in march. expect rates will drop from the current low 2% to 1.6 within a year. -- mayy the rba strengthen if the aussie dollar strengthens. it is currently one of the weakest. india's governor says the groupie might have to depreciate -- rupee might depreciate. the rupee must weekend to remain competitive. he is watching government spending and inflation to determine whether to add to the forecast made lester. in the last -- made in the last year. hsb say -- hsbc says they will stay in u.k..
a lot of people in hong kong were wondering if they would move here. >> that would have been a big move. says ament made by hsbc poor decision was in ms and they will remain in london. the statement pointed out factors such as revelatory environment, and future growth and financial impact. it also mentioned that the u.k. had a respected regulatory and men's spirits handling complex international affairs, and important and globally connected economy. it also underlines the importance of asia. asia remains at the heart of their strategy. they mentioned the strategy was a core part of a strategy unveiled last june. hsbc does make most of its profit in asia. something like 62% of pretax profit in a nine-month to the end of september last year. they tend -- continue to see asia as a big driver. for many reasons, it has decided
to stay in london. they have been there for 23 years. angie: did they get what they had threatened to do, especially in terms of regulatory environment? >> regulatory and miami, taxes, if you look at hong kong's corporate tax rate, 16.5% versus the u.k. 20%. also perhaps you could say hong kong's regulatory environment may not be as stringent in some ways as the u.k.. the u.k. government has been to pull back on certain regulatory requirements. also things like loosening up on levees which are required from banks. that has made the u.k. a slightly more attractive area. however you also have to remember that china is slowing. the profits which are great from the asian regions are in fact reducing.
uncertainty over what may happen in terms of going into the future. this is the way that china -- that china governs hong kong. estimates say the move would cost $1.5 billion for hsbc. this is a time when they're trying to cut cost. they're trying to cut $5 billion by the end of 2017. these costs are to be factored in. angie: it looks like u.k. to those conversation seriously. thank you. coming up, china returns to the fray after the new year break. we will see what will we see? always -- will we see a selloff? coming up next. ♪
>> the stories making headlines -- taiwan has ended the search for victims of last week's earthquake. hundred 16 people were pulled from the rubble. all that two of the dead were found in the apartment complex which collapsed in a 6.4 magnitude quake. architectser and two have been arrested opposition of negligent homicide following accusations that corners were cut in construction. china has called on the u.s. to formally and 76 years of hostility towards north korea, in order to persuade kim jong on to give up nuclear weapons. besides remain. technically at war the head of china's foreign affairs committee says beijing is annoyed about the nuclear program, but is more concerned about america's response. india is disappointed with america's decision to sell. fe -- f-15 fighters to japan. saying the deal would not help against terrorism. .hey are concerned the deal
india is worried that giving pakistan advanced or planes would tip the military balance. powered by over 2400 journalists, and 150 euros, this is bloomberg news. angie: let's check market trading here in the asia-pacific. 25 -- 225 --i to check it out. more than 4% higher now. pretty much paring back at least a third of the losses of last week at 12.5%. it was also a shortened trading week as well. cost be in south korea seeing gains of close to 1% higher. australian equities climbing as well, ahead of the chinese data on trade coming out later this morning. we will have all of that for you, but let's take a look ahead to china's return to trading with george.
he is from tango asset management. what do you predict we will see when markets reopened for china? morning, it is a good time to come on board after the lunar new year holiday. rout in catch up -- the the first four days of last week, we are looking at china coming on board, and obviously those -- there is accommodating language coming out of the pboc. it was a good time for china to be off-line. when they come online today, they can put it in a broader picture. we have a nice risk on rally in the past 24 hours. it could have been worse, it looks like it will be ok given the circumstances. pboc comingaid it, out after saying not much sense
the chinese triggered global route, do you think we will see easing? is that what you heard? george: interesting -- it is pandora's box. you need to understand, when the pboc speaks, it is not an independent central bank. the western world should not be using expectations like the federal reserve or boj or rba. speaking -- that is a big deal. the language was a little bit of jawboning they are trying hard on a steep learning curve to make sure that all of the good work they have done for capital reforms in recent years does not go to waste. nevertheless, it was a nuance. at the end of the day they need to have stability for obvious reasons. we are going through started in mid-november when the pboc did a shock devaluation
over three days. we have not rebounded from that globally. anything that comes, expectations coming forward, and try to indicate the pboc is trying to get under control -- that is a positive. you have to put it in context, the boc really speaks online. they come out and try to reassure people. whether it works or not, is another matter. and asiathink markets are reassured elisa headed that chinese reopened. how are you engaging today? we have been risk offer a good year and defensive. when we are looking at allocating at risk positions we at rates and utilities, infrastructure. we have been underweight. iron or, metals, we have been with that.
