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tv   Asia Edge  Bloomberg  August 30, 2015 11:00pm-12:01am EDT

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wrong? a troubled relationship that failed to produce a single success. angie: divorce. firm, thousands demand the resignation of the malaysian prime minister over corruption claims but he remains defiant. pragmatic politics. modi backtracks on a land plan after a backlash from indian farmers. plus, mixed messages. china plans to display growing military might while proclaiming commitment to peace. all of that and much more in the monday edition of "asia edge." i am zeb eckert keeping an eye on the asian markets, stocks are down broadly. china, concern about the u.s. interest rate hikes, all factoring in and certainly profitability of the companies affected. check out shanghai, a 3% moved
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to the downside, quite a reversal from friday where you saw the 5% gain and we saw that on thursday as well. on investor concern that the government will not arrest the falling markets. continued declines, bank of america with a new analysis saying we will need to see a 30% drop in the asian sharemarket to make it attractive to investors. in southeast asia, not a lot action with the philippines and malaysia shot. australia, closely watching that country ahead of the rba decision. the u.s. session because futures are not pointing to a strong open. take a look at the index futures. earlier we had daw a -- dow and nasdaq futures trending lower and s&p down 5%. futures earlier
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down as much as 1.2%. it will be another volatile session, one to end a volatile month. this will be a global volatile session starting in asia. rate decisions due from central banks with the fat of most anticipated. australia tomorrow is imminent and investors are looking for clues. central banks are confident that growth will pull inflation higher. commentsism follows from the fed vice chairman where he set a september rate hike remains on the table. in india, bond funds are betting that the r.b.i. will cut interest rates as early as next month or it the reserve bank -- month. the reserve bank is boosting sentiment. bloombergor spoke to
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at jackson hole. courtre is a bankruptcy which i think will be extremely important if we roll it out because if we can get a good bankruptcy code we can invest in long-term bonds which is absolutely necessary to finance the big things that the government plans. angie: the reserve bank of australia meets on tuesday and the policy statement will be watched closely for a shift on tone in china. let's get over to paul allen in sydney. we know that australia is exposed. what are we expecting to hear from the rba? : we are looking for words and not deeds. it is unanimous from the economists, none of them are expecting the rba to make any change from the record low 2%. the commentary about what is happening in china will be the interesting thing to watch. more than a third of australian exports go there so it will have an impact on australia.
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that said, there is nothing happening domestically that would cause the reserve bank to move. inflation is subdued and there is little expectation that the domestic environment would prompt them to act or it when we take a look, this is the informative thing. back before august 11 before the yuan got devalued and there was any of the excitement there was a 35% chance of cuts by the end of the year. that is now at 60%. the only thing that has changed has been the turmoil in china. the rbabe watching decision, not the number but for the language in the statement. angie: paul allen out of sydney. but draw all of the strings together with the chief asian market strategist at j.p. morgan. what do you think? rishaad: fed. angie: september? >> very volatile in the past
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week. if you look at the macro data, there is an argument for the fed to move in september. we have strong growth in the economy. to an a half percent in the second quarter. the labor market is gradually recovering -- 2.5% in the second quarter. the labor market is gradually recovering. holding it back. one is the inflationary pressure which they addressed in jackson hole. second is the market volatility we have seen. at the same time, we have seen that the market has gone down in the second half of last week. i still think that it is a close call for september. we did actually scale back my expectations on september but that being said it seems to be back on the table. the java data in september and august will be decent. b data in september and
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august will be decent. rishaad: 200,000 is what you would expect. but average wages, that will be the key part, because people are not getting the wages given the inflation in the pipeline. tai: there have been the ingredients for a more convincing argument and why they should wait and see. if you look at the productivity, it has been very slow. slow wage growth. a part-time job is more prominent. it is a chicken and a good thing because it is a lack of inflation pressure and wage pressure is limited. if we look at the macro data, we are getting a tighter economy in the states and eventually i agree with sally for sure that inflation will come. sally that inflation will come. truly they do it when they have the luxury of time or should they get into hiking rates? angie: do they have time or has
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the time run out? have they already missed the window of raising the federate, in the wake of all of the -- fed rate in the wake of all of the market volatility? in terms of the data, they have time to work it back into a more normal, non-emergency level interest rate. orchid volatility comes and goes and the truth is before last monday, we had a very subdued stockmarket in terms of volatility so it is difficult to pinpoint when volatility will come. what we have seen is consistent with the volatility we have seen in previous years. rishaad: it is interesting that they are confident that inflation will come eventually. it is bound to happen at some stage but mark, stanley fischer janet sending up the same message but new york and the central bank is off doing anything to
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normalizeta policy. i -- normalized policy. the question is if they will extend or step up the qe. we are starting to see the euro rebound which could be a threat or a headwind. the question becomes of the euro continues to strengthen from here on, which we do not expect, could that force the ecb to signal an extension to qa? and frankly the inflation is upset such a low level that the rebound is such an early stage. angie: it is early or perhaps qe is ineffective. take a look at the market in japan, take a look at europe in terms of growth, and you have got to scratch your head as to whether or not what worked for the fed is working right now for japan and europe. tai: in the case of japan, qa has -- qe has worked to inflate
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the price is but done little to drive the economy. in europe it is more successful. it made the euro weaker which is giving more breathing space and lending growth in europe has been revived. quality review at the end of last year where the banks from more comfortable about lending, all of this together has helped improve the liquidity flow within the european system. angie: the 800 pound gorilla in the room, china. let's get to that. in 20 minutes from now, we will join you. rishaad: what struck a on the stories, the malaysian prime minister standing firm -- let's check up on stories, the malaysian prime minister standing firm after protests.
