tv Bloomberg Markets Asia Bloomberg November 14, 2021 9:00pm-11:00pm EST
on hold. also, optimism even the xi jinping and joe biden summit. >> we did get those prices out of china that were not so pretty. it looks like that is getting worse. retail sales. wow. 4.9% for october. when it comes to industrial production, 3.5% also. that was according to the survey here. >> quite a beat there. the slowdown we were expecting is not as much as first cipated.
let's bring in our guest. >> i think that it will help lift rockets sentiment. this is good news with most of the numbers beating expectations. >> in 2022, we are looking at sub 5%. >> we actually have a lower at 4.7%. really based on the number of considerations toward the housing market as it continues to slow. especially amid the property
tax. there is also the zero-tolerance covid policy. also, i think the green commitment will become more binding. they will face more pressures to achieve energy control. the average will be less than 6% . >> i am looking at the fixed assets. property investment is 7.2%. is this mostly way down by the property woes we are seeing amongst developers right now? >> i think the governments earlier tightening policy have
already started the bias in recent months. also, the developers, because of this contingency affect, with more funding pressures, there has been a reluctant see to big plans. >> given these -- are >> and see for big -- a reluctancy for big plans. we think it is quite challenging for china to achieve 8%. our forecast is 7.8. that being said, the upside surprised and consumption and
also production. that should help lend some support to china's gross recovery. as i mentioned earlier, the downward pressure to growth is daunting. the government has been observing this in recent weeks. >> when you look at the property sector, 25% of gdp. will that trickle down to the wider economy? >> in our view, the impact -- that being said, we have long held the view that the wealth impact in china is -- the wealth
gap in china is ambiguous. most of the economists agree that this has been crying out chinese consumption. there has been an impact on the housing slowdown. they have just been looking at it from a broader angle. >> we just got that pboc ruling. what do you make of it? is that a positive signal to you that they are staying the course? does that mean that the chance of the rrr cut is slowly diminishing? >> yes. i think they are staying course. they have hinted at low
probability in their press briefing. we can see they are entering accommodating policies. also, the latest truth, especially in the face of global reflation concern our earlier than expected. >> do you see that helping to boost the economy and support the economy going forward? >> can you ask the question again? >> private let investment, that seems to be leading ahead of
public sector investment. do you see that helping the economy going forward? >> clearly. the hawkish policy reflects the willingness to transform economic structure and to encourage more high and manufacturing. also, the property investment on the back of a continuous trend for chinese exports. >> hold that thought, we will have more from jen. we will continue watching at live go. this is what we are hearing, that press briefing started just a couple of minutes ago.
they will talk about the reaction to this latest data dump here. retail sales are 4.9%. 3.5% for october. we have first word news with su keenan in new york. su: we are getting started with joe biden and xi jinping. the talks come amid heightened tensions amid issues with taiwan and trade. joe biden and president xi have spoken on the phone twice this year but this is the first time the conversation is being billed as a summit. japan's economy shrank, contracting at a much faster pace than forecasted by most
economists. this gives additional justification for extra stimulus measures. the fiscal measures will exceed 350 billion. the economy has contracted five of the past eight quarters. morgan stanley economists are sticking to their production that the fed will not raise rates until 2023. even though this rates rise with the ceo. they cited moderated inflation. that stance contradicts the call for the fed to start moving next quarter. chuck schumer could be on the fast track to 250 million bills aimed at competing with china. the bill would boost domestic
manufacturing with 52 billion in assistance. it would authorize another 90 in research and development. the china bill passed the senate in june but has been held up in the house. boeing says it is optimistic about resuming chinese orders and deliveries after the regulator symbol it is close to clearing the jet maker to fly. speaking to bloomberg, the jet maker said he is looking forward to having the max back. >> we are hopeful we can do that soon. we have seen some orders on freighters that have come through and we are just encouraged. global news, 24 hours a day on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am su keenan, this is bloomberg. >> front and center will be that
virtual summit between xi jinping and joe biden. janet yellen and ethnic lincoln will be going for that meeting. that is a much anticipated meeting. there are issues in bilateral elections. there is some better-than-expected data. there are estimates of 3%. retail sales rising. that is versus an estimate of 3.7. the investment is rising 6.1%. you can also turn to your bloomberg for more on this. get commentary, analysis and bloomberg expert additives.
>> take a look at the market. there is not much reaction but it is better than expected. this is kind of the theme as we got these october numbers. we are seeing a little bit more when it comes to the remedy -- reminbi. -- renminbi. this rally came to a screeching halt. these ppi prices may be getting a little bit more momentum with this rally. 6:38 for your onshore rates. take a look at the aussie dollar as well. there is a little bit of a bump there. we will play this out a little bit more and flesh out what this all means. they just rolled over that one trillion remedy -- renminbi.
>> welcome back. adding close to a billion dollars to the shares to be the latest china developer. it is interesting. the developers are now selling their shares. shares are slumping more than 7%. >> yes. they were selling them at a bit of a discount. more than 10%. that is probably why the market is still looking a bit more concerned.
it just goes to show where the hunt for cash is these days. they may not be able to access the bond markets. they may have to go to the equity markets as well. >> that is right and when you take a look at kaiser, that stock is suspended. it will remain suspended. o knows when it will 25% of gdp begs the question whether or not it eventually will hurt economic recovery. look at the property values. it becomes a vicious circle when you have junk-bond yields in
double digits. this is impossible to refinance the debts. what happens to these junk companies when they can't raise money? >> we have learned that the pboc is considering they may not be constrained by the regulations. they can buy assets from the distressed companies. also, we do see that the pboc has been urging banks to also meet.
i do think that the regulators are considering relaxing some of the policies to help ease the property sector. especially among the developers. >> there are a lot of comparisons from what we saw in china to what we saw back in the 80's in japan. do you see similarities there? >> there are quite a few similar challenges. also, urbanization. we are not expecting a property bubble.