we have maximum cash waiting in the new year. having said that, the bank if we putre today -- our two cents and, across the book of zero to half for some u.k. and north american banks does not make much sense. in our mind there is great value. if you look at a capital structure of most well-known banks outside of cash as an investment, whether it is seniors, subordinates, t1, or equity, we think there is great valuations across the a sector with that rout. defensive, but looking to allocate risk where we can. angie: what about oil? looking closer to $30 than $27. where do you think it will bounce? george: a good million dollar question. we are increasingly looking at a $20 bottom for oil.
having said that, it is one of the biggest underweight. it could take months. we know that sometime his calendar year will be economy out of the oil price. if you got back into evaluations. there might be an entry point sometime in the calendar year. we have maintained large underweight for the foreseeable future. it is a supply and demand equation debate. we don't have time for the nuances. that $20 bottoming is still a lot of pain to come through. that is unfortunate. having said all of that, if you want to be able on oil, from the one your view it looks like it is consolidating. if you are able out there -- a bull out there, and we are not. angie: there are a few of them. george, thank you so much. iting up next, the yen post
angie: -- haidi: it is monday, the 15th of february. when the going gets tough, foreign traders turn to the yen. the japanese might extend their biggest rally since 2008. least that is according to citigroup which says it is buying yen and selling dollars. the world's biggest traitor says they are not coming on the market to shift soon. and swisst the yen franc to appreciate in the new term. 3.2% to a dollar after a gain the week before. analysts surveyed had expected the yen to fall to $1.23 against
the dollar by the end of 2016. currency is typically regarded as the most vulnerable in asia are proving to be -- to be the most resilient. relatively low exposure to china, and a dovish fed reserve. these are the top two performers among asia's emerging-market currencies over the past three months. that is quite a reversal from 2013's taper tantrum. inflation, in the meanwhile, malaysia has managed to keep their budget deficit under control at exports are holding up. this is despite the oil slump. deutsche bank favoring the repair over the yuan and taiwan dollar. mccurry says the commodity story has been pressed into these currencies. the brazilian riyal posted its biggest weekly lost on growing speculation the government will slow the pace of promised spending cuts, all of which will undermine pledges to shore up the deficit.
currency traders are growing concerned about brazil's counts after its failure to shore up the budget cost. official says brazil is likely to put through only half of the promised spending cuts. effectively giving up on its private rate surplus target. there are some still betting on the yen strength to come, having said that, we are seeing the japanese currency receipt. we are seeing a risk appetite returning. i want to show you that today chat -- chart where it is up 1/10 of 1%, if you take a look at how far we have been faring today we are seeing a return to a little bit of yen weakness. having said that, we are talking about that one -- $1.23 handle for the dollar yen. we are still far from that sitting at 113 .44.
we are seeing a little bit of movement when it comes to the aussie dollar. this is often seen as something is a proxy for chinese growth. we are getting export trade number is from china later on today. we are expecting to see those numbers fall for the seventh straight month. that is weighing when it comes to the aussie market. your stories driving the markets this morning. latest offering, "dead pull," has hit a february box office record in north america. it is based on one of marvel's lesser-known characters. the ryan reynolds film took on 130 $5 million over the weekend, beating the previous $85 million record set by "50 shades of grey.". dreamworks, "kung fu panda three" fall second place. -- falls into second life. australia's largest gold producer reporting a steep
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the chinese balance was good. the capital flows are normal. tighten capital controls and they say that they halve the hole things. keep the decided to global headquarters in london. the decision past unanimously on a board meeting following the debate. there,y that remaining it -- this is bloomberg news. >> the last week was one that investors would prefer to forget. china returns to the fray later. we have the makings of a
recovery rally. i do not want to get ahead. take a look at the gains we have it was a horror and it was the worst in seven years in thee dollar weakness and the sydney stocks and we had the search when it comes to oil. be, i want to take you through some of the movies and we are seeing a real about-face
they will give speeches on the outlook and the lessons learned from the financials. all eyes will be on the fed again. and you remember that janet yellen said that rates will rise gradually and will not be abandoned for now. rosehe industrial activity and broke a losing streak. we will get weekly jobless consumerd the u.s. his -- itlined as is is down and the big names elianz. alliance --
else we arehat following this morning. here is david. but that'll for the company has taken another turn. alliance and the reported a stake commitment to maintain stock levels. is rewarding the responsibilities following the departures. officer -- dical january within twitter shales -- shares down. received anhey have
offer and the chairman wanted to it would be taken private before the ipo in china. day formon has just one the bet on jpmorgan to pay off. andaw the net worth rise the shares jumped. and that was a look at some of the stories making headlines. a steep decline in first half profit. recent rally is coming
this reporting season. blaming the results on the gold prices and, if you take the last couple of weeks, it has not been too bad over the past year. we have seen a decline in the profits and the sales revenue is over the same time a year ago. down.roduction is they seem to be bringing the debt under control? 2016 with the company
andng there will be a cost it is that 28%. they will not be paying a , if you take a look at the stock price, it is an interesting metaphor right now and we are pretty much flat. there are five buys, six holds, and six cells. >> thanks for that. we look at the report card with the indonesian president after his first year in office next.
