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tv   Bloomberg Daybreak Asia  Bloomberg  January 30, 2024 7:00pm-8:00pm EST

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>> this is "daybreak: asia." there is a lot for investors to be digesting this morning, we've had major big tech earnings out at alphabet, also at microsoft in focus, amd, and in asia we got that watch on the samsung numbers and what -- numbers and what that is signaling about chip demand. paul: we will keep an eye on the chip demand story. for samsung a pretty healthy beat. we will listen to what unfolds on the earnings call around tech in the asia-pacific today. annabelle: the rba ahead of his decision, let's take a look at how korea and japan are coming online. the focus on how samsung starts
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to trade unchanged at this point in time, but it does take a few moments to show my pricing. we saw the fourth straight quarter of profit decline, it was the all-important holiday quarter as well. net income falling 74% in the last three months of the year, that was a handy beat on what analysts had been expecting for around 3.2 trillion one. so roughly double that, but it is thanks in part to a tax credit. the chip division the one to watch, more than analysts had been projecting. not a great signaling for the health of the chip sector. though they were in line with the preliminary figures we had at the start of this month. perhaps playing into that is the theme around earnings, amd giving a weak forecast for the current reporting period that track intel earlier this week.
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even though a surprise profit was posted earlier this month. let's take a look at what is happening in the session in japan as we start to come online here. here the focus is on the data because we had retail sales rising just 2.1% year on year, far short of what economists had been expecting. it's an important one to be tracking, especially when you put it against the summary of opinions we just had from the boj for the january meeting and this told us that officials are starting to become even more data dependent because they are watching, but when will be the appropriate point to exit away from from negative rates. they do need to be checking the specific data and that's one of the ones that could be tracking, retail sales. we got the aussie numbers coming up for inflation but also what we are seeing after hours.
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paul: china pmi coming up later as well. continuing to see them grind a little bit lower. microsoft did have a narrow beat on revenue, but expectations around what is happening with microsoft in the cloud are somewhat higher than what microsoft ended up reporting. and a narrow miss on revenue, being punished for the search business in particular, amd saying first quarter revenue about 5.4 billion, that fell short of what analysts were expecting as well. kind of echoes what we've been hearing from intel in terms of the downbeat view, so those big names all moving after hours. annabelle: and that focus on the
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magnificent seven, the numbers were getting from those companies of the course of the week. the chief china strategist joins us here in the hong kong studios as well. i know you don't cover big tech specifically, but i'm interested in what that signals to you because we've seen big tech leading the gains, >> really pricing and for perfection. the earnings are not bad at all. looking back at fourth-quarter earnings, i think the market probably will be ok. looking for the first quarter, i think there will be more activity in the big tech
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sectors. annabelle: what do you think will be the big driver of that, isn't that the fed staying? higher for longer as well? >> we don't think the fed will stay high for longer. we think they are going to taper , so will be important to watch. i think our worry in the second quarter is when we look back on the first quarter data, especially in the coming dated we will see some weakening. inflation coming down maybe faster than the market expected. at the moment it is not the
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markets focus, at the moment it is the fed expectation. paul: in terms of market expectations around what the fed does, we're seeing those expectations whip sawing around, when it comes to mark, the consensus seems to be that we won't be getting thing in march and the focus on may instead. what sort of moves do you anticipate? >> i think we are still expecting is more likely for the fed to make a move in march, but the expectation is moving more toward may. i think they will support the bond market as well as the stock market. further down the road, some of
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the weaker data will be a problem. the key thing is inflation, and also the quantitative tightening issue i think is also supporting the market. paul: i want to turn to china now if we can, because this is a key risk for you, heading into 2024. the hang seng down about 1.5%. >> i think there's not a lot a policymaker can do, they have set the strategy for deleveraging, and the property market, the adjustment is not going to come back. i think it is manageable, but
