tv First Up With Angie Lau Bloomberg August 9, 2015 7:00pm-9:01pm EDT
you live from bloomberg's asian headquarters, streaming on your mobile and bloomberg.com. let's check in on markets in asia. to new zealand, seeing things unchanged. that 66 u.s. level creative counting down to the opens. 225, onen the nikkei third of a percent up. futures in chicago pointing to a lower open this after pressure on wall street. at 124.28.is todaying in singapore amid the hangover and cleanup of the 50th anniversary celebration , congratulations to singapore. pressure is mounting on chinese policymakers to boost stimulus after weekend data showed worse than expected. demand in consumer prices declined in its steepest in 60
years. what evidence -- in six years. what evidence did we get that it is slowing? same old story, the stock market is down or trending this way, and the chinese economy, the data is worse than expected. let's bring up producer prices. the 41st street month of deflation. sinceggest decline october 2009 you can see down 5.4%. to beic demand continues weak. this against the backdrop of a slightly increasing cpi inflation environment. andnd is still pretty weak nonfood prices are pretty sluggish. meat is up 16.7 percent, that was the biggest increase for cpi. that was due to pork prices.
nonfood was relatively tame. prices, deflationary environment for the 41st street month at producer prices. this is on top of a very weak export market. we got exports down 8.3%. the forecast was for a 1% fall. as regional economies or the currencies has been depreciating, the yuan has stayed stable. that tries to put them at a competitive disadvantage. 10.5%.xports down exports to the u.s. of 9.3% creative this has been a week story as well. a reflection of domestic demand. ninth straight month of falling
imports. bigger than expected a .1%. angie: this is concerning and no doubt pboc is watching closely. there is a lot of speculation. we have to do something. stephen: we don't want them to restock the asset bubbles we saw in 2009 when they's -- when they threw in that big stimulus package. a lot of analysts and economists are expecting another interest rate cut. they have had four since last november. perhaps as much as a 50 basis they've also got more there's been a be some construction stimulus. a that is probably another tool that is in there. >> we will see which one they fire. thank you so much. it is the market impact of this disappointing data in china that
we want to focus on. standing by with an early look at financial markets with this new treating week getting underway. we saw the markets in china finishing on a positive note and that may give a lift on the expectation of further stimulus, given these is the economic numbers. on friday.at we saw shanghai composite closing at 2.5% -- 2.25% higher. index trading 50 marginally higher, the only market at the open. we will haveonline a better sense of how this week is shaping up. we will be watching the response of the chinese government. we continue to see this quantitative easing increasing by the pboc and following the latest reserve numbers.
falling in july as the pboc moves to study the currency amid the market volatility. we have headlines allowing a one flexible view three and to give you focus on the -- expo view. china -- flexible view. -- missingt and its estimates. let's take a look at what we are following around the region. latest economic numbers out of japan ahead of the trade ballot. we have the latest economic numbers out of kuala lumpur. japan comes online in less than one hours time. of we are also following crude oil because we have jpmorgan revising its forecast for brent crude and west texas
intermediate, cutting its second half oil price forecast. you have west texas trading at 4360. european brent crude trading at 49.60 to create a -- 49.62. it looks like oil majors will continue to see a challenging time. watch those oil related shares today. another busy week shaping up. angie: a slippery day. headlines, we are going to be watching national australia when sydney is trading in the next hour. more positive and increase. the benchmark is actually up 1% premium private sales missed estimates due to the luxury slowdown. rose to $2es
billion. but in greater china they slumped to 19 per and send -- 19%. product has fallen 30% in the last 12 months. extending losses that have seen to the chinese car lifting website lose more than half its value. 56% this year. a stocks slid 22% on concerns of slowdown. automobilethe china saless show annual falling for the first time in 17 years. and hackers linked to china may have struck again, this time targeting the travel industry. process reservations for airlines and hotels and says its systems have been breached.
american airlines is investigating a possible hack. both incidence of heart of recent attacks on the u.s. military and major insurers. japan's buoyant stock market is producing clear winners. her goldman sachs seized on the opportunity to boost profit and revenue next year. goldman was a big standout here. other saw improved results as well. >> they saw increased revenue and increased sales. a couple of factors for this. the optimism in the stock market helping tanks gain from trading. also local companies advertised mergers. we see this renewed drive to expand overseas. revenue gaining 31%. net income up 39%.
