tv Bloomberg Markets Asia Bloomberg November 24, 2021 10:00pm-11:00pm EST
digital space. take a look at markets. digesting a bit on the fed minutes. some questions about whether this faster tapering you are hearing from the fed, or at least signals, is priced into the markets. the bank of korea very much in focus after the 25 basis point hike, which was expected. more dovish comments coming in from the governor, saying we are not clear when the rate hike will be. there was also dissent among the board to hike rates. one that wanted a hold. korean assets folding. bond futures rallying. yields are heading lower today in korea. lower by .4%. jakarta is standing out. take a look at the dollar moves. the biggest thing asia has to contend with. hovering the 60 month highs. u.s. consumer data came out.
suggesting it is a strong economy right now, and in the end, they are pushing inflation aside. what does it mean for dollar moves? it seems it can persist with strength for sometime. the euro, we see gains. we had seen that weakness given the spike in euros. japanese yen having around 115. korean won is weaker. the offshore renminbi, snapping out of a losses for the back of the dollar strength. also expecting more from what has been going on in mexico with the peso. this is on the back of this pick for the central bank chief by the head of state. a lot of questions about independence. so you see emfx volatility. some strength today here. also take a look at bond futures. not a lot of movement.
we do see some red when it comes to five-year notes. we saw a lot of that movement overnight before u.s. markets closed for thanksgiving. potentially on the short end of the curve. treasury yield curves are flattening. the five year yield back to those levels we saw in february of 2020. yields picking up in australia and new zealand. let's get back to the bank of korea. moving forward towards removal of pandemic driven stimulus as it hike ski rates for the second time this year to rein in on surging inflation. kathleen hays has more. not a surprise, but a strong signal from the be ok -- bok. kathleen: i think so, on many levels. the press conference revealed so many interesting thoughts. he said it was hard to say definitely when they would raise rates again.
he did mention the rate hike decision wasn't unanimous. one person on the bank of korea said he was against this. people are thinking it is a sign they will not be as hawkish on these rate hikes as had been thought. i think the fact they raised inflation forecasts. it is not as high as the u.s. 2.1% this year. they raised it higher next year, 2%. they are admitting this pulling back of inflation is not going to happen as quickly as they thought. i thought it was interesting that the governor spoke about larger than expected bottlenecks , raising price pressures. from the supply side to the demand side. he is concerned upward price pressures are spreading to many more items. he does say it reflects oil demand pressures.
the cpi just above the top target. ppi really out of control. i would say it is a decision expected. the door is open to rate hikes. a lot people said january was the next rate hike. someone i spoke to earlier today said there was an election in korea, it might slow things down. still think it will be a measured pace. but property prices, household debt. we will see how patient they can be. yvonne: we are hearing from governor lee saying they will monitor u.s. policy chains. i wonder how much the fed is watching the bok's move given what we heard in the fed minutes. kathleen: the fed is looking at the fact inflation has gotten higher and stayed higher faster and longer than expected. these minutes are so important. they show they were seeing they may have to speed up the taper.
another thing we got besides the minutes from the november 3 meeting is mary daly, who is on the dovish end of the spectrum, saying she is looking at the possibility of speeding up the taper. because you think you might have to hike rates a little bit. you want the flexibility. it also showed there is a debate in the labor market. and it is a tight labor market. even though unemployment is higher than it was in the past, how much it has to do with structural changes. 3 million people retired during the pandemic last year, during a st. louis fed study. 5 million shortage of the pandemic. those 3 million will not come back. the split on rate hikes, half looking for them to start in 2022, half 2023. that is from the september meeting.