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allegations of corruption and mismanagement. supporters say that the rallies have failed because they did not draw up ethnic malays. the japanese production fell in july, down 1% from june. economists are exciting a .1% rise. the economy struggling to recover from a contraction. stocks in tokyo are dropping back this monday. the topics set to cap off the lead. chinese leader's savior is no basis for the further depreciation of the yan. they said -- yuan. their able to retain it out a -- they are able to retain it at a reasonable rate. angie: what was that again? rishaad: you tell me. [laughter] angie: coming up later on "asia
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and soft diplomacy. china celebrates 70 years since the end of the war and neighbors are feeling a little nervous. coming up next, market movers. we did you look at the beijing investigation into the manipulation of stock. ♪
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athaad: four executives the nation's largest brokerage and a journalist and an official have admitted wrongdoing in the stock volatility. steve, what is going on here? who is responsible? they launched investigations and the police launched investigations of the regulator and this is what we have culminated in and that is basically masked confessions, if you will. not mass, six people in total.
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six executives including the managing director. have, according to the state mouthpiece, have admitted to insider trading. also the staff member. forging documents in relation to a property purchase which is not necessarily uncommon. a lot of documents that you need . ere are irregularities. to the that was added on insider trading allegations which now he has confessed to. also a journalist, the magazine, one of the leading economic, financial periodicals. wronglynalist admitting cporting on july 20 that the
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src was exiting the support measures. the government has been stepping into prop up the market. they say that the reporting caused panic and confusion and he is cooperating in the hope of reducing punishment. we have learned from people familiar with the situation that over the weekend 50 brokerages have been asked to accelerate the stock purchase program. rishaad: what has this done when it comes to share movement? any impact? stephen: we can look at the a shares and h shares in hong kong. down 47 percent. price to earnings ratio at single digits. believed again today down to the lowest level since may. bust has seen a roller coaster for brokerages and civic is suffering -- citic
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is suffering in the investigations. angie: let's get back to the markets with zeb and a look at what is moving in china. zeb: you just heard steve securitiesut citic and i wanted to give you a visual representation because mped year to date. shares and if we look at what is happening this is what you have, a 7.5% drop, further exacerbating the declines for citic securities. there are many others and let's look at how they are faring. a muted downward move in the hong kong market. h shares. citics what we have, securities down, another major security operation seeing a 3% drop.
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forward, a 5% drop for that stock. we have been focusing on banks given that some of these chinese banks have not seen profitability. bank,inese construction one of the banks that has been focused on, 0% profit growth. the bank of chama with a one -- china with a 1% profit growth. these are the hong kong listed shares. shares down just about 1%. we have seen positive notes with the chinese banks, some of them actually doing quite well, communications has been rising today but overall these concerns about the financial sector in china continuing to play through the markets. a lot of dislocation in this part of the market today. on the: let's check stories making headlines around the world now with as many as 120,000 people gathered in tokyo
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to protest against the plan to expand the power of the military. to alter of the pacifist constitution and a lot of japanese forces to operate abroad have passed the lower house. critics say that it will lead to japan becoming involved in foreign wars. toldyanmar opposition voters to ignore intimidation ahead of the election. is speakingureate in what she called a voter education exercise. the parliament has wound up the final session ahead of the vote. they are expected to make a gain but a quarter of seats are allocated to the military. is being asked to confirm commitment to the rugby world cup and the 2020 olympics. that after slashing the budget for the showpiece stadium. it has been cap that path of the original plan.