unit headcount increasing 6%. they worked on 12 japan related projects. that included a $5 billion acquisition. fees for handling those huge transactions, that is what is helping them gain revenue and profits. they jumped to a four-year high. fixed income and equity trading rising 10%. they did pretty well but not across the board as we are seeing. citigroup's revenue was similar to goldman. citigroup gained 31% in revenue. when it came to headcount they
reduced their number of staff by 43. we are seeing a bit of a difference with goldman sachs. of higher profit revenue. also we are seeing other banks to great. underwriting fees would actually hit their profit. get more on that story and all our top stories on digital destination, bringing together the best of bloomberg's miss news and new digital content all on one address. greases efforts to reach a deal -- greece cost efforts to reach a deal by tuesday -- greece's efforts to reach a deal by tuesday. a controversial sweetener is gone. up ahead, our next guest says
angie: the delta was worst hit where several ridges converge before emptying into the sea. has marked the 70th anniversary of the bombings in -- insecret and hiroshima nagasaki and hiroshima. heardors of the bomb speeches denouncing new defense wouldlegislation that lead to war. 70,000 people died in the attack and twice as many people were killed and hiroshima. commodity producers are leading the way down. let's take a look with markets in asia with su keenan in new york. a big question for investors will be can the market break its seven-week losing streak? this as a robust hiring figures
raised the likelihood that the federal reserve will begin raising rates as early as next month. of friday's data gave further confirmation that the u.s. expansion is on course. jobs growth were in line with expectations. this is after exceeding expectations in the prior months. bond futures are showing traders believe there is a 56% chance the fed raises rates in september. more than 85% of companies already reporting. investors will be pouring over profit results. dataey u.s. economic includes unit labor cost on tuesday, retail sales on thursday, and industrial production on friday. investors more than ever are focused on this eta as the debate on the rate hike continues. oil fell for a sixth
angie: welcome back as we start the trading week in asia we are seeing some markets under pressure. over to singapore, a little bit of a hangover or the 50th anniversary. tony nash is fresh for us, chief economist ready to kick the week off. how are things looking for asian infants -- asian investors, notcially on the heels of much celebrating going on in china. >> -- tony: it is becoming difficult to export inflation. that is what china is good at. with the export numbers down and be producer price numbers, it is becoming difficult to control the secondary impact. angie: what does the pboc do you
-- do you go -- do? topsn't create some backs like we have seen at the composite meltdown? tony: we are going to have to say -- we're going to have to see trip will -- see interest rate cuts and action to stimulate the economy. so many people lost money at the peak. i'm really worried about constraints on's bending. are people going to stop spending. retailse the same numbers and corporate expenditures going to come down in china? will that block of the financial that, notlet -- will necessarily lock up the financial system, but impair the financial system? angie: we are expecting trade data to come out of japan about half an hour from now.
to see and ispect japan on better footing here? tony: i think japan is better footing. the thing i worry about is -- they have been negative. the trade data will look ok. japanese trade a data with the u.s. be where we would like them to be. when it comes out we will see how that looks. i think other elements are looking good when you look at loans and other things that look comparably pretty good. angie: do you think we are going to see with this u.s. dollar strength that perhaps bank of japan is going to have to do something as well to counteract that? bang i think they are going
to have to look at things like the corporate debt allocation in the doj portfolio. japanese companies have to pay higher yields to compete with u.s. companies with an , the doj ise rise going to have to look at how much support they are going to have to provide for corporate debt within their portfolio. i think that will be a big consideration. angie: we also expect malaysia thatsecond-quarter gdp, they have been under pressure is to say the least. what you see on the economic front? it faces a lot of challenges on the political front. tony: i think it terms of economic activity we are looking ok. i think the currency has devalued quite a lot in the recent weeks, but the economy is
looking ok. issues weof political are seeing in malaysia will likely impact is like foreign estimate over the long term -- foreign investment over the long term and even business confidence. consumption in malaysia is looking ok. industrial production and even service growth are looking ok. i'm not particularly worried about the malaysian economy this quarter, but let's say a quarter or two out of if things don't change you will see some givedence thing speed of it a few more -- confidence thing. angie: it comes full circle. back to china it is the main engine that drives the regional economy. this is a country that faces a lot of challenges, doesn't it?
tony: it does. you are looking at a number of things the andy rc is going to ise to look at -- the ndrc going to have to look at in the economy, especially in the investment environment when you have the volatility and equity markets. this is a no-brainer. identifying where and when that support comes in. the trade-off the pboc is making, i don't see what of a difference from where it is today and where the ad was in 2008. it took the fed -- it took the s&p six years to come back to its peaks. i don't think china will take six years to come back to its peaks. i think both individual and corporate investors, understanding that investment
environment, buying back shares and thinking there is a no lose environment is a real issue. of the cfos and the finance directors, especially in corporate china, are especially going to have to learn how to play the corporate markets. thing,that is the because at the end of the day it still wants to internationalize its yuan. the yuan at in a tight trading range with u.s. dollars, still at a high. one point does pboc address internal domestic challenges versus foreign ones. and its foreign goals. tony: i think it is 36 months out, something like that. hand in handoes purchases and overseas investments. grows, you will se
e more loans extended. talking about devaluation is a way to offset the balance is, i'm not sure we will see a major devaluation. maybe we will see some actions at the edges. stepwise devaluation doesn't see much in line with the policy of the chinese government. angie: tony nash, complete intelligence out of singapore. coming up next, china's rescue funds try to keep the market on track. after the break we are going to take a look at its investment strategy.
angie: it is 7:30 in hong kong, a gray morning to start the trading week, perhaps reflecting the summer mode cast because of china's lower than expected producer prices, the steepest decline in ppi in almost six years, and also an unexpectedly large drop in exports last month. we will see how asian investors react to that today. we are 30 minutes away from the trading open in australia, japan, and south korea. you are watching "first up."