if you look at the housing demand structure, there has been a sharp decrease in investment demand in the last few years. there is still a significant amount of necessity and also operating improving demand. urban cities in particular and migrant workers. china is such a large country. i think china still has several years to go before we seriously were about a lost decade happening. >> think for the vote of confidence. we have heard over and over
again that the contagions can be contained. >> even the financial regulators have been embarking on this deleveraging and with renewed effort in the past year. the financial risk is one of global investors concerns. i think the risk can be contained. the pse can inject liquidity and offer some potential support and this orderly adjustment will happen. but the negative impact will really befall our growth. we are also not expecting a
the impact on prices is already playing out with soft commodities surging this year. that is taking a disproportionate toll. u.s. lawmakers are looking at other ways to push the china bill into posting the output of semiconductors. that was after bloomberg reported that the biden administration has rejected a plan by intel to increase production in china -- decreased production in china over supply concerns. they look beyond the pandemic. airbus has already secured a mega order of 255 narrowbody jets as they to boost output. the french playmaker is winning the battle of the skies against rival boeing which is struggling to get its 737 max model back in the air. shares are up more than 30% this
year. >> thank you for that. a quick business flash. airbus has received a mega order for 255 narrowbody jets. the deal is valued at over $30 billion. airbus is trying to go beyond covid level demand. they are carrying out a fleet reset. they are said to hold talks about delays of the new boeing seven triplex jet. travel demand is rebounding steadily with premium demand.
>> what has happened is a 45 month delay. we are now seeing an uptick in demand by significant percentages. we are now running at about 50%. it is growing every day. it is a good story at the moment. we are looking at the next for five months. >> look at the function right now. it is mostly higher. this was actually better than expected when it came to retail sales and industrial output. this is a little bit of a turn for the better. taiwan is up by .6%. futures in shanghai are lower by
4.5% given the property was. we continue to see the after headline. in australia, we are seeing yield heading lower here. here is where we and there you have it. woah. wireless on the most reliable network nationwide. wow. big deal. we get unlimited for just 30 bucks. sweet. but mine has 5g included. relaaax people. my wireless is crushing it! that's because you all have xfinity mobile with your internet. it's wireless so good, it keeps one-upping itself. switch to xfinity mobile and get $200 back when you bring your own phone. or get a samsung galaxy a42 on us. call, click or visit a store today.
>> the index trading higher about .5% on the back of data down out of china. let's get the first word news now the su keenan in new york. su: let's start with janet yellen. she says controlling covid-19 here in the u.s. is the key to easing inflation. she spoke on the cbs morning news face the nation. she says it is important to understand that the current
because of inflation is the pandemic. she also repeated sheehan flex -- expects inflation to decline in the second half of 2022, with prices returning to normal went labor supply and demand patterns normalized. china's covid czar defended the country's strict containment policy, confirming their adherence to a covid zero strategy. the official called it the most efficient way to protect china's people, adding the measures have not hindered the economy. china's latest outbreak is in a a city whose tens of thousands of university residents are under lockdown on the campuses. staying with china, the country getting a new -- it's intended as a platform for small and medium-sized companies that have faced difficulty raising capital because they perhaps are not large enough to list elsewhere.
about 70 companies will migrate from an existing chinese board, and an additional 10 will debut for the first time. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm su keenan. this is bloomberg. yvonne: we had that china data earlier. retail sales, production surprisingly on the upside. i guess the markets are pretty subdued and sanguine, but we did see a bit of a paring back of losses at the start of the session. renminbi 638 right now for your onshore rates. let's bring in simon flint to talk us through what we just heard in the last hour or so. so it was a beat for the most part for some of the data we got out of china. does this justify the strength we are seeing in the currency? simon: not really. because these numbers really just eat -- beat a poor string
of data. if you look at the past six months, the total shortfall in this monthly data has been much larger than the beat we saw in industrial production and retail sales. and also note that the property sector was worse than expectations and that has been the recent focal point of concern about chinese growth. haslinda: if that is the case, why is the yuan so strong? simon: most of what is due to the massive trade surplus and also corporates exchanging more dollars for renminbi, and that leads to yuan strength. one would have normally expected more aggressive official action it may be a higher-than-expected restricting. but this is probably temporarily -- today's call between xi jinping and president biden.
yvonne: i was going to get to that. should we expect any kind of positive outcome from these talks later today? simon: probably not. it is great that they are talking and probably both sides will want to put a positive spin on the talks. having said that, disagreements on issues like taiwan are really profound and domestic policies on both sides mitigate against real progress. there have been rumors of a major gesture by the u.s. on tariffs, but for the u.s. to significantly reduce tariffs, there would have to be a major breakthrough on something like ip protection, and that seems very unlikely. so i doubt it will be market moving. haslinda: simon flint, thank you so much for those in size. some breaking news out of thailand. third quarter gdp falling, 0.3% year on year, better than expected estimates of a contraction of 1.3%. a drop to 0.3% versus
projections of -1.3%. we had the bot keeping rates unchanged. it is expected to have better recovery as the economy reopens. yvonne: yeah. and we had three companies report gdp -- well, two. japan was in a contraction and china looking better than the numbers in thailand. so i guess the reopening is what is dragging, or lifting a little bit of the sentiment and growth there. let's talk more about the trade talks as well. president biden and xi jinping set to hold a virtual summit later monday. the talks come amid heightened tensions such as issues over taiwan and trade. according to the white house discussion is designed to prevent a misunderstanding that could lead to a military conflict. let's bring in angela mancini. do you have high hopes leading
up to this summit? angela: it is significant it is happening. every u.s. president has met their chinese counterparts within their first year, and it is 10 months. this is significant because the relationship is at such a low point and there are very serious issues bilaterally and also multilaterally. so i do not think we are discussing any major breakthrough. the things to watch for are tone and tenor of the conversation, any promises, and any movement on lower hanging fruit issues like reopening of the consulates. but it would be surprising if we got any with -- anything more significant than that. but let's wait and see. both sides are coming from a position of strength, but both sides are also playing heavily to a domestic audience so it is unclear exactly what they can agree on. yvonne: i was going to talk about that because the political drop is very different. you have president xi jinping
solidifying his power and essentially in line to rule for life. and you have president biden at home facing approval ratings at new lows right now. why did you think they are both coming from a position of strength? angela: well, they also have some challenges. on the china side it is exactly what you said. but chinese economic growth is slowing, you have evergrande, potential systemic risks. on the u.s. side, the u.s. is tackling covid. it is not gone. what they are rolling out vaccines to kids, medicines are coming to the fore which can change things. inflation is a problem on the economic side. but listen, biden is off a great trip to europe. he is shoring up alliances with the g20, the cop26 summit reflected well on the u.s. so i do think biden is coming from a position of strength.