and thee fahrenheit weather predictions, if that is the right word. is downside is that bloomberg news. >> the indonesian president has an up-and-down first year in office. he was criticized for policy initiatives and public spats. he still enjoys the approval rating of 67%. speaking exclusively to our asian correspondents, it is more than just communication issues. >> there was a revision of
the state budget. overall, the support has been good. >> did you underestimate the influence of some? >> in my opinion, it is about how we communicate and it is up to parliament. >> we spoke to the trade minister about the controversial transpacific partnership boosting plans for growth. go.e have a long way to marketsjective, we have
in pretty decent shapes and there are contractions year on control of 5'1" percent. time. thing at a you do not get there by teleporting. we reassure investors that we will keep pushing and reforming and modernizing and simplifying the rules, regulations. president expressed interest. is indonesia ready and can it groups?ighting interest >> i think a lot of the
, fromtionist defenses elites and why should they be so afraid and resistant to change? >> you have said that you will have to execute or the sharpest u-turns. >> i would say that we are only 10% or 15% into this and we have and the waymindset the executive branch of the that.ment thinks about of tradeou have a lot toerts and we can resort
changing people's mindsets and qualifyto the open to for agreements with europe. is going to asia as leaders go. let's get more from david tweed. welcome. this is going to be the first summit on their soil. tweed: you put it into context of what obama has been trying to do and this is the pivot towards asia with a couple andegs and the economics military components. harry harris talked about this and try to convince people that
the military pivot is absolutely real and he talked about new anything theyhat whatce is new and cool and you can see there, this is coming to asia and they next aircraft carrier will be in asia and more hardware is coming which is part of a pivot, which is what he is talking about. >> the elephant that is not in the room is china and it can be talked about. >> it will be talked about on china overtook the u.s. and it is now the and it isrtner
extremely important. has more than china and the chinese have the silk road initiative and they are going to see more investment coming and influence. >> they were looking to find a counterbalance to china there. >> a thing that has happened in the chinese island building and the aggression to build the islands is that asian nations china was expecting with diplomacy and it has been a the the foot with
philippines coming closer. warmeroubt, building on relations. any deliverables? informal and it is not even a summit. it is described as a meeting. aama will be looking for underlining that we saw in thatsia and it is a sign disputes should be solved, according to international law. also, you can go to a international tribunal, like the philippines going to the hague. anda will look for support
>> a check of the markets in the rebound.d it is a and it isoff the gdp 1.4%. we are seeing gains in japan and the equity's are climbing higher and they joined in as the asian and start trading in 15 minutes from now with futures going to a higher open. welcome to the stock exchange. let's check in on what our
reporters our looking at. >> the moment of truth. company.a consumer >> i like how the markets are at 4% and we may be the only two decliners. >> these guys take it for the movements. >> it is pretty big news. >> they are a consumer company income that is down. a company that took over a while ago, in the long-term, they are and therefficulties is a changing and aging population.
we have been seeing growth in emerging markets and they reported they'll be shutting down and getting out of the online retail in that key markets and exiting to focus more on indonesia and singapore. expecting the stock to be oversold. >> we are picking movers today in the rising markets. thank you. our reporter picks are based on news events. that is it for us today. trending business is up next. >> good morning. we are looking forward to the chinese markets reopening and we
will see if they play catch-up, after the global equities fall into a bear market. have theill associations for the world airlines and we will get views inthe outlook's for aviation 2016. lebron james is the cheney among nba players and they social media. all of that and more when trending business starts.