the top stories this hour, an unexpectedly large drop in exports increased pressure on chinese policymakers for more stimulus. 5.4% in july. exports shrank more than 8% from a year earlier. companies surveyed had been expecting a more modest 1.5% decline. the data indicates that pboc rate cuts have yet to spark a recovery. an official chinese rescue fund has become run of the most influential investors in mainland markets. chinese security finances the key for strategy. it has a war chest of more than $480 billion and the potential
to add $300 billion more. cff has not announced its strategy but has a major stake in large-cap companies, especially railway shares. global banks are seeing improving results from japan. goldman sachs is standing out. it was the only large foreign investment bank to increase revenue, profit, and headcount. net income surged more than 40% and revenue jumped by a third. they also boosted staff by 6%. appetite for m&a has been rising with the nikkei touching a high in february. let's check in on markets in asia this morning. to new zealand right now. we are seeing fractional games, pretty much flat. new zealand dollar spot is at 0.66. we are counting down to the open in australia, japan, and korea. let's head over to japan.
the nikkei last closed in the green. it looks like we are going to start off in the red zone today with futures pointing to a lower open. dollar-yen right now is at 124.3. more on our top story now. data over the weekend showing china's economic slowdown may be deepening. exports tumbled as producers saw their steepest decline in years. we have our chief asia economics correspondent joining us right now. what does this tell us about the state of china's economy. >> a pretty soft reading on china's economy over the weekend. i think the dip in exports will catch policymakers' attention. negateser, it kind of the story we had about how china's economy was stabilizing in the first half. angie: a soft start to say the
least. is the strong yuan becoming a problem here? >> that will increasingly be a political issue in china. on chinating a brake exports to the eu and japan when they need everything they can get. you would imagine the policymakers will be tentative to weaken the currency. they could trigger capital outflow. it is a question of balancing. do you go for growth and risk or maintain status quo? angie: policymakers have always said fine-tuning was their goal. how do you think they are going to respond to this latest data? >> one thing we've been watching is the policy bank recapitalization strategy. they are putting money directly into policy banks and issuing construction bonds through these banks to get the local governments building big projects. that, they get men in
work and have the economy grow. the pboc may cut interest rates, but watch for these policy banks and watch the role they will play. angie: and a current, thanks for that. let's get more on that. china's rescue fund has two months gone from obscurity to the biggest player in the market. after some simple digging at bloomberg, we know what it has been buying. david is here with all the details. what are they doing here in the markets? david: this is the bazooka we keep talking about, the government agency mandated to buy stocks to support the market. really ridding the market of all this access. what do we have? we now have a better idea of what type of stocks it likes to, or it has managed to build
positions in. we don't know the criteria they use. it is not so much that they close trading, but when a certain holder reaches a certain percentage of shares, the company has to disclose that did the exchange. we went through this data and we found out these are four of the sector preferences. rail, which is a big part. health care, food, and you have technology. csf.e talking about the angie: probably not a good idea to short these stocks. -- thesealmost like guys are actually buying. let's get into that. what are you not supposed to short? can we get the next screen? china railway group, china railway construction. this list is partial, obviously.
we don't have each and every position that they have. that means these are the biggest positions. you have two railways, the dairy maker, long way energy. let's flip the boards. as you can see, it is a mixture between health care, drugmakers, investment holding companies, chemicals, hydropower, so on. these are the top 10 that we managed to sift through. we don't know what criteria they use. angie: this is a pretty new fund, right? the cffc, we haven't even figured out which acronym to use, but we know that they have a huge arsenal here. tell us a little more about how big this fund is. david: it is basically a government agency. what they do is borrow money from the central bank.
right now, we understand it is just under half a billion u.s. dollars in its war chest. based on sources, it looks like they are asking for an additional $320 billion more. angie: quite a backstop. david ingles, thank you for that. time for a look at the top corporate stories. here's zeb eckert. zeb: berkshire hathaway missed in the last quarter with profit falling 37% on higher costs. those divisions posted a loss of $30 million mainly because of geico and berkshire reinsurance took a hit from currency fluctuations. berkshire may see a pickup in the third quarter. inerger is expected to bring $7 billion. twitter could see a shakeup in the boardroom once it finds a new ceo. the company is considering adding more diversity, such as appointing from minority groups and taking experience from
adjacent industries. three of the board are former twitter ceo's, something that may make life tricky for the new chief executive. chinese car booking service d kuaidi, has joined investors. it is seen as uber's rival in china and has raised $2 billion in funding. the company is looking to expand its shuttle bus and car pulling services. that is a check of the top corporate stories this hour. i'm zeb eckert. angie: gold's recent meltdown cost russia and china billions of dollars in just three weeks as prices hit a five-year low. we've got bloomberg intelligence asian metals mining analyst yi zhu with us in the studio. explain the impact of gold kind of dulling things for russia and
china. >> the gold prices had fallen more than 60% since the year high. we think there are four factors behind that. first is the recovery of the u.s. economy with a stronger u.s. dollar, together with the interest rate rise. u.s. are all impacting dollar denominated gold prices. china announced its gold reserve last month, which was about 1600. even though it is 57% up from 2009, they fell short of the market expectations. the third would be gold typically used as a haven. that function had weekend following the bailout of greece, and also iran's nuclear deal. last but not least, the slowdown in china, which is the largest
consumer for gold. angie: is this going to continue? and for how long? , itf we look at the price should be relatively narrow compared to the upside. we still have the cost level. if we look at the cost support, that trend had been moving up because the difficulty of those gold mines and the techniques needed to explore those gold mines. angie: good to know. thank you so much. is the worst yet to come for commodities? we are going to discuss that with a global head of commodity research after this short break. you are watching "first up." ♪
stories making headlines around the world, singapore wrapping up its birthday celebration after fireworks and a parade attended by tens of thousands of people. the festivities included a tribute to the city state's founding father. his son, the current prime minister, urged singapore to press ahead in the face of slowing growth and aging population. protests have been held at a japanese nuclear plant that's due to the restarted this week, the first to come back online since the fukushima disaster. onhoe electric plans to turn the reactor by sunday. once final inspections are compete. 25 of japan's reactors have applied for restart permits. they were shut down following the meltdown in fukushima in 2011. malaysia's aviation regulator is
to investigate an incident at kuala lumpur's new airport terminal in which a plane reportedly rolled backwards. last month, the airline says the klia=2 budget terminal is sinking with the taxiway flooded and cracked. air asia is demanding $100 million for losses and claims the airport operator is faithless. hedge funds are betting that the worst is yet to come for copper prices with the number of net short positions rising to the highest level since 2013. prices are in their worst slump in more than two years. stockpiles in shanghai jumping on falling chinese demand. the oversupply could remain for years. morgan stanley predicts copper output will rise 5% this year and keep growing through 2018. joining us for more analysis from melbourne is mark, global head of commodity research. good to see you.