if you look at where we were before he took office,, the u.s. economic and public health outlook was quite astonishing. haslinda: one of the key issues with china is the thing of u.s. tariffs. that is not on the table. to what extent could that enter how much success can be achieved at this virtual summit? angela: it will be interesting to see to what extent tariffs are raised. i am sure it will come up. a challenging one from a u.s. perspective because that is the one, or one of the key levers the u.s. holds. the minute they start reducing tariffs, you cannot really walk that back and re-escalate. the u.s. has been pushing hard to try and reduce some of those tariffs, but other elements of the u.s. business community want them to stay. so both sides, especially biden, are playing to a u.s. domestic audience as it relates to issues like tariffs. we may see a little bit of movement but there was talk
earlier about a big breakthrough. they would have to be a pretty big concession on the other site to warrant that, and it is unclear to see what that would be. haslinda: how about taiwan? it is a deep, red line for china. now we have u.s. allies, europe as well as the u.k., coming aboard, giving the u.s. support for its stance on taiwan. how much can be achieved? will china push back because of this increased support on the issue? angela: i think taiwan is a redline on both sides. i would not be surprised if it gets touched on in this summit. i think both sides do not want conflict to break out. i think we were rift of taiwan is higher than it has been. having said that, it is still quite low, because neither side wants outright conflict. obviously it is a challenge. i think the u.s. will continue to strengthen its relationship taiwan to serve as a deterrent to potential conflicts coming from china.
but that is the real thorny one, because neither side is going to want to make any concessions. and so, it's hard to see there would be any movement there. but if you take a step back, one of the top risks is geopolitics. the issue is u.s. china, a lot of really challenging issues. some issues we can make ground on, but others are quite intractable. even though the tone might be better, some issues like taiwan, the trajectory is not great for any kind of resolution, because the policies behind them are so entrenched. haslinda: does that mean that climate change is probably the only topic that these two nations see eye to eye on? angela: and potentially nuclear proliferation as well. climate change is one area where you may see some specifics. of course there was that
surprise agreement coming out of cop26 from both sides. there has been discussion of potentially meeting early next year in the first have to discuss methane emission reductions. that is one rare area where there is some agreement and that is such an existential issue for both countries, that there is some clear area where they can be cooperation. and that would be a nice set up as a way to potentially meet again soon. one of the key things coming out of this virtual summit will be not just the tone and potentially specifics they agree on, but what is the next step, is there a mechanism we will see that will be put in place similar to the old strategic and economic dialogue where there is a more regular meeting of these two powers. what is clear also is the policy is set from the top. that is where the movement needs to happen. haslinda: angela, one final question. how does a successful summit look like? angela: i think a successful summit is a pretty cordial tone,
which again, i think we will expect. both sides coming out saying similar things about both the efficiency and effectiveness of the summit, as well as some of the specific areas to focus on. also an agreement to have those two meet again fairly quickly on tangible outcomes, hopefully in the area of climate change is where we might see that. yvonne: real quickly, who needs this meeting more? angela: i think they both need it. the u.s. might need it more. china is pretty isolated internationally compared to the u.s. and what the u.s. has been doing in terms of shoring up alliances. both sides need it for a domestic win. both sides want the u.s.-china attention to be a lot lower in the coming year in the run-up to political, potential changes on both sides. so i would say actually it is probably pretty even.
some key stories we are watching in southeast asia. thailand gdp coming in better than expected, falling 0.3% year on year. the estimate was for a contraction of 1.3%. of course this is contributed to the reopening of the economy. the central bank governors saying he cannot afford to keep monetary policy, inflation easing, economic output rising ahead of thursday's rate. canada halted imports from a malaysian glass importer after reports of improper practices. it follows a similar move by the u.s. some weeks ago. yvonne: more regulations on that front. if you look at what we are seeing in the market reaction we have been seeing some stocks reverse some losses at the start. we are at the green right now. top glove off 2.5%. super max as well also up. keep in mind, this sector has been weighed down.
market value has more than halved this year after being among some of the hottest trades during the pandemic last year. haslinda: that's right. in the aviation space, the boeing commercial ceo sat down with bloomberg at the sidelines of the dubai air show and gave his outlook on the777 and 737 max. >> we've got the 777 in certification. it is here today flying. we did a flying display and we will do that all week. met with tim today to talk about the status of the program. and those are private discussions but i can tell you we have confidence in what we are doing moving forward and we are going to deliver a high quality product. that is what tim wants to see of us, that is what he messaged. we assured him we are going to be on that path. will jointly decide with the right delivery time is for him and those are discussions that will go on. >> in terms of the inflationary
pressure that the world is facing, how is boeing dealing with that? what are you seeing across supply chains? where are the crunch points? stan: supply chain is going to be critical for us in the recovery. right now our major focus is continuing to gradually ramp up, particularly on the 737 max. we see human capital as one of the constraints. we have been working deeply with our supply chain. and we will do so as we wrap -- ramp up. but the number one issue right now is bringing the workforce back in, getting them productive on the products so that we can focus on that high quality output. and then in return, deliver with confidence to our customers. yousef: are you confident enough you will be able to hand over the costs, the additional costs to consumers? stan: right now we worked out pricing with our customers. that is fixed.