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the trend growth in china is coming down, i think because of the decline and return to capital. there has to be more monetization, going back to the reform agenda. we have not seen anything yet, but we are not putting a lot of hope on that front there. annabelle: in that environment, how do you boost productivity? >> i think you have to bring back the confidence of the private sector. the private sector is driving innovation. industrial policy is the strategy the chinese are -- so
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investors can still benefit, some of the stocks will benefit from the industrial policy. if you need a more sustainable market, you have to go back to 2014, but they are doing that at the moment. annabelle: how realistic is it that they actually do open that playbook, because it doesn't seem to be the current policy priority. >> that is the key problem. there will be some rebound, the market has conditions set up for low valuation because of the pessimism but those are not going to be sustainable. paul: the chief china strategist . let's turn back to samsung if we
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can and look at how shares are tracking at the moment, off about .6% in the early going. this is after the company posted its fourth straight quarter of profit decline for the holiday quarter. for more on these fourth-quarter results, the numbers look pretty good, what are your key takeaways so far? >> i think it looks like a handy beat, but a lot of that came from a tax credit, potentially a one-time tax credit. once you strip that out, it is more or less in line and maybe looks a little weak. if you drill down deeper into the numbers you will see that the chip division, the one everybody is watching, actually had a higher than expected loss, and that is weighing on the shares a little bit. i think the real action will start in a little while when the
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executives brief analyst on the post numbers conference call and that's when they will talk about the outlook for the market and their own plans to catch up in ai and so on. annabelle: what do we want to see in terms of ai to boost investors here? >> i think to be honest, they lost a little momentum to their archrival, hiding's, which is getting all the attention now --hynix, a kind of chip that specialize for ai services. investors want to hear samsung's plans to catch up to hynix, to invest more in that sphere and retake the momentum and stake its place in the ai sphere. that is one main concern of investors right now.
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the other is the state of the chip market, kind of in a 1-2 year depression right now and people are interested in knowing when we will climb out of this trough and finally see a significant recovery in chips and electronics in smartphones and so on. annabelle: what do we get in the smartphone division, it seems like there may be mixed messages on the mix mobile market a little bit. >> in terms of smartphones, i think eventually there's a little buzz around the latest galaxy s 24 which they are hyping up as an ai enabled phone. i think the early numbers have been promising and it's sort of a front runner of its kind in terms of trying to integrate ai services into your smartphone, and if this catches on with consumers, it's conceivable that we will see it in the market
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this year. at the same time, the replacement cycle just isn't what it is. if consumers decide there is no real innovation with the newest lineup of smartphones, we may be in for a little bit of a choppy recovery in that market. annabelle: that was edwin chan. you can turn to bloomberg for more on samsung. we are awaiting more details on the latest numbers. let's take a look at how markets are reacting as we are seeing samsung is a little under pressure. there's another factor playing into this, we had amd listed in the u.s. giving a week revenue outlook, tracking is well that sort of guidance that came out from intel earlier this week. those factors together tell us that a man in the chip segment is still remaining sluggish and
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we have yet to see leave those signals that we are starting to recover but you do see the stocks dropping at this point in time. the after hours focus as well as a look at how big tech companies are faring in asia, after we had those number out from alphabet and microsoft earlier. investors really clinging to some of the more negatives in these numbers. for instance, in the alphabet one it was that focus on search revenue that disappointed. microsoft, the focus on cloud growth. we did see that shares dropping in after hours, alphabet down more than 5.5%. that is playing into the tech story broadly in asia. paul: plenty more coming up.
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we have more from our interview with the chief economist just ahead. first, president biden says the white house will institute month -- multiple actions over time. this is bloomberg. ♪ l, no question. you know how tough payroll can be, right? no. we switched to gusto, and paying my team couldn't be easier. gusto gives me unlimited payroll runs, next day direct deposits, and automatically files my taxes. ooh, taxes! sounds like you know the drill. good one! can i run payroll too? sure, after this. choose payroll without the pain. that's working with gusto.