it is not only a concern for australia, but it is a concern for the world economy. china's slowdown is turning demand for commodities and we are seeing a lot of money managers who say, just get away from commodities and focus on equities. what are your thoughts? >> good morning, angie. the backdrop of the copper market looking week for the next couple years is not a good sign for commodities. you are probably aware of the term dr. copper, which gives the copper markets a bellwether. generally it is used in all applications. it is a good demand indicator. what that is highlighting is that market positions are going to remain challenging for the next couple years, and we agree with it. it is not going to show any strong green shoots. angie: and china is also taking
advantage of the slump in a lot of prices across the sector, including iron ore and the like. do you think at least with the resumption of stockpiling thanks to lower prices like oil and iron ore that it could provide some sort of floor? >> it does give a bit of a backstop. the chinese by on the dip. they are going to be hit by this pretty much constantly. in this market, where the demand conditions are strong, they will be opportunistic. we are seeing the iron ore price come off in the last couple weeks. no surprise, we saw a healthy jump in imports in july. there is a strategic stockpiling going on all the time in china, which will be a reasonable floor on the market. angie: what is your forecast for
the rest of the year when it comes to commodities? do you sense some sort of recovery or is it going to be volatile days ahead? >> i think it is going to be volatile. i don't see much more downside risk unless we do see another leg down in the chinese story. there's enough talk in the market that the government is looking to try to stimulate, but we don't think it is enough to get the market buying commodities. i think it is going to be volatile. there's going to be a lot of false starts. there's going to be markets where it will outperform or underperform. angie: and of course, when it comes to rates, from the fed, what about precious metals here? >> another headwind. probably more short-term. it will play in most nearly for the gold market. we are seeing that being priced in. as the fed looks to normalize its rights and official rates
start to move, that's going to be a negative for the commodity markets. we don't think it will be prolonged. once it is in the market, the market will be pricing past that. in the short-term, it is a headwind. angie: how our australian miners facing this headwind? >> just looking at this, one of the key focuses is productivity and efficiency. ,t is about getting the essence being able to operate in this lower price environment. they haven't had to worry about this for years. there's a big focus now on productivity, getting cost down and keeping some sort of margin in the market. mark, i have to ask you about jpmorgan downgrading or at least cutting back its forecast for oil in the second half.
what are your thoughts there? >> i can understand the reaction. i suppose it is a reaction to what we are seeing, a supply-driven story. we are seeing a new concern about exports out of the middle east. there is that dynamic which would say prices are going lower. the issue will be, have we already priced that in? things are going to be challenging in the short term. there's more downside than upside. notre expecting oil prices to recover in the second half. angie: mark, good to talk to you. thank you so much for that. anz global head of commodities research coming to us live from melbourne. we have breaking news from japan. shery ahn with the latest numbers. shery: we got the broadest measure of japan's trade with the rest of the world, the number of again in positive
territory. a current-account surplus of 558.6 million yen. that is lower than may and also a miss in analyst estimates. analysts expected ¥786 billion, but it came in at 558 points ask billion yen. 558.6 billion yen. they have managed to stay in the black this year, helping overseas investment income, but they have come down slightly. at 558.6 coming in billion yen. the trade balance has come in at 102.6 billion yen. that also missed analyst estimates by a little bit, but still rebounding from the previous number in may, which stayed in the negative at ¥47 billion.
hase: "fantastic four" turned into fantastic flop. it was expected to be one of 20th century fox's biggest debuts this year but it raked in just $28 million. that is below estimates, nowhere near enough to topple "mission impossible" from the number one spot. the franchise may now be at risk, with the studio saying it will hold a postmortem to find out what went wrong. welcome to the stock exchange.