we fixed that for the order years. and we will continue to work productivity in our factories to offset any inflationary costs. but the market determines price, ultimately, and this great, fierce competition between boeing and airbus, it's what makes this market so good because we compete hard to win every customer. yousef: there appears to be a little bit of movement when it comes to the 737 max certification in china, and maybe some of the prepared -- some of the purchases can get back up to speed. stan: last week was a positive sign out of the cac to post the directive for public comment. we take that as an encouraging sign. it is really up to them to say when. our job has been to put forth every bit of technical information for their evaluation, to allow them to fly the airplane. that is done. to allow them to be on the simulator. to allow them to evaluate pilot
training. so, we're checking the boxes, but it is up to the cac ultimately to determine the time. haslinda: and that was boeing ceo stan deal. yvonne: we have been focusing a lot in hong kong on cathay pacific. a report over the weekend about how dozens of pilots and crew members are being forced into a 20 day quarantine in hong kong after one of their pilots tested positive. this was a flight from hong kong to frank for. this insert -- to frankfurt. this is raising some alarms from the airline, saying this could impact some passenger and cargo flights too. haslinda: they are also moving their crew to another hotel in frankfurt. it will suspend layovers, and hong kong health authorities say there are other crewmembers currently overseas, they are telling them to isolate for 20 days wherever they are.
another setback for the aviation industry. it also points to how difficult it is for this particular sector to move ahead. yvonne: yeah. you are seeing shares of cathay pacific down from 1% today. we did speak to winnie chu a few weeks ago, talking about the whole outlook for hospitality. they operate one of the biggest florentine hotels in hong kong. i asked her a strategy of pushing quickly into a quarantine hotel paid off. here is what she had to say. >> being a quarantine hotel is very much to support the immunity, but thankfully we have -- support the community, but thankfully we have been positive ebita. our numbers are not pre-pandemic level but we are not far off. yvonne: looks like the pain for cathay pacific is not over. posted earnings that topped analysts but warned sales will
decline this quarter because of persistent chip shortages. first quarter net income came in at $1.3 billion. the taiwanese company sees shortages lasting until second half of next year. chinese developer -- raised just under $1 billion through the share -- the sale of new shares. they also received $430 million in the form of an interest free loan from the controlling shareholder and chairman. it's china's fourth biggest property company by sales. its financial health has been under scrutiny since september. of course you are watching "bloomberg markets -- asia." plenty more ahead. keep it here with us. this is bloomberg. ♪ his is bloomberg. ♪
yvonne: seeing a little bit of red here in china. junk dollar bonds coming back in a big way. that rally seeing the most in 20 months on signs we could perhaps be seeing some properties curb easing. the high-yield market has come off some of the highs we saw around 26%, has. haslinda: that's right. elon musk is back at it. the tesla founder sparred with
u.s. senator bernie sanders on twitter, raising the idea oflli. the muddy waters capital ceo said he used to be negative on musk because of exchanges like that, but that is now changing. >> i used to be very negative of him. as a person, i am in the sense that he lies a lot. please don't push back on that. we can get into the examples, but every now and then when i say that on tv someone says, if that were true, people would have sold the stock. it is like, no. >> go on. >> but you know, what are the good things about elon? he builds the car. he built the rocket. and that is something that i think a lot of these managements are not going to do. likes, lordstown motors.
- -- like, lordstown motors. the people who were with the company when it ipo'd, several of them are gone, and they were pretenders. we shorted a company earlier this year called xl fleet, which is in extensively the vehicle electrification space. i like to say when we do something like this, when we are looking at these tech, this next-generation green tech or whatever, whatever hot technology is, we play the man, not the ball. it would be like, let me get my scientist out here. by the way, are sign -- our scientists arguing publicly, they will always lose. but if you play the person, ok. what is this person's background? what are some of the things that they have said that are core to
the thesis? and if we scratch the surface, oh my god, these are not true, or massive exaggerations. so, if we see exaggerations and misdirection analyze tha -- and misdirection and lies that say, this is not elon musk, but a guy who is just exaggerating in fundamental ways, this is the same kind of guy who has existed since stock markets existed, a promoter who sells a dream ultimately has no substance. that is how we play it. this does offer opportunities for us to do it, but it's pretty crazy when you look at nicola and lordstown. i mean, they still have these massive market caps. that goes to this phenomenon. every now and then i joke that $700 million is the new zero.