we will get a revision of the outlook on growth, inflation, and rate hikes. it will be so important if they show there's more than half looking for the first half in 2022, and even more than three looking for two hikes next year instead of one. going to be an exciting couple of weeks. another big indicator for the red -- another big indicator for the fed. yvonne: kathleen hays with the latest. let's bring in our next guest. there is a growing narrative among the federal reserve. even just with markets. the fed will have to speed up the pace of tapering. how will that react when it comes to risk assets in asia? is it likely priced in already? >> i think overall, i would be worried about the tapering. and to some extent, the point
from the fed, in terms of keeping flex ability with accelerating tapering. given the economic rebound and inflation in the u.s., the fed is a little bit behind the curve. the question will be about normalization from a rate hike perspective. i think some of that advancement will potentially cause some level of strength in the dollar. higher in the markets, some pickup of the volatility in the markets. even though i still believe the case for risk assets remains strong, it can cause short-term wobbles in the markets as they look at december data. >> given the unprecedented move when it comes to prices in the inflationary pressures we see, how are you viewing returns on credit? how has inflation impacted returns? >> overall, inflation hasn't had
that much of an impact on return on credit from a global perspective. the u.s. has been ok. european high-yield has underperformed. the u.s. high-yield. asia has significantly underperformed. asia has much more to do with the regulatory tightening we saw in china than anything else. looking forward, unless we see a shift, in terms of the policy and u.s. dollar, i don't think it will be a meaningful driver for the credit return. and i don't see many other asset classes outside of credit that can actually provide that income. and in asia, a large part of the market, that is providing you that income. it should not be that impacted by the inflation outlook unless you see is significant runoff in inflation. yvonne: we will talk about china
in the next segment. i want to get your take on asean. a lot of focus on the reopening efforts in countries like thailand. what does it mean from a credit perspective? >> overall, the reopening is something positive for these economies. specifically thinking about a country like thailand, more than 10% of gdp driven by tourism pre-covid. it is a positive development from a macro economic perspective. it basically keeps policymakers more vigilant around the inflation aspect. i don't think it has a negative impact on credit, given growth is positive. yvonne: neeraj is sticking around, joining us from singapore. we have vonnie quin in new york. >> jp morgan ceo jamie dimon
regrets making the credit that -- outlast china's communist party. in a statement, he said his comments were only trying to emphasize the strength and longevity of his country. jp morgan has around $20 billion worth of exposure in china, and ambitions to expand even further. european governments new efforts while avoiding curfews and lockdown. germany may consider vaccine mandates for people who work with vulnerable groups. denmark is seeking to make masks mandatory on public transport. the european union delayed new travel guidelines as it waits for data on the efficacy of different vaccines. china's tech industry regulator ordered tencent to stop rolling out apps as it reviews the complaints and privacy laws. updates of existing apps are also on pause. current versions can still be downloaded.
tencent is working to enhance user protection features and regularly cooperate with government agencies to ensure compliance. germany's new coalition government is promising to slash greenhouse gas emissions with a faster coal exit, more renewables, and a new carbon price for. after nearly two months of intense negotiation, the centerleft social democrats fueled agreement -- it paves the way to replace angela merkel as chancellor within weeks. global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quin, this is bloomberg. yvonne: the outlook for deals in india as the economy takes upwards. we are joined by bnp paribas. this is bloomberg. ♪
yvonne: let's look at the latest developments when it comes to china's property. kaiser shares are resuming trade after the suspension. a pop of close to 18%. the group offering to exchange at least $380 million in bonds. the bid to ease the cash crunch. rolling out measures to support the industry. evergrande shareholder speaking $86 million share placement. the latest we are getting out of china property. getting some more downgrades from agencies in china. take a look at how junk bonds are dealing. a little bit of rallies. seems things are losing steam once again. with us is niraj.
we were talking about with other guests that perhaps we have seen the worst on junk bonds. are you subscribing to that kind of view? >> overall, yes. i would say we are on the path of recovery. i would not ignore either. slight shift for the alternate sources of capital and valuation services we are. it still ends up being the risk with lower quality companies. looking at the data and where we are, i think a couple of weeks back on november 9, is behind us. yvonne: do we have enough information at this point?
