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tv   First Up With Angie Lau  Bloomberg  June 19, 2016 7:00pm-9:01pm EDT

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♪ angie: india under pressure, the ruby faces a tough day. the pound prices in asia, the latest polls show britain on course to remain in the european union. no sale, the multibillion-dollar plan to fend off a takeover fails to win the support of the board. welcome to "first up".
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and let's check in on the markets in asia pacific this monday morning. of 1%aland, a third higher, a stronger kiwi as well, and the remain campaign is gaining momentum after that tragic assassination of jo cox. australia looking like this, pointing to a lower open. dollar at $.74, strengthening. japan, futures trading in chicago, gain on friday. it will extend gains today according to futures in chicago, yen weakening.e can i brexit will dominate markets this week, but india will have to deal with a looming departure. the r.b.i. governor says he will
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not take another term in september. is this a surprise? rexou have brexit and now it, double stress test for india. on themore pressure currency, the ruby ♪ powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. his departure could be a question of lost credibility. the rupeee a look at in the last three years, he has strengthened it. in terms of stability, he has done so. in 2013, morgan stanley listed the currency as the fragile five along with indonesia and other currencies.
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the dollar-rupee has been slow and steady for the last couple of years. this propel the nations fx reserves to surge to an all-time high. have helped to build india's credibility among toestors as well, helping overtake china as one of the fastest-growing major economies. inflation has come down a bit as well. he said he was confident that his policies would carry through past his term. it would protect india from sudden capital flight. will lead toit outflows in the short-term until they announce his successor. long-term, people still see
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potential when it comes to high-growth, positive reform, and high caries. monday, they say, will be a tough day. angie: it has absolutely been under pressure politically. despite everything he has been doing well for india, except a little slow on that inflation goal, he has come under pressure. there did not seem to be support from the government as to whether or not they wanted to extend. he basically said i will step away. did that surprise the government? is that going to appease the detractors? who will be the next guy? >> there are a couple of names in the mix. the deputy governor for the rbi is the most obvious. he has 25 years over all in economic how lessee, and he is known as the key architect in the reforms we see.
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other names have been thrown around as well. a couple of names, september 4 is the last day for him. we will see if we have a successor by then. angie: thank you so much for that. let's check in other headlines. themakers now rating chances of britain leaving the eu at 30% with the pound climbing as campaigning resumes after the murder of jo cox. leaders from both sides visited the sunday talk shows. said britain is better off in the eu. ,avid cameron took questions accusing leave campaigners of misleading voters.
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, we can choose to leave leave, but if we leave, that's it here at we are walking out, quitting, giving up on this organization, which even if we leave will have a huge effect on our lives, our children, our opportunities, our businesses. i don't think britain is a quitter. i think we should stay and fight. that's what we should do. angie: apple has a new legal hurdle in china. filed ans it has appeal to allow its phones to remain on the market. intellectual-property iphone 6 violate've fixe rights. fromn to buy assets shenzhen metro failed to secure enough boats from the board. diluted aave
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little-known group. largest shareholder in a hostile takeover. , a recoveryes easing, prices climbed and 60 cities. growth in average new home prices slowed for the first time since october. local governments have been introducing restrictions in leading centers, where prices have been searching. was hard toht msci please, china may have a tougher time winning over the compilers of global bond indexes. china has made some progress when it comes to its bonds markets, but is a good enough? where credit is due, china took a major step earlier this year of allowing foreign investors greater access
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to the bond market. it is the world's third biggest market, but fraught with accessibility issues. back in february, they got rid of all quotas when it comes to the bond market. last month, for the reforms of the currency aspect of these under the program, but the concern is that despite these efforts, there may not be enough when it comes to china wanting to get its domestic notes added to global bond indices compiled by citigroup, j.p. morgan, barclays, etc., much like the msci when it comes to equities. the hurdles are the same issues cited by the msci last week, accessibility, repatriation. taxes as well. if you take a look at the interest when it comes to domestic notes in china by
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foreigners, since the end of 2013, 70% compared to 66% when it comes to equities. bond investors even more so than equity investors are likely to be driven by technicalities, so scrapping all entry requirements into the market, will that get the investors excited, but it is that isility to exit more important during times of market volatility. angie: what is at stake here? does china need foreign funding? about $150 billion is what is at stake when it comes to government debt that china could raise thanks to inclusion in these major global bond indices, comparing to $30 billion when it comes to a-sha res getting put into the msci.