haslinda: it is almost 11:00 a.m. in singapore and shanghai. welcome to "bloomberg markets -- asia." yvonne: china's economy stabilizes. industrial output and retail sales beat estimates, delaying concerns of a property slump. haslinda: president biden and president xi prepare for a virtual summit monday as they look to leave tensions over taiwan -- to a leave -- to
alleive tensions over a line in the markets, it looks like it is mostly higher on the back of that data dump out of china. retail sales and industrial output coming in better than expected. china saying its growth trajectory remains intact. also the pboc pumping in one trillion yuan to ensure liquidity does not dry out. taking a look at where we are into the hang seng index, down .2%. china also under pressure but off session lows. the virtual summit between president xi jinping as well as joe biden. yvonne: yep. a lot to look ahead to. seems like at least when it comes to china data. the market not exactly too up beat about it, but we are going
to focus on what happens with thailand. gdp figures came out and the contraction was less than forecast, albeit still a contraction. 0.3% lower for the third quarter. we also saw that in japan, which was a surprise. the index marginally higher. the bot a bit stronger. nifty futures pointed to a positive open in india. the ruppee there slightly stronger. haslinda: the chinese economy performed better than expected in october as retail sales and industrials beat estimates. this relieved some concerns around the deepening slump in the property sector. for more on this, we are joined by bloomberg second -- were you surprised by the numbers you saw this morning? >> a little bit surprised. at this time it's a positive
surprise. in the long-term, there's positive things of the economy stabilizing, but in our view the economy is not out of the woods yet. if you look at industrial production, retail sales data, surprise on the upside. there are some special factors for those. those special factors have flattened the data somewhat. even taking into account those special factors the momentum was stronger in october than in september. this suggests the drag from repeated data outbreaks and supply shortage may have eased but in overall terms, downward pressures are still there and have not disappeared. yvonne: are we still expecting a v-shaped recovery for china? chang: you do not quite expect that. at this point it is somewhat
mild and we expect the rebound to be relatively mild as well. at this point the government is not taking strong actions so we do not expect anything really sharp. yvonne: rolling over that, one trillion renminbi, do you think that is a big signal from the government in any way? chang: yeah, i think that is positive, that the government wants to support. and we feel there is still a possibility of government -- the central bank to cut the rrr. but today's better-than-expected data could mean that the government might wait further and look at further data to see whether the policy stance will turn more supportive. there's an important meeting coming up, working conference in december. the government might wait until
then to decide on the policy, which way it is going to go. haslinda: our bloomberg's economic chief asia correspondent chang shu, thank you for that. let's bring in mikio kumada. your thoughts on the data out of china. is that enough to support the markets? mikio: not quite yet. i do not think the data was that bad, actually. but the bigger story is here with a view to next year. china, as we all know and we all heard just now, has been rather tight in terms of its macro policy this year. i think they did that well in the sense that they did the painful frontloading of stuff they wanted to do in the long-term in a year that saw very strong growth overseas. u.s. gdp in nominal terms is growing at a 10% pace.
europe is doing well, too, coming out of the lock down. next year that is going to change. the world is going to be slowing down to a more normal pace, and i think that is when china will start to ease and that is when you will really see it in the data. so the current date is kind of like ok-ish, but the situation is constructive enough to look forward to what will happen next year. and the market has started to price that in a little bit. yvonne: would you be recommending some dip buying? mikio: selectively, yes. especially in the tech sector. the worst may be over, tentatively at least. if you think about where tech stocks have gone in the west, in the u.s. in particular, there has been such a big gap. for a reason, but that may the priced in by now. so, good companies will always have growth. you could also argue some are
good from an esd perspective, like keeping kids from playing video games might not be such a bad thing. i'd think definitely selectively you can look into china. yvonne: you are still saying stay long -- mikio: yes. that may change in the coming months, but right now that is a better place to be. you have growth, good momentum, pent-up demand. maybe everybody will do fine next year, we will see. haslinda: those gyrations in the bond market, what has been priced in and what do you make of dislocations between asset prices and what is being reflected in the economy? mikio: well, it's very interesting right now. the bond market of course is kind of manipulated by policy, or heavily influenced by policy. whether it offers negative
returns in real terms or even in nominal terms, a lot of investors do not care as long as that is liquid and it has a cash flow. risk aversion in particular. i do not know what that market in particular is pricing in. the interesting thing for me in terms of the consensus outlook, is if you look at earnings, particularly in developed markets, for the next 12 months, they basically imply a recession. so in the low single digit, the growth rate implied i the current consensus is a low single digit number, which essentially implies a close quarter session next year in the west. that is a slowdown that is way too -- i mean, that kind of slowdown will not happen in my book. markets are generally in the bond segment as well as in the term of consensus is rather cautious, which is a good situation to be in because a mix it easier for companies to keep
competing estimates. haslinda: right. so what's the path forward for the bond market, the path of least resistance? mikio: that is a good question. we would not like to test it, so we're heavily underweight duration. we think that there is a small risk, or maybe a more significant one then it was three months ago given the most recent numbers, but there is a risk here the fed will be forced to tack a bit earlier than the market is currently expecting. i think it is still 225 basis point hikes by the fed. they may have to bring that forward if inflation stays as we saw in november, particularly if the employment numbers continue to come in rather strong. there's also political pressure in the u.s. right now. a lot of people are concerned about inflation, so that might force the fed's hand, and that's an additional reason we do not
think it is a good idea to have too big an allocation in government bonds. yvonne: do you think the central bank has just lost control? mikio: no, definitely not. my personal view is the fed is doing the exact right thing. i do think the inflation will ease off kind of naturally. we just had a freak recession with the covid thing, and we have freak consequences out of this. all the supply chain disruptions. we are now comparing the worst of last year year-over-year with the best of this year with pent-up demand. i would not extrapolate that. but that is just my view. the market is concerned about inflation. a lot of politicians in the u.s., if you are listening to what is going on there, are concerned. even biden had to explain himself about inflation. what matters is not what i think, what matters is what the market and consumers think. if inflation turns out to be a big issue, then the fed will have to act to preserve its credibility and so forth, and
that may cause volatility in the markets. yvonne: mikio, you are sticking around there. let's look at the first word news with su keenan in new york. su: let's talk about japan's economy. it shrank buying annualized 3% last quarter, contrasting at a much faster pace than forecast. the data used the new prime minister's additional justification for extra stimulus measures to get the economy back on the path to recovery. the fiscal measures will exceed $350 billion. the economy has contracted in five of the past eight quarters. presidents joe biden and xi jinping are set to hold a virtual summit later monday. the talks come amid heightened tensions among issues like taiwan and trade. according to the white house, it's designed to prevent a