i think we were surprised and stunned by the amount of hidden debt. are we getting more information? are credit card companies giving guidance on what separates winners and losers and who has liquidity to navigate through this? >> parts -- there are always surprises when you look at some of the data coming out, in terms of the balance sheet. in terms of winners and losers, it is a combination of three broad factors. the fundamental strength of the business. that is based on the long-term fundamentals. the second is a liquidity or access to liquidity and the structure of debt. and the quality of corporate government and management who has been potential to find access to liquidity in the next two to six months. their pressure is still on the smaller players. you would still find winners
from a longer-term perspective. they would generate significant return for investors, also on the credit and equity side, but you have the fact. overall, you have to work on how you map these different companies and go for diversified players who are a potential survivor in the long run. yvonne: beyond the property space, what are you focusing on? >> outside of that, we like the higher quality investment grade in china. a lot of the combination of state owned enterprises, i do think it creates a lot of value. china onshore credit value, which is a less often explored market, continues to be attractive for the level of inefficiencies in that market,
with that read in our pockets of value we are looking at. yvonne: you are still watching india? what do you like at the moment? >> in india, we like investment grade credit and high-yield things. in the onshore markets, we have been somewhat cautious for the last few months. the inflationary impulse, high commodity prices. if we see a stabilization and market pricing gets more aggressive, there will be an interesting entry point in government bonds. yvonne: thank you so much. just want to mark some breaking news crossing the terminal. the governor saying not ruling
out the possibilities of a rate hike in the first quarter of 2022. we have gone from saying we are not sure when the next rate hike will be, to not ruling out the possibility of a rate hike in the first quarter of 2022. as we were talking about january, could be live. they might have to hold off a little bit longer. second or third quarter 2022. that is the indication out of governor lee at this moment when it comes to the next rate hike. coming up, more about jamie dimon walking back his comments, saying he regrets his quip about the communist party. we quantify what is really at stake. this is bloomberg.
yvonne: here are your equity markets in greater china. pressure when it comes to h-shares in hong kong. shanghai composite, 3584 at the moment. jamie dimon saying he regrets saying his bank is likely to outlast china's communist party. in a statement, he was trying to emphasize strength and longevity of the company. the latest in their provocative remarks he was forced to walk back on. let's look at this with kathy chan. you have to wonder why they had to issue this apology. what are the stakes? what potential pitfalls stemming from this? >> thanks for having me. it is hard to quantify the damage. i believe it will be intangible and could be material. it will surely cause a hiccup internally in the short-term.
we have not heard anything about how it will impact the picture so far. it is too early to tell. we will probably see an impact, it may not be that major. it is really critical to maintain good standing in the country. we believe it will be a bit of embarrassment internally when they see the clients, those party members. it will probably take explanation. >> i'm sure you have been talking to your sources, people asking jp morgan. it is interesting this apology came when china did not say anything in response. how are people internally seeing the saga, and what is the mood? >> the mood is changing quickly.
everyone was taken by surprise. they don't know why the ceo is making those comments. some would it say it was interpretive, and that is why the government relationship people -- to have a call together to discuss it. so right now, people feel they are in better position to manage this. internally, they believe the damage has been under control and don't expect anything further from this. they probably will you reiterate the same. but it was purely intended to make the speech more fun, rather than making fun of the communist party or chinese party, he said. yvonne: kathy chan on the damage
control jp morgan is undergoing right now. let's get you caught up with the business flash headlines with vonnie quin. >> -- returning to trade for the first time in three weeks. the chinese developer with the changeover for the $380 million of bonds. it is promising to feed up the other companies to liquidity. singapore's central bank will consider reactions after dbs suffered one of its first in the past decade. southeast asia's biggest lender apologized to customers after access control server problems prevented many from logging in. they call it a serious disruption and expect dbs to conduct a thorough investigation. shinsei bank has canceled a vote later thursday after the government plans to withdraw support aimed at preventing a
takeover. that is a win for fbi holdings, which will not change its offer to raise the stakes for 48%. an extra ordinary shareholders meeting in early february to vote on suppose candidates. that is the latest. yvonne: take a look at markets. risk assets on the back of these fed minutes talking about how they might have to quicken the pace of tapering. the hike here saying potentially the first quarter, they might see another rate hike. the governor not ruling out that possibility. when it comes to bond markets in asia, u.s. treasuries are on the break, given the thanksgiving break. but hire in australia, new zealand. pretty mixed across asia. look at indonesia, vietnam.