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this comes when china could use that foreign funding. beijing is looking to attract inflows. it has a trillion dollars worth of capital outflows over the past year. that is seen to start picking up given that rebuttal from msci, putting a dent in sentiment and the currency. angie: you can get more on that story and all the days top stories at our digital desta tatian, bloomberg business, bringing together the best of bloomberg news, business week, bloomberg television, new digital content all-in-one addressed, also bloomberg.com. an electric sports car as a rival to tesla. disney sets a record for a new animated feature, bloomberg.com/asia. check it out. russia considering selling stakes in one of its corporate crown jewels. sources tell us that president vladimir putin is considering offloading part of rosneft to help fund budget shortfalls.
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would a deal like that with china and india, but they're not saying much about this. are going by what we have been told by bloomberg sources. they have been earmarked for possible privatization, and russia said it would consider a joint deal, looking to sell. both china and india have commented that they would be interested to be part of a privatization, but neither have made comments on a joint deal. india's oil minister did say that one could not be ruled out and that we are not rivals. gas andoil and natural the chinese national petroleum corporation have projects.
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china said it was starting taking part in the privatization, but did not provide more details. sneft is state-controlled, but 20% is already owned by british petroleum. onres did jump more than 5% friday. the stock has gained more than 40% this year. it makes sense in the sense that china and india are two out of three of asia's fastest-growing economies. also, there has been a tilt towards asia in the russian strategic focus since its military incursion into ukraine. sanctions curbed some of its access to europe, funding, and demand in europe. strategy ist focused on boosting oil and gas supplies to china. china is the biggest market in the asian region and an
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neft,tant financier for ros providing more than $100 billion in loans and prepayments over the last decade, key to being able to build itself into the oil giant it has become today, the world's biggest public be traded oil company by applet, partly because of this finance. angie: thank you for that. coming up next, the campaign for the u.k. to remain in the do may gaining momentum. we will talk about the implications on markets ahead on "first up". ♪
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>> 7:13 a.m. in hong kong, the stories making headlines. and ubs advising on a merger between two banks. the national bank of abreu dobby
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and first goal bank with a combined portfolio of $170 billion. the deal would be the first major banking merger since the national bank of dubai combined with emirates in 2007. credit suisse has placed five employees on leave while conducting an internal investigation. a newspaper says the staff worked on the israel staff, working on ipos. the probe is linked to possible breaches of u.s. tax laws by israelis. the bank declined to comment. australia has support for struggling steelmaker less than two weeks before the election. malcolm turnbull's coalition will provide $36 million for new machinery at two mines in south which will convert
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low-grade iron ore into export quality. it was described as an open will support 2000 mining jobs. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. i am yvonne man. week was a volatile one with the looming brexit vote and speculation over the fed. we take a look at what we can expect in the u.s. this week. the week ahead on wall street will likely see investors along with the rest of the world hyper focused on the speeches, debates, and final countdown to that bitter campaign in the u.k. to either leave or remain in the european union. another highlight of the trading week, janet yellen testifies to congress on monetary policy on back-to-back days midweek. testimony before lawmakers having voted to keep interest rates unchanged. economic reports in the coming week will probably show that
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sales of previously owned homes climbed in may, while new home purchases declined. the economists also say that orders for durable goods are expected to drop. facebookrporate front, holding its annual shareholder meeting, while ge will hold its first digital investors meeting. hairy, anddex, black bed bath & beyond are among the companies set to announce earnings. the brexit debate is set to dominate this week, but there are other key economic a deck, beginning with japan's may trade figures. we are joined by carlos casanova. the boj kept rates unchanged. that is speculation governor kuroda has to act this summer. >> that's right. there are mounting pressures on growth in japan. that in combination with an
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unprecedented appreciation of the yen versus the dollar is definitely putting pressure to make a move. angie: of course the brexit doesn't help either. it doesn't help. global investors are shifting towards a safe havens. you seen a lot of demand for the yen, pushing prices up. so definitely not good news for japan. right now, slightly strengthening off that. we are seeing some relief of pressure after the latest brexit vote. do you think there could be intervention at some point from the boj if it does see the yen strengthened? >> this is a topic that was put forward at the g-20 and shanghai, but also at the g seven in japan. global powers agree that they need to coordinate actions and avoid unilateral competitive devaluations. it's not sure that japan won't see it so forced to intervene if
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things get worse with the brexit vote. angie: where do you see the yen going? >> we expect strengthening to continue, but the regional forecasts for asia is appreciation towards the end of the year. angie: strengthening in the short-term, i guess it's hard to say. anything could happen after the 23rd if the pressure is off the yen? if the u.k. vote to leave the eurozone, it could be quite destabilizing. that is the biggest risk factor in the short-term. angie: if they don't? >> there are other headwinds, we global command, china slowing which means they need to implement easing, which means will regional partners begin easing, putting downward pressure's on currencies. angie: what kind of moves you expect from the pboc? >> we don't expect a full