misunderstanding that could lead the u.s. and china potentially to a military conflict. biden and xi have spoken on the phone twice this year, but this is the first time a conversation is being billed as a summit. u.s. senate majority leader chuck schumer could be set to fast-track a $250 billion bill aimed at competing with china. this, by attaching into a must-pass defense bill this week. the bill would boost domestic semiconductor manufacturing with 250 billion dollars in aid and authorize another 190 billion dollars for reachers and develop. the bill passed of the senate in june but has been held up as of late in the house. morgan stanley economists are sticking with their prediction that the u.s. fed will not be raising rates until 2023. and this breaks ranks with their ceo, james gorman. the bank's economists say they expect the fed to end asset purchases by the middle of next year and they say moderating inflation, rising labor
participation. that stands does contradict dormant's -- gorman's call for the fed to start moving next order. -- quarter. janet yellen says controlling covid-19 in the u.s. is the key to easing inflation. she spoke on the cbs morning news program face the nation. she said is important to understand that the current cause of inflation is the pandemic. she also repeated she expects inflation to decline by the second half of 2022, with prices returning to normal in labor supply and demand patterns normalize. and china's covid czar defended the country's strict containment policy, confirming the country's adherence to its covid zero strategy. the official called it the most efficient way to protect china's people, adding that the measures have not hindered the economy. their latest outbreak is in a city where tens of thousand of
university students are on lockdown on their campuses. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm su keenan. this is bloomberg. haslinda: still to come, an exclusive with gmm managing director tarak patel. we discuss how the supply chain crisis is affecting his business. keep it here with us. this is bloomberg. ♪ is bloomberg. ♪
stephen engle joining us from hong kong. it is going to be interesting. we have more news that yellen will be joining as well. a lot of anticipation for this call. stephen: they have had two phone calls so far this year, but they have not met face-to-face. xi jinping has not left in china -- left china in more than 600 days. whether they use facetime or skype or zoom or whatever, i am sure they have their own channels, but the biden administration, at lease the president has wanted to lift this up to face to face between the president.because lower level talks so far have not borne fruit. in that anchorage face-to-face meeting there was more acrimony than agreement. there is an area of grievances of course. to this date, the biden administration has not wound back the tariffs and some of the trade war measures from the trump administration.
giving themselves some wiggle room as far as leverage. do not always want to pull it back right from the start in the first year. so i am sure that will be on the table. some of the other financial and trade issues with yellen joining the call. but there is momentum right now. there was a joint statement coming out of cop on climate change that they can build upon. there is also the putting to rest to huawei episode, with her being released from her extradition process to the united states and canada. that obviously pleased to the chinese. but again, i am sure they will be talking about the south china sea, uighurs, maybe hong kong, but taiwan will be the focal point because there has been a lot of rhetoric from both sides about the tensions circulating about taiwan. haslinda: taiwan, a deep red line. still unclear, where does congress stand on this china bill?
it aimed to vanquish in the house. stephen: $250 billion earmarked for domestic semiconductor manufacturing to counter the shortage of semiconductors, but the rise in china's spending on strategic high-tech. $52 billion for the domestic semiconductor industry, $190 billion or so for r&d to various institutions. it passed the senate in june but has languished since in the house, and we are hearing from chuck schumer that he would like to see that that spending bill perhaps added to a pentagon measure, which has to be approved every year and has wide, broad bipartisan support. if you hit t -- hitch the two together, perhaps it could have a better chance of being passed by the end of the year. yvonne: just want to check one stock. brii biosciences the state in hong kong, , a -- surging 36% on
the back of local media saying china may approve an antibody-based covid drug by the end of the year. december is what they are reporting. this is a national medical product administration, likely to approve the first locally produced covid drug based on antibodies and conditions by december. brii shares surging on that news. haslinda: wow. still to come, we look at some of the top recommendations across markets. the strs looking in positive territory, up .4%. this is the market looking pretty optimistic, given its reopening. keep it with us. this is bloomberg. ♪ his is bloomberg. ♪
haslinda: let's do a quick check of the latest headlines. airbus has received a mega orer for 255 narrowbody jets that will be distributed to four low-cost airlines. the deal is valued at over $30 billion before typical industry discount. airbus is trying to persuade suppliers to prepare for higher demand for aircrafts beyond pre-covid levels but orders have remained flat. analysts say they are carrying out -- which could affect delivery schedules and order numbers. the carrier is said to hold talks about delays for the new boeing 777x jet and could try to accelerate airbus 835 handovers instead. travel demand is rebounding steadily, with premium demand especially robust. >> orders happen with a four to five month delay. we are seeing an uptick in demand by significant
percentages. not as much as prior to the pandemic. we are now running about 50%, maybe 60%, and it is growing every day. and cargo. so yes, it's a good story at the moment and we are looking forward to the next five months of good business. haslinda: boeing says it's optimistic about resuming chinese orders and deliveries for its 737 max after the country's regulators signaled it is close to clearing the jet to fly. speaking to bloomberg, the jet maker's head said he's looking forward to having max back. >> we're hopeful that we can do that soon. we've seen some orders on freighters that have come through, and we're just encouraged. haslinda: time for our morning calls segment with sophie kamaruddin. yvonne: we are talking about the chinese data. the economy appears to have
stabilized, given we sell retail sales rebounding on october. we see an inflection point when it comes to growth in china. sophie: the pickup we saw in retail sales could be a sign of things to come. at morgan stanley, they expect as they seek to realign gdp with potential growth, that will bring about a clear shift to an easing stance accompanied by corporate tax cuts for consumption measures and a push for green infrastructure. flipping the board, gdp now expected to accelerate to 5.5% year on year growth next year. the risk to this outlook remained to the downside, given the potential challenges posed by covid outbreaks as well as the housing outbreak. haslinda: japan's economy set for a bounceback after a contraction in the september quarter. sophie: yes, that is the view at
capital economics. they expect output to rebound sharply and gdp will regrade the pre-virus level this quarter as services picks up. flipping the board over at morgan stanley, which has recovery seen gaining strength. the bank is seeing the best data in japanese stocks along with europe. you can see at the top line here. u.s. stocks rated under rate at morgan stanley. as for china, the bank is cautious on chinese equities. a-shares over the mst i china index. that benchmark is still at a critical juncture in the face of headwinds from earnings growth. yvonne: yeah. still cautious when it comes to a-shares despite people being a little more positive. property stocks, we talked about how they are looking at
potentially fire sales to repay their loans. also raising money at a discount and selling shares. shares are down close to 9.5% right now. you are seeing property, no surprise, property and consumer discretionary, these are the two sectors weighing on the hang seng. we are mostly lower when it nk bonds coming back into big way as we look at more on the speculation that some curbs could be eased right now. haslinda: now, here's something to look forward to. the fourth annual bloomberg -- facilitating face-to-face discussions among world leaders in intimate breakouts. we will feature a back-to-back lineup of high-profile voices. being organized by bloomberg midea group, a division of bloomberg lp and parent company of bloomberg news. don't miss that.
