tv Trending Business Bloomberg June 5, 2016 9:00pm-11:01pm EDT
♪ it is monday, the sixth of june. this is "trending business". i am rishaad salamat. ♪ rishaad: right, we will visit beijing in singapore this hour. japanese equities declining the most in a month, casting a long shadow. the week's report in six years sending the dollar plunging. piling the pressure on exporters. progress,s made great but jack lew says last year's
devaluation was confusing. -- repeatingeading his claim to china south china sea. let us know what you think of our top stories. follow me on twitter @rishaadtv, include #trendingbusiness. shanghai, shenzhen, and hong kong reacting to that u.s. jobs report. here is juliet. what a disastrous number for that payrolls number. we are seeing weakness come through from a laser on the open. singapore opening higher. from malaysia on the open. singapore opening higher. most of the weakness coming through from the nikkei 225 as the yen holding near one-month
highs. this is a story of dollar weakness. the likelihood of a june rate hike in response to that jobs number now only 4%, down from 30%. the likelihood of a july hike down from 50% to 27%. down 1.4% with the yen holding on to those highs. australia, up by a third of 1%. gains from gold players. that shows you how much there is in terms of risk off sentiment. investors flocked to that safe haven gold price. zealand closed today, also korea for a public holiday. hong kong will be close later in the week, so an abbreviated week
for investors in this region. the yen did have a pullback in early trade, but we are seeing it near those highs. weakness coming through out of the aussie dollar ahead of the rate decision tomorrow, down .5%. all of this in response to that payroll number. the china-u.s. dialogue about to get underway with an opening speech from the president. jack lew saying china is moving in the right direction on the yuan, but needs to improve its communication skills. tom mackenzie is at the dialogue this morning. what do we expect? it is good timing because the opening ceremony has just got underway. we are expecting the opening
remarks in a few seconds. lew about hisjack priorities for these talks and the u.s. perspective, and he talked about the reform agenda and importance to seeing some action from the pboc. and of course greater market response -- market-driven exchange rate for the renminbi. he said more work to be done. let's take a listen. sure that themake commitment to moving in an orderly way to more market determined exchange rates will stay a firm policy as there is up and down pressure and that it not become a one-way policy in the future. but i think compared to where we , we just a few years ago had seen real progress.
i don't know if you can see behind me, but the president has just taken the stage to kick off -- thelogue between priorities on lifting tariffs that the u.s. has imposed on chinese steel imports and getting market economy status. in december this year, they are expecting some tension over that. that would make it much harder for the european union and the u.s. to pursue antidumping sanctions. jack lew was also very focused on this problem of overcapacity, particularly steel and aluminum industries.
said it was distorting and impacting china's future growth patterns. he says that is a top priority now. and market reforms that would allow u.s. companies to get into sectors like financials, logistics, and telecoms, all difficult for u.s. companies. president she thing is kicking off his remarks and we will be following it throughout the day. he just started talking there. behind all of this are the geopolitical tensions as well. are providing a negative undercurrent, aren't they? that is true, i think, to some extent. john kerry is here to focus on those geopolitical issues, while
jack lew is focusing on those financial issues. of course, incredibly expensive -- significant expansion by the chinese authorities in the south ,hina sea, building up islands putting into place anti-aircraft weapons. in may, we had a close call between chinese fighter jets and a u.s. spy plane went all aircrafts can close together. we have heard warnings that china was building a great wall of self isolation because of its south china sea policies. then of course things like cyber for thee, a top concern
u.s. in particular, but south china sea is shadowing these talks. secretary kerry will be pushing hard to get some answers. rishaad: we will get right back to you. we want to hear what the president has to say as he inaugurates this dialogue taking place. that is the chinese president. xi: we issued three joint statements on climate change. we work together with other countries for the conclusion of the historic paris agreement. maintained executive communication and coordination on hotspot issues like the korean nuclear issue, iranian nuclear issue, and afghanistan
in syria. cooperation brings tangible andfits to both countries has given a strong boost to , and, stability development of the asia-pacific and beyond. losing the audio there for the time being. as thatbe back u.s.-china dialogue takes place. economic cooperation, market transparency, cyber security, key topics. muchmportant is it, how have the chinese authorities flagged this up? tom: right, that's an
interesting question. there has been criticism that this dialogue does not achieve very much. people point out that economic -- geopolitical tensions jack lew says it is a very important for him. he is able to pick up by phone and speak with the chinese colleague to address these concerns. hisas able to address with chinese counterpart back in august. the importance of this relationship, but the fact that the president is addressing the opening right now shows the level of importance that china puts on this. i talked to the brookings institute, an analyst there was a level of there is
importance that china is putting on this, but they are aware of the u.s. political calendar. they will be doing with the new administration. china is they will be dealing with a much tougher president, whoever that is next year. a much tougher white house on all of these issues, trade in particular. that has been capitalized on in many ways by the likes of donald trump and bernie sanders. next year is a very important year because the chinese parties people's congress promises leadership changes as well. itmeans that to some degree has been muted.