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cappedown from 80,000 -- from the original plan. changing the plan puts organizers under pressure to complete it in time. angie: coming up next, breaking up is hard to do. suzuki and vw go separate ways after a four-year romance that tears.n when we return. ♪
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♪ you are back with "asia edge." china has been reflected in big earnings reports with the chinese construction bank reporting zero profit growth and rising bad loans. $10 billion. another bank posted little change in profit growth as the government struggles to reinvigorate the economy. hires two engineers that fact a jeep to expose security flaws. the experiment caused them to recall 1.5 million vehicles. this is part of a campaign to improve security at the company. there are plans to invest more than $750 million in india, money they claim they are owed by the tamil government.
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are asking the central government to help them recover millions of dollars in subsidies. plant ina production the capital of tamil. declining to comment on the issue. a first-half loss of almost $8 million after suspending contracts with the parent company. during that stock surge that we ergy became the most valuable solar company end of that man was one of china's richest people but shares have been suspended since may when they lost half their value. even before the collapse, some questioned its relationship with its parent company with provided 61% of revenue. --ergy which provided 61% of revenue. suzuki's troubled relationship with vw is coming to an end.
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vw has been ordered to sell its stake, wrapping up a six-year relationship that devolved into a four-year dispute over the failed partnership. julia has been taking a look at where did it all go wrong. they love each other. >> at one time. look, it went down. it got nasty. suzuki agreed to buy diesel engines and they were quite upset about that. suzuki was a little bit concerned that they were not getting what they wanted out of the partnership. the partnership was essentially gethat volkswagen could into the india market and suzuki could use volkswagen technology. arbitrators are upholding the request and we are seeing shares do well in japan today so investors speculating that there will be an upside. thatard from the chairman
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the vast four years have been a valuable experience. he has come to realize there are different than suzuki with different fundamentals. let's listen to what he has to say. >> i am satisfied with the outcome of the arbitration process. it is like removing a small bone stuck in my throat. i feel refreshed. i do not think you would remarry somebody who you divorced. juliette: and angie, even in winding up the relationship, the companies are at odds. suzuki wants to buy back the that everyw says german bank looking after it and they do not know who the buyer will be. suzuki is facing the prospect of paying damages so it is not over yet. words divorce, anger, the about a divorce, kind of wondering for investors whether the next joint venture partnership means that suzuki does have to marry its partner.
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what of that? juliette: one analyst is saying that the culture of suzuki is not conductive to a joint venture. thatnother person says suzuki should focus on india operations and not worry about the title with other companies. one thing is for sure, they will not be working with volkswagen in the near future. angie: that is the much sure. thank you so much for that, juliette saly. we are looking for word to the afternoon session in tokyo, a morning that saw losses of just over 1%. the losses continue? find out after the break. ♪
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angie: asian stock markets have opened the in new york trading week lower with the original benchmark heading to its worst month in 2012. shares are decline across the region, led down by china where there is no end in sight to the slowdown. caused globalmoil trillion.$5 bond funds and india are betting that lower inflation will allow the r.b.i. to get a crease again.
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-- two get an increase again. rojan said central bankers have done pretty much all they can. malaysia's prime minister is standing firm after two days of mass antigovernment protesting. called for the prime minister to resign under allegations of corruption and mismanagement. the rallies failed because they did not draw a significant number of ethnic malays. rishaad: let's go to zeb.
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zeb: yes, tokyo falling into line. it is firmly a down day across asia on concern about when the fed interest-rate increase will happen. will china be able to pull through with the stock market and economic challenges? we are seeing some modest buying into carter right now. the philippines and malaysia close for a public holiday today. you're seeing the china concerns reflected in the astro in market today. watching some of these commodity-related producers, copper has pulled back. that is reflecting concerns about china. we are watching very closely. as japan returns from the lunchtime break, the nikkei 225 is lower. but the and is rising.
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is one of our star movers, up five. for -- five to 4%. see esai up. it is a decline for that stock. angie: the fed stanley fischer says he thinks inflation will move higher. he spoke a jackson hole but pointed out that he is not signaling an imminent u.s. rate rights. act. asked when the will i think the fed is assessing
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the news. they have a domestic case retaining which seems quite strong. inflation has a really picked up. they've got this messy global backdrop. that makes has been there since 2013. it is nothing new. september or is even potentially october comes into the frame. the feds made the public case for moving. -- areconditions are two too concerning for september. angie: the public volatility will prably shift the fed's timetable for tightening. >> we ended up on a relatively high note with about half of a correction recovered. however, the next half of that correction will be difficult for regain.arkets to obviously, the jackson hole statement over the weekend, they were relatively a beat on the u.s. economy.