in the meantime, here is how shanghai is looking. down, .3%. this is bloomberg. ♪ total gym includes everything you need to get into the best shape of your life. for every body at any age. it works every muscle group, including your core, using your own body weight as resistance. customers love total gym because it's fun, fast and effective. nothing delivers full body results like total gym. and right now you can try it risk free and enjoy special savings too! get on demand workouts free, free shipping and more. call now! kathlee0
p.m. in new york. president joe biden and changing paying are set to hold a virtual summit, the talks come amid heightened tension over taiwan and trade. according to the white house, the discussion is designed to prevent a misunderstanding. biden and xi have spoken on the phone, but this will be the
first time the conversation is billed as a summit. chuck schumer could be set to fast-track a bill aimed at competing with china. the bill would boost domestic semiconductor manufacturing, $52 billion in aid and authorize $190 billion for research and development. the china bill passed the senate back in june, but has been held up of late in the house. morgan stanley economists are sticking with their prediction that the fed will not raise rates until 2023, even though this breaks ranks with their ceo. in an outlook, the banks economists say they expect the fed to end asset purchases by the middle of next year, citing inflation, labor participation, but that stands contradicts the ceos call.
janet yellen said it is important to understand the current cause of inflation is the pandemic. she also repeated she expects inflation to decline by the second half of next year, with prices returning to normal with labor supply normalizing. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am su keenan. this is bloomberg. yvonne: factories padded production wrapping up expectations for the prime minister's package. are we going to get more? paul, we were expecting a contraction in the economy but
this is worse than expected. what happened? paul: it's a story of covid and supply chain snags. in the summer, we had a big surge in infections, extension of restrictions, that squeezed consumption of households. it is a lot worse than we expected. 4% drop in consumption over the quarter. also, the supply chain snags saw companies like toyota cutting production and the lack of goods to buy also fit into poor consumption numbers. looking ahead, we are expecting a recovery in this quarter as those restrictions are lifted. as supply chains get back on
track. we have this stimulus from the prime minister. haslinda: the big question is, what does it mean for stimulus plans? paul: you have a bad gdp result , that makes it easier for the prime minister to unveil a big spending package. what is he going to spend this money on? we know he will give handouts to eight your -- 18-year-olds, $180 for each of them. we know he is going to think about restarting domestic travel subsidies, that will also be good for the domestic economy. he also has this wider view of redistribute and wealth a bit more, so bigger tax breaks for firms that raise wages, and raise -- wage rises for
caregivers. how much is this going to cause cup\\\ -- cost? range of 50 billion u.s. dollars. we don't think it's going to be as much of that. why not? it's typically because japan has already racked up so much stimulus, a lot of it remains unused. it could even be as much as ¥30 trillion. we don't think it's as much as that, but surely the spending plans will not be as large as the price tag seems. haslinda: let's take a look at the markets as japan comes back from lunch, it is up 4/10 of 1%, news of the stimulus. taking it a step further, sentiment being lifted by the better-than-expected data out of china retail sales, industrial production coming in better than expected, the msci index of 3/10
of 1%. thank saying is dragged down by property stocks. we are dragging -- tracking renewable stocks, cop 26 came to a conclusion, they cap the goal of 1.5 degrees. they agreed to phase down coal rather than phaseout, watering down the language. energy is down 7/10 of 1%, solar down by about 2% right now. yvonne: one of the largest movers to the downside on the hang seng. let's take a look at the recap of cop 26. more ambitious than many expected, last-minute objections from china and india. bloomberg has the details. reporter: after two weeks and long nights, certainly someone negotiations, the biggest climate conference in the world
has come to an end. and we have a deal. a number of things to point out. it keeps the 1.5 degrees celsius temperature alive. this was a top priority for the u.k. government, but also sees a breakthrough on coal for the first time, explicit language that calls for the trade down. an earlier version calls for a phaseout. that would have been much stronger language, but the compromise version was phase down. the other thing to know, the establishment for an internationally recognized are been market, this is something scientists have called on for years, in order to eliminate carbon, you have to measure and trade it properly, particularly when you look at carbon credits. this is of course on paper. the question is, how to turn this into a reality. there are questions around the implementation.
for a lot of activists present, occluding greta thunberg, this is more blah blah blah. the real fight continues on the street, with real people, and time is of the essence. haslinda: for more on india's dramatic last-minute move to defend coal, we're joined by an asian energy reporter. tell us more about india's position. reporter: [indiscernible] despite commitments to green energy, there is no going back on coal. the fact is that india has abundant coal reserves available domestically, edit wants to keep its options open.
i think this decision reflects that sentiment. there is also the fact that power plants [indiscernible] yvonne: what has the response been from the international community? it seems like they were quite taken aback? it was basically on two words, phaseout versus phase down. reporter: i think phaseout would have meant big bank efforts. that is probably not going to happen.