significantl a very set of talks here in china. just how much progress they will be able to make is the key question. you for that. tom mackenzie in beijing at those talks. the chinese president speaking as we talk about the relationship a true in washington and beijing saying they have made achievements in cyber security and military cooperation as well, talking about the two countries needing to respect each other. it is fairly broad ranging best far. let's see where else he is going with it. years, sinceast the establishment of diplomatic ties, china-u.s. cooperation has grown steadily. it is bringing real benefits to our people. a wini to embrace
movepolicy and ahead. we had to make sure the summit delivers positive outcomes. it is important to conclude a mutually beneficial investment at the earliest date to foster a new highlight. it is important that we deep the exchange incorporation in climate change, development, cyber issues, counterterrorism, ,onproliferation military-to-military relations and law enforcement. to step up communication coordination on major international and regional
issues as well as issues of global significance. this way, we could bring more real benefits to our people and stabilityeater peace, , and prosperity of the world. u.s. need to properly manage differences on sensitive issues. each with itsu.s. own uniqueness are different in terms of history and culture, social systems, and people's aspirations. differing views are hardly .voidable in fact, in this world of diversity differences among countries are natural. members do not always see i to i.
eye.e to one should not be afraid of differences. it should not be used as excuses for confrontation. differences that could be addressed and redoubling our efforts. for those differences, that cannot be settled for the time being. we need to manage them in a pragmatic and constructive fashion. need to put ourselves in each other's shoes. as long as we observe the principles of mutual respect and will be able to overcome obstacles and prevent
major disruptions in bilateral relations. u.s. need to increase communication and cooperation. it should be a stage for inclusive conversation, not an arena for competition. china pursues a neighborhood diplomacy of sincerity commission benefit, and inclusiveness, and is committed to advancing peace and stability. the extensive common interests between china and u.s. in the asia-pacific make it possible for these two countries to keep frequent corporation, have jointly address is inclusiveat
rather than exclusive, and both countries should play such a role in the stability of the region. need to have u.s. friendship among the people. friendship and exchange among the people provides constant driving force for growing relations, mutual understanding and friendship, providing a basis for the growth of china-u.s. relations. i visited the u.s. many times. i remember the lovely children i met when i was in america and my friends in ohio. they have friendly sentiments towards the chinese people. , 500 millionne visits were made between people
of both countries. build mored to do is platforms and facilitate these exchanges and the friendship between our peoples to go on from generation to generation. german, friends -- gentlemen, friends, distinct s, china willguest continue to build a party of moderate prosperity, strengthen the rule of law. china's development will be guided by principles of coordinated, green, open, and share development. china will redouble efforts to promote supply-side reform, shift growth models, and achieve
better opening up. goals confident that our for economic and social development will be met as planned. china's development will mean more opportunities for the world and china will have closer cooperation with the u.s. and other countries. committed to the path of peace for development. china calls on all countries to follow such a path and work to promote a new model of international relations cooperation toin foster a community of a shared future. china will strengthen cooperation with other countries and jointly uphold the thernational system with
purpose and principles of the united nations charter at the core. working together, we can make the world a better place to live in. guests, ladies and we haven, friends --yed a significant role deepening friendship among the people. i wish to express heartfelt to people from all walks of life who have taken a great interest in and acted to support dialogs. in the phone three days, our teams will make persistent effort to achieve consensus and
produce more deliverables in the talks. the poet in china once wrote mountains could not stop the river from flowing into the sea. travel aall rivers meandering course before reaching their destination. u.s., as longthe as we stay focused on our goals and persevere in our efforts, we will be able to make greater benefits,ith greater not just to the people of our two countries, but for the people of all countries in the world.
a complete round success. thank you. [applause] distinguish representatives, ladies and gentlemen. please rise. rishaad: the chinese president leaving the auditorium after that speech. china-u.s. talks taking place in beijing. he was talking about the differences between the u.s. and beijing, saying they need to
shelve those differences and find a common thread. they were making progress in fields of cyber security and military cooperation as well. this is what we have at the moment. we are trying to smooth over any cracks that exist between the two countries. chiefly as regarding geopolitical tensions in the south china sea. not are saying they should have confrontations and should respect one another as well. they talked about reaching new progress in some of these bilateral ties as well. the chinese president leaving the auditorium. air, thehave been on pboc has gotten into the mix and added more liquidity to the system. some 40 billion yuan in the form of reverse purchases, seven day reverse repurchases.
to get someo liquidity pumped into the financial system in china. the chinese president highlighting the importance of the strategic dialogue between the two countries. economics, butut alluding to what is going on with these geopolitical tensions we have been discussing. the chinese president saying that china will provide more opportunities to the international community and also what he was saying in reference to the chinese economy is that they would redouble their efforts on the supply-side reforms they have announced, and in some cases stalled upon here. we are talking about structural reform taking place in china. that is what we have at the moment. now some of the other things he has been saying, talking about redoubling those efforts, fairly light when talking about the
economy, but more about cooperation between the two countries on various different levels, particularly when it came to mutual understanding. right, let's have a look at some other stories making headlines around the world. india will be looking to strengthen ties with united states. president modi meets president obama this week as part of a five nation tour in the united states to begin in afghanistan on saturday. he helped to open afghanistan's andest hydroelectric dam will discuss new to power when in switzerland. he will make a speech on capitol hill and meet business leaders before finishing in mexico. frankfurt airport is being sold to an unidentified buyer from china. the state owns an 85% stake in the airport. department aviation and others are known to have been in joint talks.