we've got our own version of fantastic four right here. zeb, what are you taking a look at? zeb: i'm taking a look at here. -- beer. angie: why not? it is the weekend in america and 5:00 somewhere. zeb: it is 5:00 somewhere. let's check out asahi breweries. it is japan's biggest brewer. it had a nice run over the last year. all of these breweries may see a tax increase. the finance industry wants to increase taxes. it is not clear what type of drink, but all of them produce this type of drink. apparently they are not being taxed at the right level. asahi is the best performer. angie: is that similar to a corona lime in your beer? zeb: maybe like a virgin beer. angie: all right.
what have you got? juliette: i'm looking at australian company car sales.com. it is based in melbourne. it doesn't, i guess, trade that much in terms of volatility, but we are hoping for a big take up today. it is going to buy a 50% stake in a mexican rival, solo autos. this is a company as well which you can basically buy and sell cars online. $9 million investment. keep my'm going to winning streak alive. i don't know why you guys still try. angie: you have to send me the score sheet. vilene, it is a company that makes garments, but not for clothes. the ceiling of your car for example. velvet. what kind of card to you have?
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angie: missing the target. japan's current account surplus remains in the black but it is below expectations. under pressure. adds toand for goods the case for more stimulus from china. investor exodus. will the scandal and growing economic doubts have money on the run? welcome to "first up." i'm angie lau coming to you live from our asian headquarters in hong kong. the broadest measure of japan's trade with the rest of the world
has missed estimates. shery ahn, give us the latest numbers. shery: they are looking pretty good in terms of the fact that japan did manage to stay in the black in june as it did in the past year, with the current account surplus coming in at 558.6 billion yen. compared to the previous month, it is much less. ofmay, they saw a surplus 1.9 trillion yen. it also missed analyst estimates slightly. analysts expected about 700 billion yen. japan is being helped by weaker yen. that helped the country inflate the value of income, not to mention falling energy prices trimming the import bill. we are seeing a surplus in the trade balance. the balance of payment basis has also come in at 206 billion yen in june. a lot of it helped by abenomics.
felt: abenomics also being by the banks here. it seems that goldman sachs was head and shoulders above the crowd. shery: goldman sachs was a standout, but we also had citigroup, bnp paribas, societe generale performing very well. there were a couple factors helping them out. not only did we have optimism in the stock market, more people interested in equity trading, but also, japanese companies' appetite for mergers. we had this renewed interest in expanding overseas helping bolster these banks. if you look at goldman sachs, you have already 12 japan-related projects in the past fiscal year, including a 5.5 billion yen acquisition by dai-ichi life insurance. huge fees there. you can see their revenue
rising. citigroup as well boosting revenue. bnp paribas by 21%. we are seeing them increase , and also fees and commissions from investment banking and brokerage is at a four-year high. angie: shery ahn, thanks for that. it is a new day and a new trading week underway in the asian pacific. let's see how markets in tokyo are digesting the data from japan. zeb eckert is here with the early market cues and clues. zeb: let's take a look at what is happening with the japanese currency in reaction to those latest numbers. an early snapshot on the yen trade today, trading at 124.23. muted reaction, just under 0.1% move here. if you want to compare to how we finished the day on friday, this is what we have.
124.22. not a huge move for the currency. watch it very closely given this latest number we have out of japan. as for the equity markets, we have japan, south korea, and australia starting this monday session. new zealand is posting a gain. pressure,nikkei under down about 0.5%. from china, numbers ongoing concerns about the economy weighing on its main trading partners. australia looking at a very marginal move to the upside. oil prices are pulling back. jpmorgan has revised its oil price forecast, down by about eckstein dollars a barrel for west texas. we will get a check on that in a moment. in australia, watch the banks. we have bank earnings today. at the start of the session, looks like jb hi-fi one of your
movers to the upside. jb hi-fi in focus today. there's a lot of dealnews in focus. also, bank earnings. and anz, one stock to watch. the bank set to start trading. we have national australia bank coming up later. checking on the start of the tokyo session, nikkei looks like this. we are seeing zinc shares,, betty-related stocks moving to the upside. mitsui mining down 3.27%. nissan chemical under pressure. watch the breweries as well. they will be in focus, given a new tax that may be coming their way. checking on the kospi index, samsung cnt one of those most active shares. we are also following the department stores.
department stores falling short of expectations. you want to watch those stocks. also worthwhile to watch the duty-free hotel sheila in the seoul market. that's a quick check of what we are following. we will be watching china very closely as that market comes online. angie: thanks. checking other headlines, prada sales have missed estimates due to the slowdown in london and macau. in greater china, they slumped 19%. the company is cutting down on stores and producing more lower-priced bags in a bid to reignite demand. prada has fallen almost 30% over the last 12 months. holdings fellauto for an eighth straight week, extending losses as the website loses more than half its value.