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interest rate cut. they have been struggling with how close -- with outflows. liquidityand more injections, as well as more fiscal stimulus. angie: will they widen or tighten the trading band for the yuan? >> i expect more depreciation, gradual, but converging toward 6.8 by the end of the year. angie: that is the goal, you think? >> yes. angie: property prices in china show that stability with the it may not beat as good in the property market. it is easing in terms of recovery. yes, definitely. a lot of the optimism in may was on the back of home sales. this is something now starting to reverse again. so it does show weakness in the chinese economy. the case thatbeen
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capital flows into first-tier cities like shenzhen and shanghai in the short-term, especially when you have strict capital controls, but there has always been downward pressure on second-tier and third tear cities, where there are concerns over oversupply. that will be an issue going ford. angie: stay right here. we want to get more on the fed and central-bank action happening in india. study with us. you are watching "first up". ♪
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angie: welcome back. you are watching "first up". yellen to testify at congress, will we get more direction from her in the federal reserve? we saw a reversal of this stance the fed had prior to the may payroll data. onht now, we are focusing
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one interest rate hike, perhaps to, but that is unlikely. the good news for emerging markets is renewed dovishness opens the door for easing and does support capital inflows in the short-term. angie: we saw that earlier this year, so it is set to continue for the philippines and thailand this week? >> that trend will deftly continue because of this renewed dovishness in the fed. the sustainability of strength in the long-term depends upon the speed of hikes by the fed, but also risks materializing. a europe that and could be destabilized with outflows increasing. angie: let's talk about this reprieve in terms of central banks, philippines and thailand. you think they will act to this week?
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do you think they will wait until after brexit? >> we saw how they acted last week with indonesia and korea, this renewed dovishness. stance remains pro growth in asia, and there is room to continue cutting interest rates. however, this week because we had the eu referendum, it is unlikely that central banks will make a move, and less tricky necessary. angie: i have to bring in india here. a surprise, but definitely an affirmation of foreign investors big fear about india. >> yes. , he has done a good job as central governor and has helped move india ahead of china has the top performer in terms of regional growth. investors are worried that the policy will change, and india needs to continue implementing measures to facilitate investment in the region.
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floated a couple of names. do you know any of them? >> we don't know who will be the new one, but it could be quite destabilizing if it's someone who's not more international in his outlook or more pro-foreign investment. angie: that is something they will have to keep an eye on. we will leave it there. thank you for joining has. i think everybody is waiting for brexit right now. thanks. , thinking local as a goes global. out whatokyo to find netflix is doing to expand its japanese presence. ♪
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a rainy day in tokyo. a live look there at the imperial palace. in 20 minutes we will break down the japan trade imbalance data for you. previously it was ¥823.2 billion. quite a contraction. openinges away from the of trading there, as well as south korea and australia. top stories of this hour, expected with new pressure following r.b.i. decision not to take the engine when his term ends december 4.
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currently is second-worst performer this year. bookmakers are now waiting for the chances of britain meeting the eu at just 3%, the pound climbing is campaigning resumed after the murder of a pro-leader. leaders on both sides of the debate wrote an open letter saying that is better off. isme minister david cameron accused of selling takes the oil company to china and india with several targets ahead of the election. moscow once to raise $11 billion. the deal would not only cover budget shortfalls, but
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strengthen ties with asia and the u.s. and europe. journalists400 around the world, this is number news. checking on the market this morning, the first trading day you are seeing gains in new zealand, that stronger new u.s. cents.ar at 78 australia pointing to a lower open right now, it is strengthening. japan, pointing to a higher opening. two victories for the duration prime minister helping him to strengthen his grip on power. many with your majorities in affected, the right political turmoil and allegations of
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corruption. the results of this are still significant. >> significant. a huge weight and is significant because this is the first step of public support for logic -- najib after the $681 billion that appeared in his personal accounts. he really needed to win to validate his position in his eight margins suggested he still has the support within the coalition party. despite the slowing growth and on thes of his impact cornerstone of the party. to be sure, several factors helped him to secure the win. one, the opposition was divided. to opposition groups ran for
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both seats in there was even an independent candidate making it much easier for the ruling party to win. he also made sure that the party was visible in the lead up to the polls. daily trips, shaking hands with voters, at times handing out bags of rice and other necessities to the poor. that's reggie aimed at overshadowing the opposition, which focused on his credibility. that strategy edge paid off. >> is it fair to say that the opposition is losing ground? it has not been able to capitalize on progress it made a few years ago. you are spot on. the infighting is it. one party left the opposition alliance, after implementing the islamic penal code. that idea clashing with another party consisting mostly of ethnic chinese.