reports do not name the successful bidder. the storms have battered east coast of australia, forcing residents in low lying areas to leave their homes. emergency services receiving thousands of calls for help. flash flooding and strong wind brought down trees, waves as high as 13 meters have been recorded. dozens of motorists had to be rescued after ignoring warnings not to drive through those floodwaters. take a look at one of asia's biggest security challenges and latest efforts to diffuse what could be the biggest flashpoint in the region -wide territorial dispute. we get the markets in hong kong, shanghai, and shenzhen getting underway. awful readbout that
♪ rishaad: a look at our top stories. , concern over the u.s. economy, the yen near delhi. -- a high. taking on the fewest workers in six years, denting prospects of a fed rate hike this month or next. the aussie dollar spiking on that news. the chinese president opening a summit with the u.s. in beijing, warning against confrontation. the chinese president noted
achievement in cooperation and the conclusion of an investment treaty. this is overshadowed by claims oversputed 80% of the south china sea. saudi aramco has raise prices for sales to asia and the united states in july. the official selling price is $.35 a barrel higher and $.60 above the regional benchmark, less than the 40% increase forecasts by refiners and traders last week. the chinese president formally dialoguehe china-u.s. in beijing, saying the two countries need more opportunity to build trust and two side should respect one another and the pacific ocean should not be a battlefield for competing views. tom mackenzie is at that dialogue. it was a positive message, wasn't it? tom: it was.
as i'm speaking, john kerry has taken to the stage to make his address. the chinese president pointing there progress and hoping will be more positive dialogue in the next two days. he pointed of course to improvements on things like cyber security and maritime issues. tensions are high between the u.s. and china around the south china sea. this is a few weeks before the u.n. arbitration panel makes his decision on the case between the philippines and china. sent and the u.s. have diplomats around the region to rally support, but the chinese 'sesident also outlined
priorities, saying he wanted to continue peaceful development of the chinese military and increased dialogue with his u.s. counterparts. treatyateral investment the u.s. has been pushing hard for, he mentioned that as well. the u.s. has been waiting for the chinese to produce a negative list of sectors where u.s. corporations would not be able to invest. the u.s. are keen to get this bilateral treaty off the ground. the chinese president suggesting that it would be a priority for the chinese as well. he said we need to shelve our differences and find common ground and said the pacific should not be a battlefield for different parties after this great build out in the south china sea. he said he would redouble efforts on supply-side reforms. we have been hearing that
consistently from the chinese government, but questions leaders around the world want to know is how much progress is being made. when we spoke to jack lew, he said we need to know the timing of these reforms, the speed of these reforms, so those remain vague questions from the u.s. side -- big questions from the u.s. side here. president said he would redouble on the supply-side reforms. he said that china would provide more opportunities for the international community to invest in china, a key priority of the u.s. side, getting the chinese to open sectors like finance, telecoms, and logistics. it is very hard for western firms to get real play in those sectors. the u.s. is a much more open
investmentshinese have a lot more room to maneuver in the u.s. the chinese would say that some -- that is aies concern from the chinese side. the chinese side also be pushing for terrorists to be removed on steel exports. that seems unlikely from that seems unlikely from the u.s. perspective. china also was to have market tied tostatus, that joining the wto. the chinese saying that 15 years on they should be labeled an economy market status. that would make it more difficult for the united states and european union and pose
sanctions on them for dumping. rishaad: john taking to the lectern now. john kerry taking to the lectern now. we are having a look at reaction from shanghai to hong kong as they open up. juliette: a little bit of hivergence between the a and share markets. really following on from that negative lead we were expecting with that payroll number out of the u.s. if you have a look at some of , itlosers in the hang seng is the casinos. that is playing out there. on the a share market, pretty flat at the moment on the shanghai composite in early trade. those industrial
players showing some strength there. elsewhere, japan beating the weion lower, down by 1.3%, see the yen hold onto one-month highs and gold stocks lifting the australian market today, australia and new zealand -- ofea i want to show you some the movers we are watching on the hong kong and china markets today. we have seen beijing capital open higher by for tens of 1%. we have also seen home prices in hong kong fall by a 10th of 1% over the course of the week. this should be an interesting one to watch, although unchanged at the moment. nter milannveil its i deal today. down.t also reference rate has been not asrengthened, but
much as predicted. it was calling for a 1% strengthening by the pboc. the offshore chinese renminbi down by .25%. that china expecting foreign reserves in may could hold levels. that could suggest the pboc was intervening less and letting the yuan slip with other asian currencies. the offshore renminbi -- and having a quick check of markets, weakness in hong kong. china has turned negative as well. rishaad: thank you. we have been hearing from the chinese president, and not your china-u.s.e
strategic dialogues taking place. i head of that form, the u.s. treasury secretary spoke to discussing the challenges ahead as the economy transitions from manufacturing to consumerism. >> what i think the world saw was something that was confusing. it was not well communicated. it gave rise to fears that china's economy was in a much weaker place than it actually appears to be or what perceived by policymakers to be. china's economy is not as interconnected to the global financial system as the u.s. or the european economy. what is very much interconnected are the flows of purchases, imports and exports. if you are an exporter from an emerging market of raw materials
to china and you think growth is dropping even faster than it is, that has a huge impact on what you think the future looks like. policy the world saw a that was by the government here meant to be a move to a rate,-oriented exchange but it was interpreted as an attempt to drive down the renminbi because of fears of economic weakness. morethat was communicated clearly, it kind of settled out. it underscores how important it is. china becomes more adept at communicating its policy path and its analysis of its own economy because the world and markets are hanging on what china thinks is going to be the next step in its economy in so many ways. >> have you made that case to
your chinese counterpoints? >> i've had many conversations theugust, the week of disruption and markets. week andvacation that was on the phone with china for much of my vacation, first asking them to explain what they had done. when i understood what they perceive their action to become i immediately said that that is not what the world saw. >> they were receptive to that? days, but them a few the deputy governor of their central bank went out and offered a much more clear nation. that started to help settle things down. he gave a long interview where he explained the views, that helped. the thing about communicating government policy is that we know all too well and the united states that it is not something you do once. is wondering world
if things are the way they were yesterday, are you on a new path. it is something you have to keep at. rishaad: our exclusive interview with jack lew there. on some other stories. softbank getting serious about improving its bouncing -- balance sheet. planning to raise 10 they in dollars from selling the company stake in alibaba -- a $10 billion stake i'm selling the company's shares in alibaba. has reiterated its claim to most of south china sea. a meeting of defense chiefs and singapore, the chinese struck a more conciliatory term. he said that china would ignore an upcoming arbitration ruling sought by the philippines and hinted the united states should keep out of the area.