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particularly fisher's comments. we're possibly bringing back a potential september fed rate hike. >> we see a reasonably healthy world economy and are quite prepared to take risk. angie: that was today's word from asia. rishaad: malaysia's prime minister is facing increasing pressure to step down after two days of street protests in kuala
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lumpur. what is it like today? how is the mood? today, it is more quiet, people are now celebrating independence day. it is actually quite significant that the rallies did not spell over into today, a very important and proud day for malaysians. but the protests over the weekend were some of the largest the country has ever seen. so if anything, the rallies did send a clear message to the prime minister. -- one protester told me he only wanted to send a clear signal to the government. the protested not draw a large number of ethnic malays who are
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the core base for the prime minister. the rallies were dominated by at the chinese. there is not enough ammunition for the opposition to claim that ms. is already -- that's the isority malays population against the prime minister. so we are not seeing a significant shift on the ground. but it is worth mentioning that we are seeing some growing division within the system it self -- itself with the foreman -- the former prime minister attending the protests. the civic movement in itself is a big deal for malaysia as more people take over social media and voice their concerns in public. of course, this public unrest is now complicating the outlook for the malaysian economy. already, foreign funds have
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dumped more than $3 billion. we are seeing the malaysian ringgit plunge for the 10th thely the klein -- decline longest losing streak since 2013. how has been the response has the government responded to the rallies? shery: the government has been quick in calling the rallies illegal, saying -- and condemning them. the premise or yesterday saying the government had to oppose the street demonstrations, saying that the government would not give in to this -- these instigators who could destroy malaysia. the prime minister has already talked about the economy, the malaysian economy, saying, you know, the malaysian ringgit has declined as well as the price of oil.
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and he said that is be on the government's control. the malaysian government has been strongly opposed to these rallies and they have made it clear that they are not representative of the majority of malaysians. rishaad: thanks. checking in on some other stories we are following for you right now, hong kong has been warned to expect a slowdown. the finance secretary says growth weakened in the second half. and a decline in tourism may have never's effect. tumbled amid concerns about china. hong kong has also become relatively more expensive as its currency strengthens while other asian currencies have weakened. netflix is dropping some high-profile move means -- movies.
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because it has decided not to renew its contract with -- apex investors are turning their back on alibaba for a small arrival. they have boosted holdings by 18% since the third quarter last year. in contrast, they have cut back on alibaba by a third in the same period. jd shares have surged more than 40% since last year. we've got china stepping back into the world spotlight with a ground -- a grand parade. abeident obama and shinzo will not be there. there is concern about china's growing influence in asia area
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this is generally how it's shaped almost. you look at the list and it is really only vladimir putin who is going to be there of the former allies during and they say, hey, we were part of this war as well. yet the former allies are reluctant to come along because they are worried about being getting -- about getting caught up in the propaganda. and that is the message about how we defeated japan, which still hasn't lived up and squarely looked history in the face. that is the propaganda department speaking. and i don't think you want other world leaders associated with this message. rishaad: that is the reason those former allies are staying away. this is also a personal thing. they seem to have a good rapport. bromance, but a
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bit of a romance. it is fun for the media to do a like that. she would like to continue to see relations between china and north korea, which are clearly at their worst since the end of the cold war. she doesn't want to see them getting closer again. the second reason she wants to go there is because she wants to broker a summit between china, japan, and south korea, which would be also for her own intentions a very key thing. it would present herself as a very powerful leader, particularly at a time when her own image and south korea isn't particularly high at the moment. the air is clean. >> the security is extruder. rishaad: there is an internal
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message, a message for the people, too. a there are a lot of very strong messages going out externally and internally. the internal message is the communist party is legitimate. the communist party is in power. and at the center of the communist party is xi jinping. he has amassed more power around him than any leader. and the other message is what he would be tried to do with the rate, remember, this is the first military parade to mark the victory over the japanese ever. we've had military parade before but they have always been on the anniversary, the 10th anniversary, the founding of the people's republic. this is a chance to not wait until when he 19. he can bring it forward and he can stand up and present himself at the center of the rejuvenation of china as a wealthy power. rishaad: thank you very much.
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angie: coming up next, the rescue mission. we will take a look at the cost of supporting the chinese stock market. a group discussion coming up after this short right. -- short break.