slid 22% last week on concerns of a slowdown in chinese auto sales hitting sales growth. in july, china automobile dealers association said sales in china may fall for the first time in 17 years. hackers linked to china may have struck again, targeting the travel industry. sabr core processes reservations and says systems have been breached. american airlines is investigating a possible hack. sources say both and tenants are part -- both incidents are part of a recent attack on the u.s. --icymakers boost stimulus producers prices saw their steepest decline in six years. stephen engle joining us for more on that. a lot of people say this is evidence that the slowing growth in china is deepening. stephen: in the first half of the year, we were distracted by
the stock market surge that peaked on june 12. now, we are getting back to what has been the underlying fundamentals of this economy, the slowing pace of growth. the latest numbers we got over the weekend exemplify this. look at china producer prices. deflation for 41 straight months. worst sinceas the the fall of 2009, october 2009. the worst fall this decade. 5.4% more than expected. that deflationary environment continuing, showing weak demand at home and abroad. this comes against the backdrop of inching higher cpi inflation. you have to look deeper into inflation numbers. up, a little more than the previous months. most of this is pork prices. nonfood inflation remains quite
tame. that shows there is room for policy movement. it is well off the full-year target. angie: what are they going to do? they've already cut interest rates four times since november. stephen: they expect another rate cut this order, another cut in the rrr requirement at banks, perhaps as much as 50 basis points. there's also this news of construction bonds being pushed for that kind of stimulus, upwards of one trillion yuan. bridges,he old roads, that kind of thing to get that going. one thing that shows the picture on the export side, the external picture, which is worrying, the export numbers which were out this weekend. exports down 8.3%. the forecast for was a decline of 1.5%. exports to japan down 10.5%.
one bright spot was the united states. angie: not enough. stephen: it is not enough because authorities are grappling, perhaps they are grappling with the stable yuan. as regional currencies have been devaluing, the yuan has held steady. that has put china at a competitive disadvantage. angie: stephen engle, thanks for that. we are watching national australia bank after deposits rose last quarter thanks to lower bad debt charges. shares higher in early trade. nab shares have fallen 1% this year. you can get more on that and all today's top stories at bloomberg business, bringing together the best bloomberg business news, bloomberg television, and digital content all in one address. also on bloomberg.com, greece's
efforts to reach a bailout by tuesday. plus, the biggest change to diet pepsi in three decades. the silver can stays the same but a controversial sweetener is gone. that is on bloomberg.com. check it out. disappointing data from beijing dragged down markets today. our next guest says china has replaced greece as the top concern for investors. you are watching "first up." ♪
angie: checking some of the stories making headlines around the world, a typhoon weakens to a tropical storm in china. ,t least 14 people were killed with more still missing. earlier, five people died and five more were unaccounted for in taiwan. they include eight-year-old twin girls and their mother, who were all swept out to sea. also a firefighter who was hit
by a drunken driver as he tried to clear a fallen tree. 99 people have died and almost one billion people -- one million people have been displaced by myanmar's worst flood in decades. it has affected all but two of the country's 14 states. the government admits its response is slow and is appealing for international healtlp. japan has marked the 70th anniversary of the bombings of nagasaki and hiroshima with calls for a ban on nuclear weapons. survivors of the bombs that ended world war ii heard speeches denouncing new legislation that would "lead toward." 70,000 people died in the attack on nagasaki three days after twice as many were killed and hiroshima. markets trading here in the asia-pacific. let's look at how things stand
right now. indeed starting the day in the red. we are also seeing the kospi in south korea in the red, also with australian equities with commodities under pressure. our next guest says there is value in asia, but it is too early to be aggressive. joining us is adrian, head of asset allocation for the asian pacific at ubs wealth management. it is hard to feel aggressive today, but also on the heels of that chinese data over the weekend that showed exports slowing domestically. as well, imports are showing signs of slow growth. there's concerns here. >> it is clear that china has to do more. we see it in the data that are coming in. the experts are not coming to the rescue.
that is a problem for asia. exports are pretty weak. the pickup we have seen in growth hasn't really translated into better sales for the asian markets. china has to do more and china has become a vast market for asia, for many asian countries, so china is really key in the whole system here. we think the government will do more. there will be more rate cuts coming through, rrr cuts coming through. but it also looks like the transmission mechanism has been broken. the money is not ending up where it should. what they have to do is fiscal stimulus. we are pretty sure they have the willingness and the tools to do so. angie: is this the same china we are talking about? the first half of the year, it was great. there was pressure on policymakers to put the brakes on and they did, perhaps to the chagrin of a lot of people internationally. year, how half of the
does china play out for you? >> we stay neutral on china. the problem was at the beginning of the year, it was liquidity-driven but fundamentals pointed in a different direction. we think fundamentals still matter. we see some light at the end of the tunnel. we expect some acceleration in terms of growth and stabilization in the fourth order. for the third quarter, growth still remains quite frothy. that is putting pressure on the equity markets. but valuation is cheap. angie: do you keep your powder expectedait for more pickup, or should you look for some bargains now? >> at the moment, we are more on the sidelines. you see opportunities somewhere else. we like japan quite a lot. angie: a lot of people like japan.