the philippines finance secretary says the new president will build on recent economic gains. froms made headlines strong language and anti-crime rhetoric. he said he is developing tax reforms that will create a more equitable system. these brackets that have been developed were developed him was guess throughnd i the years because of inflation that it has become rather in -equitable and we want to make the tax system more equitable. example,rackets, for probably they will be much higher than the 500,000 peso cap they have now. that will also be a reduction in revenue. rishaad: stormy weather ahead for the markets.
445 p.m. in baghdad in iraq. the iraq he army securing the southern part of falluja. coalition airstrikes now pushing on. falluja is one of the militants last strongholds. they now control less in the mosul.west, and in polls suggestt more britons favor leaving the european union. the survey found 45% of voters would choose leave.
41% said they would vote to remain. the race has tightened in the past week, spooking some investors who had bet the remain cap will win. public in the initial offering of its hotel unit for lotte. the ipo was today, and no new date has been set. there is a bribery investigation into one of its executives. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. right, let's have a look at what else we will be looking at for you in the asia-pacific. tuesday, interest rate day decision in australia. economists 24
looking at a rate rise. debtor and gdp growth in the first quarter. -- better than expected gdp growth in the first quarter. pele putting a wide range of memorabilia and prizes up for auction. the lots include a replica of the original world cup you to him for his third victory. the sale is expected to raise $7 million. on wednesday, asia's two biggest economies, china's met exports dropping 4.6% from eight year ago to two sluggish demand in japan partly. economists we have been talking ofour expecting expansion one half of 1% to the end of june. on thursday, finance officials from asia and europe will meet.
they are expected to focus on ways to boost global growth, trade, strengthening financial regulation, and combating money laundering. our next guest is seeing stormy weather ahead on the markets. senior investment strategist at oc bc bank. i think there will be turbulence. ahead, fed policy is still unclear with the job numbers last friday. there will be concerns over the economy. you have breaks it down the road. you have chinese economic data showing some weakness. then you have the u.s. presidential elections. that is going to create some concerns in the market, so quite a number of headwinds ahead. the market has had a good run.
the msci index has rebounded since early february. going ahead, i think they will run into some choppy waters. rishaad: it's all about that nonfarm payroll report dominating sentiment on friday in european and u.s. markets. the thing is, this number is somewhat of an outlier. could we seek is as usual next month? >> you look at how the asian markets are performing today. they don't seem to be too perturbed by what came out of the u.s. on friday. it could possibly even be one off. it does not add up if you look at other recent economic data. it does not sync up with the u.s. job numbers. claims coming in below 300,000. since 1973.streak
april consumer spending at the 2009, so aace since lot of indicators pointing to the fact that the economy is doing quite well. is veryployment rate low, so it will be harder to add on as many jobs as it did in the last few years, so i would not the too perturbed by the job numbers. i am slightly skeptical. rishaad: what do you do in light of this? you've had a bit of recovery when it comes to the asia-pacific markets. gold was the firm winner, does it not? does it remain a winner? >> we are skeptical on gold. has had a good rebound and surprised everybody on the upside. role could seet about $1200 an ounce in six months and go below at the end
of 12 months. once the fed starts hiking rates and the dollar hence higher, risk appetite picks up a little bit. gold will lose some of its strength. rishaad: well, yes, of course, this would also mean more dollar stagnation, or what is it mean? what are the implications for the dollar? what happens next? dollar will tread water and may weaken a little bit. it had a good rebound in the last couple of weeks. you had fed governors coming out saying not to write off the rate hike in june or july, but that does not seem to be happening yet. i think you can't write the dollar off. it may treadllar water and weaken a little bit,
but going ahead, economic data in the u.s. will pick up. the fed will sound more hawkish, and that will help the dollar regained its footing. rishaad: not if we get another jobs number like the one we just had. jobell, you know, if the numbers will continue to show weakness, i think that will be bad news for the u.s. dollar, but interest rates in the u.s. are so low. the fed has to normalize rates, and the fed knows it. i suspect the fed will. once the market appreciates that, i think the dollar will rebound. theas much as it has in past few years, but it will regain footing. rishaad: great to talk to you as ever. we have to take a break. ,oming up, frustration building the company could walk away from
of and: the chairman giant says it may abandon a $15 billion development. it adani will walk away from the carmichael mine. tell hows difficult to likely this will happen. ani chairman expressed frustration at all the environmental delays. the environmental factors are many. there is the dredging of the point,rminal at abbott
so that has been a bone of contention for environmentalists. impact on the water tables for capital grazers in the area. , $16 billionhuge to build, railway, port expansion. i it could create 5000 jobs. does it all stock up? the queens land treasury has already called it on bankable. a number of austrian banks say they will not be involved despite not being asked. if you look at the economics of the situation, that could be a 's comments asi well. whetherto wait and see this is preparation for a face-saving exhibit or what indeed. rishaad: coming up, despite the
the company is now valued at $16 billion. lotte group postponing the idea of a hotels division. the offering would have been the biggest in the world so far this year. our top stories. japan waskets, driving the regional index down last time we checked. i think things have changed. >> we are seeing the regional index in the red due to weakness from the nikkei. we are seeing gains across the rest of the region. hong kong near flat. south east asia looking good. australia up .7%. thanks the crude oil price for that. we are seeing miners and goal do the heavy lifting.