india has said it supports phasing down. that is a narrative it wants to go with. and would not be pressured by the international community or any other agreement to close down plants. yvonne: thank you. coming up, we are taking a look at one of our interviews exclusive with a managing director. we will discuss how to supply chain prices are affecting his business. this is bloomberg. ♪
plus one policy that they europe -- that europe and the u.s. are employing. guest: good morning. thank you for happy be on the show. like you said, [indiscernible] we have seen an uptick in terms of investment that have come back to western and indian shores. india has been doing quite well over the last 18 to 24 months because of chemicals. what we are seeing recently his investment coming back in america and the united states, europe, germany, austria, i think this is driven by local government. i think this will continue for the short-term. yvonne: can you give us more of your outlook when it comes to revenue?
what percentage of total revenue is going to come from exports in the next year or so? guest: as you know, we have factories on four continents. the idea to use india makes us more competitive in the european and u.s. markets, but we still believe there is a market for u.s.-made equipment. we are going out about 15% internationally. the idea is to leverage and gain market share across the world. russia, spain, south america, africa. these are now more accessible. earlier [indiscernible] were restricted in exporting.
we know don't have any restrictions so we can go into markets we were never in before. haslinda: challenging environment, high inflation, supply chain disruptions. how is that impacting your margins? guest: margins have remained pretty small. we have not changed our guidance yet. we have seen some increasing power costs in germany and the u.k.. in the u.s. we have not been affected by power increases. we are guarding towards the same margin profile we have.
[indiscernible] moving forward, there might be a revision in guidance. haslinda: we know you are diversifying. what is the latest on that and two or three years down the road, what will the business look like? guest: that is an important part of strategy. the last couple of years, m&a has been important. we were a local company, we did three acquisitions over the last 18 months. we bought a competitor in india. we recently acquired 200 kilometers of power. overall, i monday has been an important strategy for us. moving forward, local sourcing
[indiscernible] i'm quite positive. outlook is very strong. we have good people working for us. i think the next few years will be significant. yvonne: maybe give us more details. how much money are you willing to spend on organic and inorganic growth? guest: we have aspirations. a lot of companies, you have small companies in the million dollar range. [indiscernible] we have opportunities the
mentioned m&a is an important part. we don't have a number. we definitely have a balance sheet. haslinda: shares are up by have a person. thank you so much. let's take a look at the indian markets. it's up for a second day in a row, it is a very big week for india. we know this is the biggest week in over a decade for indian ipo debuts for companies slated to trade, raising a total of $3.3 billion. indian stocks have been rallying, helping to boost offerings. looking pretty good. yvonne: coming up next, we hear from dorsett hospitality international about operating a pandemic hotel in hong kong, and global expansion plans. this is bloomberg. ♪
approved for the mandatory quarantine for incoming travelers. she spoke with me about that in their future plans. guest: being a quarantine hotel -- thankfully, we are in a positive place all at time, our numbers are not preventing levels, but we are not far off, it differs city to city, but we are not far off. yvonne: the company is doing better than others. when it comes to revenue and profits, it is still falling. what is your view on the path to recovery? guest: definitely the costs have gone up, we are using a lot of medical equipment. the cost is not cheap.
definitely the occupancy is not the same as before. in terms of recovery, each country is different. we have opened a hotel during covid, that is the ritz-carlton, we are lucky because places like australia is very much domestic travel. we have good occupancy with around 60% average, because vacation goes up. this is a very good question, but in each city and country is a little bit different. in places like japan, we have opened three hotels. they are doing ok because of a lot of domestic travel and boosters from the government,
the government gives you allowances to travel. yvonne: it differs market to market, but when do you expect things to go back to pre-pandemic levels? do you have any kind of crystal ball? guest: i don't think anybody will have a crystal ball, but at least another year. we are redesigning some of our product. i think consumer behavior will change, it is impactful. covid is huge in terms of impact on all industry and consumer behavior. if you look at surveys, global statistics, people are traveling but the length of stay is longer. in december, we are launching a long stay project. yvonne: what is the transformation you want to see? you have been in business for 70 years since your grandfather started this company. what is the vision on how to transform the business?
guest: next year is 50 years being listed on the hong kong stock exchange. that is a milestone for us. in terms of transformation, we want to go with the city we are in. since my grandfather, we have been quite global. it's actually most enjoyable because we have always been entertainment and consumer related. we are in cinemas, and parks, tv stations, different entertainment. in different generations, we have always been very close to the customers. most important is we need to always think we are together, growing with the customer. we like to always do, even with
hotels, we like to do more middle-class products. yvonne: looking ahead, the next five to 10 years, what is the vision there? at the end of the day, what is the legacy you want to leave behind? guest: i believe we must continually grow. since i started in 2010, we were at 11 hotels, now we are at 64 hotels. we want to grow our portfolio more. we have four stars, three stars, we have just added service residence and we hope this will expand our global footprint. in terms of legacy, making a difference. hopefully influencing more and to make a difference for future generations. yvonne: that was the dorset
hospitality international president. you can get more on our interviews every monday on daybreak asia. 6:40 p.m. sunday if you are joining out of new york. haslinda: time for a check of the latest business flash headlines. third quarter net income coming in at $1.3 billion. the taiwanese company sees shortages lasting until the second half of last year. toshiba is aiming to split into three separate companies by the second half of 2023 financial year as part of an effort to improve shareholder values. cooperations will be separated into two new publicly traded companies, one for infrastructure services and another for technology devices. the remaining business will hold stakes in memory chips and
toshiba tech. another company signed a deal with a consortium. the agreement is just under $2.9 billion and gives shareholders to options. an all cash offer or an offer of $2.40 a share comprising a mix of units and cash. yvonne: taking a look at markets before we go, we are seeing markets off some of the highs we have seen but we are marginally higher after the data dump out of china which did look better than expected, perhaps signs of stabilization. in terms of equity movers, take a look at biotech. they are surging. up 17.3%. there is news and local media that china may approve an antibody-based covid drug by the end of this year which would be
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