it helped out goldman sachs quite a bit. not just inks good terms of quantitative easing. we really like the qualitative easing that we see coming through. share buybacks are coming through. cash on the balance sheet, that is 90% of the market cap. they are willing to pay back some of this money to the shareholders. costs are being reduced. that is freeing up capital. that is really what we want to see. angie: japan is interesting on a number of levels area their energies -- of levels. their energy sector is looking to restart one of their nuclear plants the great controversy. once these reactors start getting back online, how do you think that is going to help out japan's economy? >> energy is an important part. it also helps to lower energy prices. even if it doesn't come that
quickly, i think japan should be doing fairly well in this environment. japan is a pure importer of energy. that should help bring down costs and allow earnings to grow. angie: how about the trade data, was that disappointing or are you going to shrug it off? >> we should shrug it off. it is still a surplus. numbers are still actually looking good. i think it is a general phenomenon we see, trade data coming in pretty weak, particularly the export side coming in pretty weak. we also expect that europe and the u.s. will start to order more goods from asia. angie: we ran out of time, adrian. very quickly, fed, going to raise rates in september? >> we think they are good to go in september. angie: adrian, thank you so much.
we are watching the yen today as well. weaker than expected chinese trade data is weighing on the region. investors also digesting the latest japanese data showing the nation's current account surplus in june less than expected. expecting had been 6.3 billion. turning to europe, investors in greece begin their second full week of trade at the athens stock exchange. fullweek marked the first week of trading since capital controls were declared. the euro today will be in focus on news the greek government is seeking to conclude talks on a rescue program by tuesday. that will leave enough time for national parliaments to assess the deal for funds to be dispersed. bringing it back to the asia-pacific. in southeast asia, watching the malaysian ringgit.
this as the government releases the latest factory output numbers for june. that estimate is 14.3% for the expansion in factory output. we will be monitoring the currency amid the prospect of higher rates by the u.s. federal reserve. that is a check of the top stories driving the forex markets this monday morning. angie: foreign investors are losing confidence in malaysia, prompting the biggest fund outflows in seven years. scandal political swirling around the prime minister and growing doubts over the economy. let's go live to our southeast asia correspondent, haslinda amin. have we seen the worst? haslinda: not quite. further outflows are still possible. the sentiment is being eroded even more. let's look at the numbers. $3 billion put out by foreign
funds this year alone. the klpi is slumping in that period. there is concern of a crisis. the company will focus on growth. as it is, malaysia has already had a commodities rout. the expected rate hike expected to weigh on it as well. they can hardly afford to be distracted. the prime minister is fighting money madeions that hiits way to his account. statusa risks losing its as a safe haven in the region. for a very long time, political stability was its trump card. not the case anymore. it is damaging for the country. angie: as you said, the ringgit has been smacked here.
can the central bank continue to profit? haslinda: there's less ammunition to shore up the ringgit. malaysia's reserves have dropped below $100 billion, the lowest level since 2008. $96 billion, enough to pay for just seven months of imports. the commodities rout we are talking about, it is the only major oil exporter in asia. revenues down slightly. ringgit intervention is limited. say intervention will stop at $90 billion of holdings. that is the number to watch. angie: indeed. thanks for that, as haslinda amin out of singapore. markets trading in the asia-pacific and they start the day in the red and continue to extend those losses. nikkei trade data and current account surplus coming in below
estimates. that is shrug off a little bit, but still putting pressure on things overall. it is down 0.4%. 0.3% south korea is down as well as australian equities pretty much flat right now as we watch commodities very closely here and miners as well. coming up next, a squeeze on steel. china is flooding the markets, driving down prices, as the economy slows at home. more on that when "first up" returns. stay with us. ♪
top stories this hour, the recovery in japan came at a than expected. .hey excited a surplus stocks are down in tokyo. -- they have a surplus. stocks are down in tokyo. a large drop in exports. the steepest decline in six years. all increase pressure on chinese policymakers for more stimulus. exports shrank than a year ago here at economist have been expecting more modest ones. the cutsata indicates have get to spark a recovery.
fundsal chinese rescue has been one of the most influential in the main men market. -- mainland market. potential to add 300 billion more. they haven't announced the strategy. as a major stake in large-cap companies, especially at railway shares. more on that top story now. data shows china economic slowdown may be deepening. we have got group numbered news gotf joining us -- we have our bloomberg news chief joining us. this shows us the second half of china story is slowing the economy. >> that is exactly right. veneered away the
narrated the economy had. they really did inflate gdp. something up in the u.s. is one positive. had doesn't paint a pretty picture for china's economy. >> and not a pretty picture is the strong you on -- yuan here. problem.a that is what is hurting their exports. i guess the conundrum for policymakers is due to go for the stock and we did the great to? triggerporters who may -- the goal rush to get their money out of china. it is not a simple decision. tempted.ers will be
>> there are pluses and minuses on all ends. i didn't policymakers will address the issue? what do you think they will do? >> conventional monitoring on the seat has not yet been exhausted. they could encourage banks to lend them more. you can't force people to borrow if they don't want to. they have been putting money directly into the banks and issuing construction bonds. get local authorities building this project that will hire track -- heat them on keep them on track. it is one area we need to fly. >> thank you -- we need to watch. >> thank you for that.
should the surplus abroad affect prices? where is this going? >> good question. it has really accelerated this year with up to record levels. prices.ing down the steelmaker.biggest >> that is not good news. any positives here? is it temporary or permanent? there is a slowdown of china's economy. residential real estate.