ivanka: it is 11:20 9 -- vonnie: the bank of korea has raised interest rates for a second time since august. this 25-basis-point hike comes amid risks of an asset bubble and inflation. the bank says it expects consumer prices to rise to percent next year, up from its previous estimate of 1.5%. it sees gdp growth this year coming in at or percent.
fed officials at their last meeting stressed the need for flexibility. minutes of the early november gathering show agreement that maintaining flexibility should be a guiding principle. the fomc decided to begin scaling back its bond buying program. opec says the coordinated release of oil reserves by top consuming nations could massively slow the surplus in global markets. some opec-plus delegates have indicated they could cancel an output hike scheduled for january if the market is overrun. singapore and malaysia have agreed to open the causeway linking the two countries allowing cross-border travel for the first time since march last year. vaccinated passengers will be able to travel on buses.
global news 24 hours a day on air and on bloomberg quicktake powered by 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. yvonne: a lot of things to watch across markets today. my colleague david ingles is here to walk us through all of this. let's start with macau casinos. david: when you measure the move up from nevada, the latest was this note on credit suisse and then pointing to very very cheap valuations. they are upgrading price targets. you can see those on your screen. they're looking at favorable regulations for potential regulations, and suspected
border reopening, all of these things when you have cheap valuations. as you can see, the market is doing that as we speak and as you mention, outperform on most, not all. yvonne: we had good news when it comes to chinese property developers as well. >> and what it might mean, and do we see that rolled out, just to emphasize local governments make up their own mind, but it is a major chinese city, and it is the first major one to actually come out with a series of very direct measures to support the market, if that is accelerating these applications for historic sales, credit when it comes to developers, and also loan approval. some of these stocks are actually moving on the back of this. again, not all but still very favorable. yvonne: pointing to the macro picture when it comes to the
fomc minutes. the dollar once again extending those gains. you're focusing more on the mexican peso and what is going on there. david: even without the issues surrounding these specific em currencies, there is a dollar strength, and you had, at least in the case of mexico, you could see a nominee out of the president and the market looking at that as may be a risk to central bank independence. you also see the pop we had in the dollar overnight. on the back of a 20-year inflation surge and that nominee coming up, that don't worry, she is not there to back -- she is there to back independence of the central bank. she is there to look at inflation and what to do around that, so not a concern at the moment. let's see what happened in when
london wakes up and see what happened in these equity markets. yvonne: thank you. let's talk more about chinese tech. tencent is back in the crosshairs of regulators after a story cites alleged violations of privacy laws. let's bring in our asia correspondent. how is tencent being invited to fix the situation? >> i think they are being urged and told by the regulator to essentially -- first of all, you have to rectify some perceived violations of this data privacy law that came into effect and started to be implement it on november 1. also backed up by a statement that tencent put out that they are working on bolstering their user protection pictures, but
essentially, they are targeting violations across nine different services that tencent has on four different occasions, stating that these violations happen, so they are reviewing tencent data protection practices. they are going to freeze essentially any new apps, support a moratorium on any new apps, and you cannot update those as well. users can still download the various apps, but right now, there is a whole because of these reviews that have to take place on user privacy protections. >> eight potential sign this regulatory crackdown is continuing. stephen: absolutely. we have market commentary now. we had a research at united first partners essentially saying it does not seem this is going to have a material impact on earnings, but it is a very clear indication this is an
extension of regulatory action, clearly an extension of rules in the area which is loosely regulated until last november, which is when the ant ipo was scrapped. yvonne: we have to talk about alibaba, right, because analysts are nonstop on it comes to cutting price targets. stephen: there was that rally in the earnings came out last week. guidance was well below the consensus forecast. the stock has taken a hammering since then, dipped back below to the levels we thought would be the lows on october 4, but if we bring up some terminal charts, you got it already here. we are headed for an 18 consecutive week of price downgrades. that would be a record string for alibaba.