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the opposition is split. there are policy differences. plus the key opposition leader is in jail. not surprisingly, political observers say that the young voters that would have voted for the opposition just did not turn out to cast their votes. disillusioned. they may have gained 2013, but that has come to naught. thanks for that. let's take a look at what else we are following for you this morning on "the bloomberg." rosalind: planning to buy a 20% stake, they become the key financial services player southeast asia. valued at $60 billion they want the option to increase their holding to 30%. offering more loans online payment across the region. tehran say that iran has signed an agreement with boeing, the first the country since u.s. sanctions
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were lifted in january, following their 20's and billion dollars decision to purchase 118 planes from airbus. the ve still need a license for the deal to go through. iran says that more details will be revealed once washington gives approval. the sequel to "finding nemo" has an an opening record for animated movie. topping the opening box office at the weekend. the film stars a forgetful fish sets out to reconnect with a the family that she lost long ago run tomato says that 95% are giving positive reviews. analysts predicting this will be yeary's bigger -- biggest ever in film. netflix pushing into japan, planning to produce more original japanese shows after a series introduced earlier this month the expectation by drawing
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in a global audience. 130 newis adding markets this year, though it faces regulatory issues in china. >> a lot of japanese consumers are watching japanese content, so we want to add more and more, but just like with our great new drama that was great here in japan, we are finding a bigger audience for that show outside of japan as well. we think there is not only tremendous opportunity to satisfy japanese consumers with that content but connect them to the stories being made england, brazil, italy, france, all over the world. rosalind: that was a look at some of the stories making headlines. angie: let's get more live with grace in tokyo. grace, netflix entered japan last year. how is its development there? grace: you know, japan is a special market.
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on the one hand, it has some great net worth for streaming video. on the other hand, viewers here, customers don't have the custom dvds anding videos. package videos, rentals are still popular in japan. so, the problem for net x coming here first is the expansion of life streaming videos. developing have been in a stellar fashion in japan, such as with their mobile partner, softbank, and we mentioned in their interview that softbank has been able to sort of kind of persuade their withmers in the shops streaming video and adding custom to them. they have also partnered with
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powerful tv stations, such as fuji television, to make original content. latest one is from a very popular japanese novel, an award-winning novel that clicks s to.ased the right onlyshow is attracting not but alsorom japan, those outside japan, which is kind of interesting. angie: yeah. how is the competition and the environment in which other streaming services like blue, amazon prime, how do they fair against netflix in japan? he's as he doesn't view the conversation in the way that
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they tend to think of each other shares, but he really thinks that it's sort of like mixing the ground together and expanding that streaming video service together. one interesting metaphor that he made was to think about the tv channels. your tv at your home, you don't have only one channel, but you can see multiple channels, which is what makes the tv industry thrive more better. netflix views the competition in this way and think that with original content that they can differentiate from competitors. of course, their competitors may do similar things, but it will be just like tv,'s witching to different tv channels at the same time. thank you for that, grace. the president of lg electronics told bloomberg that south korea's second-biggest
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electronics maker is looking for acquisitions. our technology reporter spoke to him and asked about what kind of takeover targets the company has in mind. >> we are always open to deals and decisions usually depend on the business strategy and direction. you can divide it into two sectors. we have already secured broad coverage with many global product lineup. another is a huge variety and it is hard to start from scratch because of things like research and investment. towill make acquisitions push the missing links. >> the first quarter earnings were impressive. can you explain the reasons behind this? site -- global sales of appliances is not likely to show any significant expansion
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in the near term. we think the market will generate only 2% to 3% growth this year. nowadays people are talking about cost-effectiveness and the biggest challenge is to offer the most efficient services in a timely manner. chinaant to know your strategy. is china a threat to lg? >> china can be a direct rival, but also be an ally in certain markets. chinese companies tend to be more competitive when making products with short lifecycles. brand value includes quality and credibility as consumers want something they can use for a long time without many problems. i think that we can still compete against chinese brands. but they will catch up sunday. >> what wakes you up at night? >> the market growing fastest in asia is india. brazil is also growing fast but
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their currency is having a negative effect. the business in mexico to outgrow that market for now. the biggest challenge for us all is to sustain competitiveness. we are trying innovations that no one else has achieved. i think we have done quite a good job so far. angie: that was the president of lg speaking to bloomberg. coming up next, as the world waits for the next fed hike we will be asking if china is set for a cut. ♪
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angie: 7:45 p.m. in washington, d.c.. house speaker paul ryan has confirmed support for donald trump, saying the republican unity is more important heading towards the november election. that as speaker he has the responsibility to prevent a democratic win, but he will
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challenge trump if the nominee doesn't stick to conservative principles. paul ryan has already rebuked the tycoon for doubting a federal judge and threatening to ban muslims from entering america. thousands of people joined a rally in oconomowoc protesting the u.s. military presence on the island. the bilateral agreement sees them hosting the bulk of american forces in japan. anger at perceived crimes by u.s. personnel has rome after the rape and killing of a local women in which best local woman in which an american contractor is assessed. the u.n. is warning of a humanitarian disaster in falluja as thousands of civilians try to escape fighting area so-called islamic state militants seized the city two years ago but the declared itas liberated. they say that 80,000 people have fled and the operation began last month. 10,000 in the last three days.