less demand to make all those buildings. pricee seen a pickup of in china. on the other hand, if you have trade disputes around the world. thing.that is ubs is forecasting that china steelmakers may be ramping up output had a policy change. is there isoing on an event coming up in beijing very soon. the steel makers have to shut down ahead of the ramping up production. that is quite normal. >> flooding the market here in driving down prices. >> yes. china still market as setting
the price of steel for a long time. if you're in southeast asia or japan or india, the price of steel is being set of the chinese producer. >> there you go. thank you for all of them. >> warren buffett berkshire hathaway -- both divisions posted a loss. fluctuations.ncy there may be a pickup in the third quarter. sources say the company is considering adding more diversity to its direct this.
they are taking experience adjacent industries. life tricky. and set to have attracted more backing. kuaidi is seen as arrival of uber. some of the top corporate stories this hour. >> u.s. stocks will start the week having seen the longest slide since 2011. markets. a look at the -- let's take a look at the markets. will market break it seven-week losing streak?
raising the likelihood the federal reserve will begin raising rates as early as next month. friday's data in further expansion. jobs are in line with expectations. futures arend showing traders believe there is a chance that the fed raises rates in september. also nearing the end of earning season were companies reporting in the coming weeks investors will be pouring over profit s.sult the key u.s. economic that costs and retail sales and industrial production. investors are more than ever focused on the data. the debate on the rate hike continues. commodities will also eat in vocus.
after fireworks and a parade were attended i tens of thousands. by tens of thousands. the current prime minister urged singaporeans to press ahead and exploring growth. protests have been held at a japanese nuclear plant. plan to turn on the number one reactor on wednesday when final inspections are completed. 25 of japan's 43 reactors have applied for restart permits and were shut down following the meltdown at fukushima in 2011 caused by the massive earthquake and tsunami. china rescue funds have gone from obscurity to the biggest player in the market. .e know what it has been buying
this is interesting. we don't know what it will continue to buy. i think you look at what bloomberg is able to find out. with able to find some of these companies. holdingt up such a huge . these companies had to disclose that information to the exchanges. >> a public filing. you found them. >> yep. public record. anyone could take a look at. china security finances -- .ailways is a big part health care. food. technology. what are the names of these companies? top 10. we are sorting this based on the biggest of the funds.
construction. north of 3 billion u.s. dollars. you have a dairy maker. just rounding things out. health care. an investment holding fund. chemical producers. hydropower. 9 million u.s. dollars. we don't know what criterion is used by these funds. you don't want to short these. >> you don't want to short that against china. a lot of people are not familiar with this fund. this is the first heard about it since the melt down. it is a big deal. how is this fund? firepower, look at they've managed to borrow and from various agencies. it is one government agency.
it is holding everything together. just under half when trillion u.s. dollars -- just under half when trillion u.s. dollars. u.s. dollars. they are borrowing money. before, no one knew what it was. i didn't know what the agency did. out whichry to figure acumen to use for it -- we were trying to figure out which acumen to use for it. certainly very impactful what it has been doing. thank you. are making in china unprecedented offers to drum up
sales. at its lowest in four years. there is concern the discount .ill only make matters worse you have done the analysis. if the discount route the only way to stoke sales here? >> no. they can take a number of steps to lure in the buyers. the biggest one is the price cuts. some are offering maybe 0% interest rate. you have been helping the buyers
with insurance premiums. a whole host to rebate incentives they could use. i guess the slowdown is being felt. >> yeah. look upstream and downstream. everyone is feeling it. automakers will probably ask them to cut prices on parts. dealers are taking the brunt of it. it is not big enough to offset the mining their losing. to chinese consumers have to borrow money from banks to buy cars? >> their ability to buy cars is not just for the money.
the slowdown in sales fell through the wealth spectrum. tata motors said range rover's sales were down. commodity prices have come down. they are buying less cars. holding off. -- people are holding off. --with this version deflation is not a good idea. >> exactly. >> thank you so much for that. coming up, the company is government may be pushing for a tax in japan.
>> that is a live look of tokyo. the imperial palace there. we are looking at the nikkei 225. right now it is still 10th of 1% down after trade data. lower than expected. in sydney, it is those commodity producers. we're seeing a slump across the board. could say it has been the canary in the mine. let's check things out right now . investors are taking the money
off the table when it comes to emerging market. area are taking money off the table -- they are taking money off the table. celebrating their 50th anniversary of the city state there. no trading in singapore today. time for a look of the stories will be following. tensing goal post quarter earnings. earnings.st a quarter the ridges more than one million people. galaxy -- wealling are expecting galaxy note 5 and
edge. there is talk of a third device. what will it be? we will see. followinges have been since the galaxy six. we'll also get malaysia's latest gdp figures. they are dwindling in foreign reserves. on friday, it is potentially -- marking 70 years since the end of world war ii. he is expected to address historical relations with asia and his view on the future. china once oblique to apologize for militarization in the 20 century -- wants abe to
apologize for militarization in the 20th century. welcome to the stock exchange. let's check in with trading underway in asia. >> time for a drink. [laughter] that's right to japanese breweries. look at this. >> wow. i will have to mark up the score sheet here. you.ank >> i came in second. it is much straley and car sales company -- australian car sales company. can i show you the score sheet
here? 60%. hundred percent score. not today though. detailed. quite >> he has to try harder. and you did try harder. [laughter] >> thank you. it hasn't started training. >> stay tuned. it is good to see you. >> and you as well. [laughter] we have got china and all of that data. we are having a look at that.