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is being won. if it continues we could have viewed more good surprises on the inflation front to help lift growth. on the downside, we concerned about geopolitical risks. we are concerned that there could be a tightening of financial conditions that would increase interest rates further than they are right now. annabelle: that was the imf chief economist on the outlook for the global economy and referencing the geopolitical risks that as he said, tensions in the middle east, and president biden saying he has already made a decision on how to respond to a deadly attack on u.s. troops in jordan. he said he also does not want to spark a wider war in the middle east. bruce einhorn joins us now. any sort of response here is
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going to be significant not just for the u.s. but for the global economy. >> as the president said, the u.s. feels it needs to respond because there have been dozens of these attacks since october when the war between israel and hamas started. this is the first time there have been american fertility's. the president said i don't think we need a wider war in the middle east, that's not what i'm looking for. his natural security advisor, spokesman for the national security council said it's likely there will be a multipronged response, that we won't be seeing one big tech, which is something that a lot of biden critics in the u.s. have called for, instead we are likely to see what the spokesman called a tiered approach, not just a single action but potentially multiple actions over a period of time.
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the risk there is that if we have multiple responses, then there could be responses to those responses over time, so the situation could just deteriorate. paul: ripe for escalation indeed. let's look at the situation in gaza as well, the main you in relief agency -- un relief agency on the brink of collapse. what is the future for? >> a spokesperson for the agency warned that the agency not be able to continue beyond february currently because of the cut off in funds, 16 countries including the u.s. have cut off funding to the agency following reports israel provided to the un that 13 members of the agency were involved in the hamas attacks, the massacre on october 7.
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israel also says about 10% of the agency's workers are members of hamas or islamic jihad. mitch mcconnell, the leader of republicans in the senate come about on tuesday to prevent any further u.s. funding to the agency. the u.s. ambassador to the united nations, thomas greenfield, she said that while the agency does provide important work, she also said we need to see fundamental changes before we can resume providing funding directly to the agency. the un secretary-general that with about three dozen members, officials from three dozen countries yesterday, trying to address the situation, but for the moment it does seem like it's preventing crisis when it comes to manage tearing eight in
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-- humanitarian aid in gaza. paul: let's look at how oil is tracking against this backdrop. prices from mx. -- west texas rising at the moment as we await the retaliation from the u.s. for that strike in jordan that killed three u.s. soldiers and injured 25. president biden saying he's decided on what action he's going to take, but we have no action taking place as of yet. plenty more to come on "daybreak: asia." this is bloomberg. ♪ ( ♪♪ ) ( ♪♪ ) ( ♪♪ ) -awww. -awww. -awww. -nope. ( ♪♪ ) constant contact delivers the marketing tools your small business needs to keep up, excel,
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annabelle: a delaware judge has dropped a judgment, ed ludlow
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has more. >> the judge is essentially siding with the investor that brought the original suit or than five years ago. that was based on the idea that when tesla's board awarded elon musk this $55 million compensation package, two issues. one, they were not clear in explaining performance benchmarking, and also investor concerns about conflict of interest or lack of impartiality in the board awarding the package and the relationship to elon musk. when elon musk defended himself on that stand, he said i had nothing to do with this, but the judge has made that 55 moon dollars package void, it was the biggest compensation package in history, and what happens next is that tesla's current board
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have to come up with a new compensation plan for musk. just based on the immediate reaction in tesla shares in after hours, the market is taking this really seriously, the outpouring of instant reaction on social media was in high volume and severe in our understanding is that musk will appeal the decision. paul: here are some of the corporate stories we are tracking. general motors says it plans to reintroduce hybrid powered cars in north america. the ceo said gm remains committed to an all electric lineup by 2035. >> there definitely is a slowdown of ev adoption. it was never going to be completely linear. one of the important things is continuing to build out the charging infrastructure.