a-shares down .1%. in hong kong, we have seen a switch around with the hang seng. day in a rowenth with the h-share market higher. we have seen weakness from casino players, downgrading galaxy entertainment. surging. the yen is nikkei down 1.2%. this is all to do with dollar weakness. there is a 4% chance we will see a fed rate hike in june following disappointing payrolls numbers out of the u.s. on friday. 27% chance for july. it was 60% for the numbers came through. cinemas, sed wanda
urging after the daily limit. gold players are really surging on the gold price. 10%. group down almost there are signs of an oversold signal. rish? xihaad: she's in pain -- jinping saying the u.s. and china need more opportunities to build trust and the south pacific should not be a battlefield. a positive message coming from the president there. it was. is -- behindbarney me is jack lew. jinps she's in pain -- xi
ing who kicked off talks of political changes in china. theshadowing the talks is tension in the south china sea between the u.s. and china, where china is aggressively expanding territory. stressing the need and desire for peaceful development. take a listen to what he had to say. china and the u.s. new to increase communication and cooperation over asian pacific affairs. the south pacific should be a cooperation,lusive not competition. china sea, weh are expected to get the conclusion of the u.n.
arbitration panel that has been looking at the case. there has been tension over that. the chinese have also said, look, we do not respect to the panel. we will not respect the decision. we think it is biased. jinping is stressing that china is offering a peaceful ri se. we have madeid, progress on things like north korea. we have made progress on iran. we can make progress on this area as well. ng also addressed economic concerns of both sides, saying they would increase supply-side reforms moves. that would be welcome news. says the question of
overcapacity, aluminum industries are of particular concern. ing said there would be more openness to the international community to invest in china. news, asd be welcome would his comment on the bilateral treaty that u.s. and china have been working towards. the u.s. has been frustrated the treaty has not been signed. brought itat jinping up suggests it is a problem for the chinese as well. they are going to try to iron out some of these differences as they go into the next day here in beijing. there injohn mackenzie the capital. group has delayed the ipo of a hotel business after senior
executive was caught up in a bribery investigation. this would have been the biggest deal in the world so far this year. what went wrong? what is going on? isbasically, what you have real life drama unfolding. dast year, you have to feu between brothers. now you have the korean lotteutors raiding hotel with regards to the company and one of its executives. of one of the chairmen, basically allegations they took bribery. rishaad: this is pretty damaging. ipohey permanently put this off? >> it is premature at the moment. according to a korean stock exchange spokesman, this
investigation in itself will not significantly delay the ipo. the market has already been delayed. of course, it will affect valuation of the company. rishaad: how damaging is it, is the ultimate question? >> some probably see this as a way to bring the valuation of the company to buy it cheap. it is still a company that is $5.1 trillionear last year. rishaad: that is where we are with it. so we just watch this? >> is early, but more things to come. rishaad: thank you, regina. an interest rate decision taking place, i believe, this week. india's central bank to be doing that. it is about the future at the
rbi. we have those stories and some of the others we are covering. . is expected to hold its benchmark purchase rate at 6.5% tuesday. the rbition is whether chair will serve a second term. speculation has been swirling about tension between him and some politicians. he has been credited with bringing inflation under control during his time as governor. nestle is expanding in china as e-commerce, on alibaba's t-mobile platform. products like powdered chocolate are not available in regular shops. nestle has met long-term sales targets for four years.
in china, sales increased 6% last year. saudi arabia says demand for cr ude has raised prices on most grades on sale to the u.s. and asia for july. it is now $.35 a barrel higher than the regional benchmark for sales to asia. the 14%still less than increase forecast by refiners and traders in a survey last week. rishaad: thank you. coming up, set to walk away from a multimillion dollar development in australia. and next, not the place for a barbie. domestic asia is more expensive than other major markets. ♪
rishaad: it is going to take more than the world's deepest stockmarket selloff to return china to a place for bargain hunters. valuations tower over other markets. early to jumptoo back in? yvonne: i do not see a bull market happening. tc see government intervention that has propped up stock practice -- prices despite the fact they continue to shrink. earnings are down 13% on year. the biggest risk is investors' psychology changing. we can see following june and january, we are well below the psychological line in the sand. compared to the rest of the
world, it is not cheap. it is three times more expensive than every other major market worldwide. medium ratio is 59 on the nation 's exchanges, higher than the other countries on the chart and higher than u.s. tech shares at the height of the dotcom boom. we see corporate default spreading. yuan trading near a five-year low. it is a gloomy outlook. perhaps the clearest indicator is this a-share and premium. how does this connect to the domestic market versus the international? we are at 834 market premium versus the h-share in hong kong. another way to look at this, this number is actually smaller in some scales. think about this as equity. you still have bank stocks with
a greater rate on the index. the price gaps are much smaller and brings the number down. the equal weighted average could be as high as 90 times. it is interesting to see there is possible distortion or disconnect that we see in these two markets. some are saying the fundamentals are still poor. it looks like it could be getting worse. rishaad: the thing is that sometimes people ignore all of that. they do not really worry about valuation. yvonne: in terms of brokerage analysts, they seem to be more bullish. they see a 13% rally in the next few months. some things to look out for, the prospect of the hong kong shenzhen connection, the inclusion into the msdi indices. when it comes to government intervention, china security's
$77nce still has at least billion of mainland equities right now. some say that scale could be bigger because the cash is not all publicly disclosed. rishaad: thank you, yvonne. china's chief strategist is with me now. i think you are looking at it and going, that is your point. >> the mainland market is always more expensive. the fact it is so much more expensive than the rest of the world is not news. rishaad: right. how did they get in this position? you maintain they will recover. >> given time, everything will recover. the price will recover.