we are talking about the adr and hong kong traded shares, roughly the same, even though this different currency translation there, but essentially around 1.36 and change. deutsche bank, needham, argus research all cutting the price target. deutsche bank, by the way, likes the competitor, jd.com. avon: coming up, the outlook for deals in india and the economy picks up. this is bloomberg. ♪
yvonne: a live look at mumbai. looking pretty quiet as we count down to that open, just about less than six minutes away. we have been talking about digital companies in india who may have to rethink their ipo plans, even scaled-down their size after the fall of paytm. we are seeing gains of about .8%
, so another third day of games after that dismal day. 17% on wednesday in that second session of gains, but still down significantly from that offering price. let's get more on insights on market sentiment and bring in the head of corporate coverage in india at bnp paribas. we have seen a little bit of stabilization in chairs, but i have to wonder, what are some of the lessons we have learned from this debut? >> good afternoon. clearly, it is difficult to comment on a single stock and we were not part of the transaction, so i would not be able to give a very expert opinion on this, but however, you can look at the broader market. we have seen record inflows this
year. we have seen issuance, volume of more than $30 billion, which has been the highest since 2017 and 2020. we continue to see strong momentum from investors in the transactions that we are looking at, so i think the market momentum is good. avon: there's a lot of questions about valuations. do you expect some of these digital companies will have to reconsider their ipo plans or even have to scale down ipo? >> i don't think so. other companies have business models, and i think investors look at them very differently. we have had at the same time other ipo's, so investors are
very discerning. each company has its own business model, and i don't think this is a broadbrush indication of what we can expect from the ipo market. yvonne: you were just talking about how it is still quite vibrant from your focus. what about the change in trends and how some of these indian companies continue to raise money through ipo's in 2022? how much do you expect them to raise? what is your next forecast? >> you have seen a very constructive deal market in 2020 and 2021. looking at the debt capital
market, we saw correct bond issuance up from about $14 billion in 2020. as we content you does continue to see potentially an increase in rates, we would see the dollar market continuing to be attractive, especially for sectors with high intensity like commodity metals, mining, etc. we also saw a lot of interest from banks. we saw two very successful issuance last year. we expect to continue to see this trend into 2022. coming to the equity capital market, we have seen issuance,
volume over $30 billion. not a quality and nature of issuance was very different. i would say 2020 was a year of follow-on offerings, and the theme was capitalization. 2021 was clearly on the other end of europe ipo's. there were several tech ipo's, unicorns, etc.. as we go into 2022, we see a mix of ipo and follow-on offerings, so we have seen the capacity utilizations going up and the revival coming through, so with all this momentum, we will see more, and that is already robust set of ipo's, so i expect 2020
to to continue to be a record area. yvonne: you mentioned asking companies to ramp up there. what do you think could be the challenges? >> if you look at the cap x, there are several factors to look at. one is that it is a natural cycle with higher capacities asian. second, the government itself has been spending a lot and announced measures leading to large-scale investment plans. the third factor is energy transition, something bnp paribas has spent a lot of focus on globally and in india and we will witness significant, if
it's renewable, hydrogen, value chain, etc. i think we are at the start of a multiyear cycle, and given the scale of the such as anticipated, i would say it is both a challenge and opportunity for indian corporate as well as the banking sector, so in terms of what we need, of course, we need a stable policy environment for companies to make these long-term investment decisions. i would say that is inflationary treasure -- pressure on the horizon. we definitely need more large and stable banks to finance such a large program. the capital market continues to develop and grow, and i would say while we are allowed, we still need to grow and become much deeper, and i think that is something we will continue to witness. yvonne: we are going to leave it
there. indian markets have open. here is what we're looking at here. we are pretty flat as we kick things off this morning. we are still kind of looking for some direction when it comes to equities on the backs of some of these hawkish comments we got out of the fomc minutes, the be ok on the back of that as well, that dollar strength we are contending with in the region. pretty flat on the and fte as well. take a look at paytm, when we have been watching as well. for percent gains for the stock. this is the third day of gains after we saw two days of losses after they debuted. let's focus a little bit more on india, set to be considering that proposal to treat cryptocurrencies as a financial asset while safeguarding small investors. take a look at what the prime
minister has said, getting all kinds of suggestions when it comes to cryptocurrency from no band to a complete ban. what is the government likely to do? >> the government might not allow cryptocurrency in private transactions will not be recognized. but the government could put in some safeguards to protect small investors. when trading is allowed, the government will also put tracks on foreign revenues. this is one discussion that is happening right now.