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paul: volkswagen is said to be pushing that plans to list its battery unit power car, sources also say vw is causing talks with investors for estate sales. we are told ipl plants could be revived if the market approves. the world's top ev battery maker says profits rose as much as 48% last year thanks to strong sales. net income as high as $6.3 billion and that beat analyst estimates. it share of the global ev battery market is about 37%, more than double its nearest rival, byd. annabelle: look at some of the big movers we are tracking today in terms of big tech, we had
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microsoft and alphabet reporting numbers after hours, disappointing investors on a couple of different metrics. we saw alphabet surge revenue missing and the headline for microsoft was the focus on cloud growth that fell short of what some on wall street were expecting. big tech under pressure today, the other story we are tracking is the samsung earnings that came out. we did see it generating a profit beat in the final reading, but still it was a one-time tech gain that helped it along. more ahead, this is bloomberg. ♪
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paul: some breaking news out of
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australia, fourth-quarter cpi coming in weaker than expected. cpi slowing, the expectation was for or .3%, a big slowdown from what we saw in the third quarter when we had 5.4%. stripping out some of the volatile items, slower than anticipated as well. the survey was for 4.3%. the big slowdown from the 5.2% we saw back in the third quarter. let's look at how the market is reacting, the aussie dollar dipped below 66 u.s. cents on that news. the asx turning sharply positive. stocks moving higher, that report still a little ways off.
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what is the record we are looking for? we are just one point shy of hitting that intraday rate on the asx. let's get a little bit more on those cpi numbers. that was interesting, what are the implications for the rba? >> rate are off the table now, we had some talk toward the end of last year from the governor and others that they still want to be vigilant, that the last mile for inflation might be harder. this will scotch that outlook. there's going to be some encouragement to the idea that the rba could cut rates a little bit more in line with some of the expectations globally. it's also coming in at a time when there had been hints in new
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zealand, singapore and the u.k. that inflation in those places was being a little bit stickier. the idea that australia's is having a significant slowdown like this could well help, we will see what the fed says later on today, but it could definitely help global bonds to regain some of their mojo after the recent difficulties they have had. annabelle: talk us more through that market reaction because there has been a strong reaction here. >> i'm looking at the -- seeing three, 4, 5 basis points lower in the pricing or where the rba is going to be going forward. that is the sort of thing that is likely to develop more during the day. also have china pmi coming up later on, but before this data,
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we didn't have a rate cut for the rba priced in, fully priced in until september. now it's likely that by the end of the day, even some bets on potential for a june or july cut. paul: what are the upside risks to inflation? we still have a war on going in the middle east which could continue for some time, in terms of rhetoric we could expect some caution from the rba. >> we could, especially because one of the big concerns has been rent, housing costs, there's not a lot of signs of pressure coming off on that front. the flipside is there is plenty of good news that is filtering through when it comes to power prices. that has been another major impact and that is more to do with local issues then
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necessarily what has been going on with global petrol prices. at the very least the rbis be confident they are done. when it comes to rate cuts, they're probably also going to need to see some significantly worse economic data. we did have some worse economic data yesterday, retail sales, which is a flawed indicator these days. we will be looking forward to that jobs data coming up in some of the other indicators as to whether the rba will feel like it wants to move toward cutting rates. remember next week when the rba meets, we will get a post rba press conference, so that will be very much a focus. the expectation is the rba is going to hold, that was always the expectation.