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leet 20-year-old assent to be foreign and has been charged with possession of explosives.
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police say they have no evidence of international terrorism, but rumors in bangkok claim that he belongs to [indiscernible] in china. comments came as he and senior party members discuss to the standoff and the damage caused by widespread flooding on the weekend. rishaad: got the hands even. let's talk about china. what do you make of it all? this is something stephen a heaven talking about as well. the zero profit growth. it is saying the things are not on an even keel.
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guess: that is not surprising, even with the economic slowdown. that interest margin has been compressed. their wealth management products have been more scrutinized. the way to make money for for chinese banks has become more challenging. and gives them a chance to expand into other areas, maybe investment banking. not the things are under a major threat, but the environment is going to be very difficult. zeb: how much more under pressure will they be and how long because of the provisioning ?or nonperforming loans tai: i think we are still going through those cycles, maybe for several quarters, for the next two or three years, especially when we have yet to see a stabilization of the economy. rishaad: there was a tweet earlier that china can blame a
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thenalist's story for market crash, but how can you explain zero growth at your big four banks. face it, it is a crisis now. of that is due to the economy and part of that is heart of the government's intention to make the banking sector more competitive. we had these huge, huge banks. they are going through a lot of reforms with net interest margins and lending rates coming down. all of that together is going to make money much more challenging seeangie: are we going to -- challenging. angie: are we going to see more intervention? ai: first of all, it is really many different institutions trying to do different things. it sends a confusing
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message to the market. authorities have not really gone through this. as a banking sector, that is something that the people's bank of china and the regulators have been working through in the last live for 10 years. i think there is a much their roadmap on how they should proceed. the correction is really just throwing in the kitchen. zeb: you need capital markets change or a roadmap in the consolidation. does a make sense? consolidate some of these banks. : we cannot consolidate anymore because they are already extremely large. but the smaller provincial banks have room for consolidation. larger bankshese can be more specialized in specific areas. not write them up, but make them responsible in different parts. banks continuese
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with a domestic focus. they serve chinese clients. zeb: but they are powerful. tai: absolutely. angie: how are you playing china? tai: volatility will remain high. we are trained to really look for opportunities where we are still seeing strong growth. we look at the service sector, power consumption, looking at the slowdown in electricity growth or consumption growth. the service sector is maintaining a respectable growth in that area. there are some bright spots in you have to look deeper and find them. stephen: you and i have been around a long time. we remember the banks in china
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the listing come of when they took all the horrible assets out. nonperforming loans on a historical basis, now are very low. by can we get into a crisis area? how much further do have to go? to a closeret crisis area, will likely get another recapitalization from the state, which they can afford. there is a thousand and one ways that they can roll the loans over. and therefore try to keep things under wraps. i think this will play out for a long time. hopefully, the cycle and china will have been turned around by then. we discussed this many years back. it is the system, how you do the risk management. you can keep warm water into the lock -- into the bucket, but you have to fix the leaks. the china bank space is not quite enough to compare
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themselves to what we have in the western standard. angie: is the boat going to sink? tai: i think so. and there are engines that are moving along very nicely. rishaad: thank you very much. angie: coming up next, hot off the press. latest toashion, the embrace the new world of 3-d printing. is it the fickle world of fashion? angie: it could be. from the catwalk to the catwalk -- from the catwalk to the closet in the push of a button.
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>> it is home to creation in concept but now the catwalk has taken designed to a new level. the red dress here was not's rich or sewn but printed. feeds an elastic thread through a 3-d printer. out the other and comes plastic fashion. >> the technology, the home printer let all of us to be able to wear this kind of stuff. it is not only for celebrities
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anymore. and it's not me. it's very flexible. you can sleep with it. you can wash it in the dishwasher. >> even for high-end fashion, the process is expensive. ais red jacket cost to an half thousand dollars. not to mention the 2000 hours worth of printing time. theg is confident technology will become more accessible. >> so i think in a few years, it will be much more reasonable. designedconsigns her strictly to customers. anyone with a design can print it was a fashion at home. with the cost of printers though theykly, will not be the latest 3-d fashion for much longer. angie: i don't know if i would wait that long. rishaad: 2000 hours? angie: for a plastic jacket.
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rishaad: i imagine it is reflected in the price if it's fence -- if it spends $2000 making it.
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>> quick cuts, always lobby. ordinary table saws, big costs and zero afford ability. here is a workshop that is portable. it is new deal -- the all-new rockwell blade runner 2. it is lighter weight than the original blade r


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