the capital in china is largely closed. the domestic investor, it is difficult for them to continue globally. easyow valuation is not for the investor. picking in thep local chinese market, they have to use to mastech stocks -- domestic stocks. rishaad: you have also done research to find a bottom. where is the bottom? >> people tend to look for a bottom on the horizontal level. across 1996a line all the way up, the market tends to bottom every 10 years. it has been going up 10% per annum compound. that happened to be the growth target ever since 1996.
the 7% target is set in many five-year plans of china's development. rishaad: you are saying 7% of the market? >> right. each year, the market tends to grow at a compound rate of 7%. rishaad: the point is you average it out. you get these massive moves to the upside and it does not do anything for five years. >> also true. -- the closer it travels to the baseline, the more it can support. level, start at the 2000 2014, it sat at 2000. 7% three times, you would get 2100 or thereabouts this year. rishaad: ok. -- there are not many opportunities for those on the mainland. they can invest in hong kong. the thing is, we always wondered
why this premium china has over a-shares has not narrowed. something has to give, surely. >> that is right. caps come down this way, which is good for the hong kong market. quota onind there is a the shanghai program. they have to raise the quota. too small to make a difference. rishaad: there are other ways to get the money out, art there? >> the underground. it is getting harder to come out of china as well. seng.d: look at the hang how closely are you watching that? it has got a decent price to it.
amongst the lowest in the world for a major index. >> many people are still waiting for the fed to make a move. if you get into hong kong stocks right now and there is a sudden rays of interest rate, it would make a huge impact on your stock portfolio. rishaad: what about your clients? what are they looking at? >> people tend to be sitting on the sidelines. people are looking to consumer stocks. overall, i think they are still very cautious and waiting for a resolution. hong, great talking to you. >> these are the stories making headlines around the world. china's government may have a bigger problem than slowing growth. the nation's jobless rate maybe three times official estimates. the underemployment indicator has tripled to 12.9% over the
last four years. excludes mostauge of china's 270 million migrant workers. reports from germany say frankfurt airport is being sold to an unidentified buyer from china. own and 82% stake in the airport. shanghai has known to been in talks, but there is no name for the successful bidder. there will be a briefing later today. man has died on australia's east coast, forcing residents to leave their homes. trench lorraine has caused flash flooding. -- torrential rain has caused flash flooding. after had to be rescued
>> these tax brackets that have been developed were developed almost 20 years ago. the years,ough because of inflation, it has become rather inequitable. we want to make the tax system more equitable. and exemptionss will be much higher than the cap now.eso rishaad: the philippines has committed to improving defenses against cyber attacks. the country was involved in one sts in modernt hei history when hackers stole $81 million from new york and routed it. haslinda, what are the measures here? think tighter scrutiny
and surveillance. bitcoin is currently not regulated. i was surprised to learn that is big in the philippines, third-largest user in the world in transactions. up to $2 million a month. that is because of the volume of funds being sent by filipinos working overseas. tighter security and stricter rules for banks. financial institutions will be required to have regular checks on customers at all times. a point to note, it is about oversight. the central bank is mulling over lesser or not to allow dealing on the black market and more on the formal stock market. from the sound of things, the philippines is getting serious about this type of threat. rishaad: can the philippines central-bank push through and implement these changes? that will be the challenge,
isn't it? haslinda: that is right. we do not really know. what we know is that it is making the right moves. it will expand the cyber security unit to allow it to have a surveillance team looking into securities, policies, monitor cyber starts -- threats. what we also know is that remittance companies, oversight will be carried out in three months. there is a time frame. it was a wake-up call back just for the philippines. two attacks that has prompted the likes of singapore to tighten scrutiny. it says there is just no room for complacency, and that applies to all governments. rishaad: thanks, has. coming up, balancing the books. masterat how softbank's
♪ rishaad: a look at our top stories, xi jinping opening a summit, warning against confrontation. he noted achievements in cyber and military cooperation and calls for the conclusion of an investment treaty. it is overshadowed by beijing's claim to the south china sea. trade.inemas resumed valuing theurge
company at 18 billion dollars, the highest among asian entertainment countries -- companies. price,ramco raising the $.35 a barrel higher and $.60 above the regional benchmark to sales to asia, less than the $.40 increased in a bloomberg survey last week. into a break after a negative morning session. exporters and financial issues pulling down the broader market. not a great start for japanese equities to kickstart this trading week. the yen holding onto one-month highs, a story of dollar weakness as we saw that payroll number disappoint money markets, factoring in a 4% chance of a