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how does governor bullock regard the outlook for this year? how strongly are they going to push back against the idea that they are going to cut rates i the end of 2024, a alone by the middle of 2024, which is probably what the market will be pricing for? paul: something new from the rba . garfield reynolds there. let's to take a look at how are doing, cpi in australia accelerating, four point 1%. a pretty profound reaction on the asx. we are still in positive territory after being tepid all day. of the market seeing a little softness, the nikkei all by .8%, the kospi pretty much flat. samsung is dragging the kospi
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down at the moment, off by .6%. a big beat on the top line figure of net profit for samsung but a lot of that was to do with a one-off tax credit so the market is waiting to your more from samsung about the outlook, particularly around ai and chip production. new zealand meanwhile off .5%. annabelle: something else that will play into the market action is what we get in terms of the pmi numbers. china's official january report is set to be released in just under an hour's time from now. the headline manufacturing gauge level, we expect a contraction for the last three months of 2023. bloomberg economics says today's data will show activity revving up before the lunar new year holiday but it might not be enough to to provide any sort of convincing evidence that china's economy has finally turned a corner. let's discuss with our guest,
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anz's chief economist for greater china who joins us this morning in hong kong. even if we do see brighter numbers coming out of this, it probably won't move the dial too much. >> absolutely. we have to bear in mind that this is a distortion with the lunar new year as well, the year of the dragon, by the way. whatever seasonally adjusted impact, is not going to change the fact that the economy is slowing down and the numbers should be weaker. annabelle: how much is that tell you we could be setting up for a period of longer-term deflation? >> usually people look at the headline number but starting from last year, the price of the index, for example the selling price of the index has been
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below 54 a long while. i also look at the nominal gdp number, we are forecasting 3.8% this year, versus the real growth of our forecast, four point 2%. it means a nominal gdp growth is slower than real growth. china is already in the deflationary era, i would say, because i don't see any reasonable driver to boost price, plus the fact that domestically market has been very competitive. firms and enterprises are cutting prices so i think deflation trend will continue. we have to wait until the second half of the year that we may build -- able to see one or two months of positive ppi. annabelle: is there any sort of transmission effect playing into
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that, do you think? >> so far we've seen a rrr cut. the market was expecting an interest rate cut that did not happen in january. this may happen by april. we also expect some fiscal policy before the national people's congress in march, then they may start to talk about bond infrastructure. these piecemeal stimulus measures are not able to change the market expectation that the slowdown will stop, because this is rather structural, rather than cyclical. paul: to your point, markets just keep declining. can you foresee a scenario where markets really do start to twist policymakers arms into
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delivering that big stimulus that they seem to be asking for? >> there's a lot of talk about a rescue package, last week on how the authorities are able to stabilize the market sentiment. but this is just a sentiment poll, it's not anything that will change the economic fundamentals. as long as inflation remains, there's got to be some pressure on industrial earnings, some pressure on companies valuation, and that's more about how the government is going to change a market expectations, and how expectation varies. we are not expecting any meaningful recovery and chinese property market in 2024. so i think the forward growth momentum and also the market is
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rather already pricing in the outlook of your of the dragon. paul: to cycle back to what you were saying earlier about deflation, bloomberg reporting that white collar wages are probably in china as well. when you put that alongside all the other difficulties people are facing, the problem in the property sector, the declines in the share market, at what point does political risk start to build up in terms of the social contract between the chinese government and the people? >> we've seen strong unemployment pressure happening in the private sector. china has close to 300 million workers in the urban area that are looking for jobs. many of them are actually working in the construction industry. so i think the government knows how important the property sector is to employment, to wage growth, without meaningful wage
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growth or disposable income growth, that is also a main drag to household consumption two. i think the governor knows youth unemployment is more important than gdp numbers. so i believe that this is a top policy agenda this year. trying to boost employment and stabilize unemployment pressure in the urban area, at the same time they also need to look at how to stabilize the financial market sentiment. so they are two major objectives that the chinese government need to focus on, unemployment in the urban area and also financial stability. annabelle: financial stability, given that the stock market really just represents quite a small percentage of individual household wealth and property
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makes up a lot more of that, what do you think that tells you then about the actual priorities for financial instability? >> the chinese governments care about both. financial stability and the economic fundamentals. the financial stability is much more complicated than any kind of specific policy to boost the economy, which is rather straightforward. in terms of financial stability, they need to care about the debt and leverage of private sector, the public developers and some financial institutions too. so this year they are already trying to strengthen economic control in different financial institutions. senior management, and how do we form the financial policy and