yvonne: hold on a second. we are going to have a little more on paytm as well. sources telling us you have the likes of blackrock actually bought more paytm shares after that plunge we saw on the first few days of its debut, perhaps that's why we are seeing this segment improve here, but these are some of the biggest investors in that record-breaking ipo, adding to their stake in the fintech china, so that is the latest coming through from our sources. let's bring it back to crypto and regulation. tell us how soon they will finalize this bill. >> the plan now is to introduce the bill in the upcoming session of parliament. they have less than one month to get the bill ready, to take it to the cabinet of ministers.
avon -- yvonne: shares of zoom have slumped after failing to address concerns of post lockdown growth. cathie wood moved in to buy. zoom's ceo said with a company is headed next. >> just to remind everyone, we reported earnings of 35% year-over-year growth and gave outlook for the full year of over $4 billion, which is over 50% year-over-year growth. we are really proud of everything we have accomplished, and we are excited about the future, especially about the future of hybrid work. work is really transitioning. it is no longer a place. it is a space where people get their work done, and zoom is really at the forefront of bringing teams together and
keeping them connected and efficient, and we are really making the transition from the killer meetings app to communications platform. also zoom phone, our cloud solution, zoom rooms, which is really important and a key partner strategy, and of course we have products like zoom events, which we just launched 90 days ago as we look forward and consider that events are also going to be hybrid. >> i'm interested in how you continue to build ongoing conversations with your investor base. they got too enthusiastic about where future growth was, and hugh beat in many ways third-quarter earnings expectation. you talk about this growth 30% or 50%. did investors just expect too
much, or was it the fact that some of the m&a you wanted, the organic growth could not come off this time around? >> i think that we experienced a growth last year that was completely unprecedented and had never been seen before, and the way that we talk about it internally, we cannot really control the stock price. what we can control is our expectation, and we focus on delivering happiness to our customers. we do that by innovating and creating the most reliable and intuitive products that support our customers, and that's the best we can do. >> i'm interested, as you look toward -- speaking of conferences, looking at new and different ways you continue to spell growth, what is it that excites you? >> i think zoom events is going
to be a key component as we are all excited to be back together in person. zoom events is going to be able to bring those two together and support them, which is exciting. yvonne: a quick check of the latest business flash headlines, a popular consumer credit service make some of that makes it clear that borrowers are borrowing from outside lenders. they focus on small to medium amounts of credit. consumer credit contributed to 53% of revenue.
the ceo told financial times this week that such investments would help improve its reputation. finance has not confirmed. take a look at markets, it is mostly on the bond market, you see bond futures are doing this when it comes to treasuries with markets in the u.s. closed for thanksgiving despite liquidity being thin. you are still seeing where the downside pressure is when it comes to bonds on the back of those fomc minutes. yields are taking higher here in new zealand and australia, and we have been talking about how the belly of the curve in the u.s. is where we are seeing a lot of the action. we will see how this plays out the next couple of days or so. we are watching property. we are watching macau casinos as well, with that upgrade, talking about how there's multiple catalysts for the sector now, and we are watching, of course, the property stocks, given what