rate hike this month. a little weakness coming through in hong kong, down by a third of 1%. the big casino players are coming under pressure. some good moves from property stocks, despite the fact we see another dip in property values over last week in hong kong. the a-share market pretty flat, gains across southeast asia, taiwan has turned negative, australia doing well today on this resurgent and commodity prices. have a look at gold players, very strong. we have seen most of the energy players move higher as well. new zealand closed today for a public holiday, as is south down by 1.1%,an
the weakest performer out of the region. that is weighing on the overall .25%. down tw down, but theyg offshore renminbi -- on shore renminbi down. thee have a look at offshore, also weaker, down by 4/10 of 1%. i want to show you what is happening with debt in response to the fact that money markets are now not pricing in a rate hike. % chance ofe a 50 a rate hike before december. the 10 year bond in australia is higher, the yield down by 2.2%. that payroll number has sent
shockwaves through investors in this part of the region. the u.s. treasury secretary says china faces a tough balancing act as it transitions from -- to a consumer driven economy. tok lew says china needs take steps to curb overcapacity. jack: where we have challenges are are quite of the moment on structural reforms here in china. the question of excess capacity in particular is a profound one. we are seeing global markets, steel and aluminum, being distorted by excess capacity. the good news is that for china's own economic future to be bright, they will have to deal with this question of excess capacity. it has a corrosive effect on future growth if you let the problem linger, but it is a hard transition. the prospect of finding work
for millions who have to get different jobs is a daunting one. dislocatedow that workers is a very serious problem politically and socially. it is a challenge. you'd talk to chinese economic policy makers, they are confident they can retrain people 50 and younger. they think you have to provide income support for people who are later in their careers. threading that needle is hard. you don't have a choice. if you have excess capacity and you are just grinding down your future potential growth, that's not going to be good for people either. they made the policy commitment to make these changes. to implement and execute, not just at the national level, but at the provincial level as well. the line between government and state owned enterprises and excess capacity is a hard line to see.
it is some of the provincial governments that are owners of much of the excess capacity. rishaad: president xi jinping formally opened the dialogue in beijing, saying the two countries need opportunities to build trust and talked about mutual trust and said that pacific should not be a battlefield for different views. a possible message from the president there. they have just ramped up the opening statement and the dialogue here. we heard from the u.s. treasury secretary jack lew and john kerry and president xi jinping. the south china sea and the tensions around the issue is something that has overshadowed to some degree these talks, but president xi jinping coming out and making a positive statement, at least from the u.s.
perspective, on this, saying he wants to see greater cooperation between the two sides, that he wants to see an avoidance of any confrontation,y a diving down of confrontation, in that region, and this comes before this very heated and much is happeningthat at the you an arbitration panel between the philippines and china over claims to the south china sea. it comes after ash carter said that china risk building a great wall of self isolation with its policies in the south china sea. that is something of a positive line from xi jinping on this issue, diving down some of the tensions and the bellicose statements that you hear from state media here on a regular occurrence in china. of course, economic issues key to this, and jack lew articulating to us what his key
priorities are in that interview, for ticky on overcapacity reforms, cutting sectorsovercapacity in like steel and aluminum, and more access to markets by u.s. firms. rishaad: now the thing is here, what does china want to get out of these talks? so china is looking to see the tariffs removed on its steel exports. that sounds very unlikely. of u.s. has imposed tariffs 200% on cold rolled chinese steel, which is putting factories in the u.s. under huge amounts of pressure. those tariffs are unlikely to be removed. that is a pressure point that the chinese want to work on.
they are also trying to get market economy status. they signed up for the wto 15 years ago this december, and they say they should be awarded market economy status, making it or for the european union and the u.s. to impose anti-dumping sanctions. those are some of the crucial issues china is focused on, as well as geopolitical issues, north korea, cyber security concerns, and the south china sea. rishaad: tom mackenzie in beijing. ok, just going to have a look at what else is going on. stories making headlines with the s&p facing heat for keeping indonesia's rating at junk. say thed managers decision is disappointing and inexplicable because the country has one of the lows that to gdp ratios in asia. -- debt to gdp ratios in asia.