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also the pboc. this will be a major task that the party central is trying to address. annabelle: as we said, those pmi numbers are due in about 45 minutes from now. you can watch us live and see our past interviews on our interactive tv function and you can also dive into any of the securities or bloomberg functions we talk about. become part of the conversation by sending instant messages during our shows. check it out at tv . ♪ psst. hey, sarah. hi. if you had to choose, would you listen to elevator music all day
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paul: you are watching "daybreak: asia." here are some of the corporate stories we're tracking. paypal cutting 9% of its workforce as rising competition puts pressure on profits. those affected will be notified this week. paypal was an early disruptor in the payments industry but rivals have since crowded into the space. in the biggest share drop since april after plans to cut 12,000 management jobs. the ceo says it's due to new
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technologies like ai. jack dorsey's fintech will begin cutting jobs as part of a go to cap its workforce at 12,000. declined to give specific details on how any jobs are affected. they will report third-quarter earnings in november. they have been trying to rain because to be prophets. and reducing headcount after the takeover of credit suisse, sources say several cuts were made last week. the workforce jumped to about 120,000 when the deal closed in june. the bank says it aims to save about $6 billion in staff costs in the coming years. annabelle: we can stick with that theme of job cuts at banks, because the japanese lender nomura announcing it is cutting
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60 staff and most of that is in investment banking, ahead of its earnings result later today. let's crossover to tokyo and are asian reporter, it does seem like there are job cuts underfoot at ubs as well as nomura. what exactly does it signal to us? >> the job cuts are flowing worldwide in the banking sector. the latest big news coming from number overnight, 60 jobs being cut, 30 in the u.s., mostly in investment banking. this reflects the slump in global dealmaking that all banks have been afflicted by, including on wall street, big banks there are cutting staff on the banking side. for nomura, they have faced in norma's pressure to cut cost on
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the wholesale banking business in recent quarters, only a couple of quarters ago, revenue -- cost exceeded revenue from that division so it was losing money. it has managed to get the ratio down to 96%, but it is trying to cut that down lower. the ceo seeking more cost cuts from the division in the job cuts reflect that. it's also just reflecting a tough decision, they've been trying to expand investment banking in the u.s., so these cuts were probably a tough decision. paul: we will hear from nomura later with earnings today. what can we expect there? >> we are expecting quite solid results. profit will fall about 26%, but mainly because of the absence of one time gain last year, but this will really be driven more on the domestic side.
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retail business is doing very well and recovering very well on the back of the japan stockmarket rally, but there's going to be closely watched figures on the wholesale side, whether those cost cuts will show progress as i mentioned earlier. also the fixed income business has had a softer couple of quarters so we will have to see what happens on that front as well. looking ahead, the year started off well for the japanese brokerages, due to japanese stocks being at a 34 year high. shares have risen 19% on the back of a 30% decrease last year. so there are a few tailwinds for nomura and its rival is also reporting today. paul: what is the thinking on adding jobs for mizuho?
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>> the contract is very stark. it has been doing quite well in equity underwriting, it landed the ipo last year which was a big coup, and we spoke to the head of the americas division, we want to complement that by adding to our research and energy, health care industries. recent highs include a managing director and head of america's research. it seems to be on the front foot. also expanding ties with morgan stanley. the big megabanks looking to diversify away from japan and make inroads into investment banking while nomura on the
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other hand is struggling a little bit. annabelle: the numbers are due friday instead of today as i said earlier. let's take a look at the earnings focus today on samsung because that company continues to be under pressure, it's one of the biggest drags on the kospi so far in the session. we did have numbers coming out, the final reading for the fourth quarter just in the last hour or so and what we saw was a fourth straight quarter of profit declined. that was for the key holiday period as well. net income dropping 74% in the last three months of the year, after its mainstay chip operations posted a loss of 2.18 trillion won. more than one analyst had been rejecting a tax credit that did help lift the bottom line to nearly double what analysts had been expecting.
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still a few point shy of that record intraday high. however, elsewhere he got the nikkei in negative territory by about .6%. the cost pretty much flat, samsung currently off by about .6%. net profit look like a beat, however a lot of it due to a one-off tax credit. annabelle: in the next hour, counting down to the china pmi numbers that are due out. not really going to have a long-standing impact on equities, given the underlying pressures around the property sector. more on that ahead with our guest joining us live. ♪
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