has to cutonesia deficit and implement fuel subsidy reforms. may change if jakarta pushes ahead with the changes. jaguar-land rover suing for copyright breaches and unfair competition over its suv. say the vehicle is the copy of the land rover. both models feature similar features. staying with china, a commerce group expected to announce that it is buying the a tie in football club inter malan. attain media reported that they have been moving closer to buying between 60% to 70% of the
club, valued at 790 my million dollars -- valued at 795 million plans. -- dollars. softbank getting serious about improving its balance sheet. it is planning to raise over $10 billion as they look to restructure the business. we are in tokyo. alibaba, now gung ho, what with the cash be used for? add the planned stake, thatr cell is more than $14 billion in cash they may raise from these the vestige or's. the company said they have managed leverage and reducing debt and want to gain more flexibility in investments, and it seems like they're getting more series about fixing the balance sheet. the company's debt has grown
sixfold over the past four years to ¥12 trillion. that is part of the reason why the company has been massively overvalued. there was a $20 billion gap between its holdings and market cap. it has been a sore point for some. now it looks like they are taking concrete stacks -- steps to unlock the value. could there be other assets on the block? our sources are telling us that this is part of a broader restructuring spearheaded by the president. gains are now not considered to be a core part of the company's portfolio. there are other valuable assets like yahoo japan or renren in china. rishaad: everybody's thinking this is just some good housekeeping, but what are the chances they are amassing funds
for an other massive purchase. that's not being rolled out either, is it? >> that is always an exciting possibility, but until softbank sells it, major acquisition is probably unlikely. rishaad: thank you very much. break. to take a coming up, the security summit highlighting tensions in the south china sea. that is when "trending business" returns. ♪
than last year. china would ignore an upcoming arbitration ruling sought by the philippines and hinted the united states should keep out of the area. our policy that we own the south china sea remains the same. anda has the wisdom patience to solve any disputes through peaceful negotiations. we also believe that other countries concern have the same wisdom and patience to walk on the path of peace with china. directlyry not concerned is not allowed to sabotage our path towards peace. rishaad: bloomberg news southeast asia joins us from singapore. there was a lot of brass in the room. what was achieved? , as you said, a more conciliatory tone from the chinese this year than last year. achieved, to what was
nothing as yet. the great elephant in the room .as the scarborough shoal what happens if the hague ruling goes against china and china decides that it will build up its assets in the south china sea? that, tomoves to do put a runway on the scarborough al, that would create a big security problem for the other nations and the united states. appear tot does likely contradict china's claims to 80% of the south china sea. >> the philippines has asked the hague to rule on the land
features in the south china sea. are these rocks and reese, -- reefs, do they actually constitute islands. if the hague rules they are not cannot, then china legitimately claim to have any legitimate ownership of those land features. it seems as though the hague will rule in the philippines favor, and that does put china in a difficult position. they have said they will ignore the arbitration, ignore the ruling, but at the same time, they are signatories to the u.n. treaty that they signed. if they decide they will ignore this ruling because it does not go their way, they may come to regret that in the future if they are seeking passage through
other waterways that chinese ships want to go through. and there is a lot at stake economically in the south china sea. it carries $5 trillion worth of trade each year. if they tried to take complete ownership of that waterway, it may present some big problems for them down the track. rishaad: thanks a lot for that. joining us there from singapore. >> the stories making headlines around the world. the iraq he army has secure the southern part of falluja, which has been in the hands of the so-called islamic state. special forces supported by u.s. coalition airstrikes are poised to take on the center of the city. falluja is the militants last stronghold in iraq. now they control less than half in the north, west, and molesul.
the pound has fallen to a three-week low after a pollster just more britons favor leaving the european union. it weakened after a survey found 45% which is leave. 41% said they would remain. another paul had a majority in favor of brexit ahead of the referendum on june 23. it has spooked some investors who had bet to remain cap will win. india will be looking to strengthen ties with the u.s. went by minister modi meets barack obama this week. i minister modi will visit washington as part of a five nation tour. he helped to open afghanistan's biggest hydroelectric dam and will discuss nuclear power in switzerland. he will make a speech on capitol hill and meet business leaders before finishing in mexico. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. rishaad: now the chairman of the
ani saypower giant ad they may abandon a development. let's get to sydney and paul allen. it is the carmichael mine. we are talking about it earlier. there have been? 's over those mines for some years now. there have been environmental challenges over those mines for some years now. insignificant project, $16 billion will be spent to mine this project. it would create 5000 jobs, ani, should about 11 billion tons of coal, and it needs infrastructure as well.
that has been one of the bones of contention, because that is close to the great barrier reef marine park. environmentalists already have a commitment that the dredge spoil it will be dumped on land instead of the sea. about theorried impact is mine will have on the water table, so multiple problems on the environmental front. there is an economic dimension as well. so cheap,rice of coal there are questions over viability of this mine. rishaad: thank you very much. we have to take a break chinese provinces are faced with the government looks to move away from manufacturing to focus on services.
that powered it. tom mackenzie reports. this is don glenn, once home to thousands of factories turning out textiles and toys. high wages and reduce the man have forced many to/capacity or shut up shop could come -- shop completely. withthis road is lined half closed factories. there is a garment factory there. this was at least an electrical parts supplier. this goes all the way down to the end of the road. some workers are still clinging onto their jobs, but the future looks bleak. we met with one group who work at a factory making clothing for brands like gap and under armour. they did not want to show their faces on camera, some harassed by police for speaking out.
beingbiggest fear now is left jobless and a province undergoing a painful transition. the boss has not given us a word of explanation. we are worried that if he leaves, we will not get everything we are owed. wherehis is the factory they work. it used to employ more than 2000 people. now it employs fewer than 200. they have had their wages cut, and they tell is the boss refusing to tell them if their jobs are safe. tohours drive east, you get a compact, modern city surrounded by lush hills. for what they see as the future, heavily automated factories turning out high-tech products. they are even paying factory owners to replace workers with robots, $7,500 per machine. using robots to replace
humans will help individual companies to be more competitive in the market. overall, it will cause some workers to be laid off. 40,000 workers were replaced with robots last year. essential for china's economic rebalancing, but it also poses risks in a province afflicted by widening tensions. asia edge is next. the big stories of the day. head of asia-pacific economics and markets now at citigroup. ♪
the china-u.s. dialogue. also coming up, challenges for the engine that powers the factory of the world. a special series on china with a look at manufacturing powerhouse. juliette: keep an eye on the payroll the u.s. numbers disastrous. asian markets being sold off. really led by japan, down by over 1%. bit of a breather after last week, posting their best five-day gains since march. a 4% chance the fed will list this month. that hasn't investors flocking to safe havens.
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