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onlyity of muscle is the area under islamic state control left. news." "bloomberg after the dovish tone set by the fed less weak its meeting, my for guest sees more room china. our senior economist at commerce inc. joins us in the studio area do you think that the pboc will have to cut? will they be forced to after the property data came out over the >> it looks like chinese growth is under pressure. looking at recent data points, for me it looks like the growth is definitely under big pressure. especially if you look at private investment, dropping to a historical low.
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that global economic outlook is , it makesod for china perfect sense for china to cut at the moment. especially after the fed. i think he mentioned that property prices are a problem in china, but it can't be the reason that china can move at this moment. china could do other property policies, like increasing the mortgage rate with property policies and those first years cities to turn down the market china not moving at this moment. >> i want to get back to private investment. in is definitely weaker. is it because of lack of appetite or liquidity? the outlookus that or the sentiment in the private
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sector is quite weak. the margin of the manufacturing sector is so weak we can put money into the private investments. especially in the manufacturing sector. in this case it provided more incentive on that side. basically the business in china is too high for many sectors of the moment. why do you think it will >> in in the next week? think it makes sense for them to move ahead of the curve. moment,e that at the it's a zero likelihood of a fed hike next month. if the market recovers of it, it will put off. on the one hand the referendum
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added more activity at this moment into the market. on the other hand it means that more easy measures have to come up from other central as well. we have seen these kinds of policy moves from the bank of indonesia, the bank of korea, and the russian central bank in the past few weeks. it makes sense for them to join in at this moment. angie: but it really does seem that we are all waiting for brexit right now. including central bank. >> actually, no. if the u.k. remains in the eu, we're actually not trying anything on the global problem. but if it is a leave it will create more volatility in the market. itually if it is not changed will be biased the global economic outlook. basically the recovery is not there. also the u.k. is creating
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more volatility in the global economic perspective. will that volatility -- actually, hold on right there for a second. we have got breaking news from japan. a surprise trade deficit for may at ¥40.7 billion. they were expecting 70 billion. exports fell 11.3% compared to estimates of -10%. that is definitely wider the next exit. imports falling 13.8%, in line with expectations. of course, further weakness in the japanese trade data, with exports dropping much more than expected. all right, bringing it back to you, how, this volatility, we are seeing it in japan and in terms of the global recovery across a jet. after the brexit, how will that volatility look for asia,
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>> fundamentally speaking, if you look at the gdp and trade growth in asia, i expect more volatility to come over in the next few quarters. definitely i also see that more and more of the geopolitical conflict are coming up. i think that the volatility is still there. there is no solid recovery yet this moment. thank you for that. coming up next, a stronger yen, including a lineup with the japanese exports mayor -- sportswear maker -- sportswear major. ♪
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angie: we are taking a look
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ahead at the open in japan, south korea, industrial you. our intrepid reporters are here to tell us what stocks to keep an eye on. >> on looking at a sports maker here who's year has been hurt. 27%, lowerecember by than analysts estimated because its sales forecast is at 7.8% and operating forecast seen as 28% lower, saying that the four cap is based on ¥120 to the dollar in 130 end the euro, changing that now and taste on ¥110 to the dollar. so, it really is taking a hit from the end. withd to wait for gold exit. hedge funds at their second-biggest that on record gold inl would rally
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australia hit last year, very cheap and coming off a 10 year low. on friday it was the biggest decline are, because just before the march -- the market closed we had a 34 million share block come through. 98 million aussie dollars. stopping the stock from nosediving. volatility means that goal the shiny again. [laughter] >> at least until friday at least. >> japan tobacco saw domestic sales drop after april when they raised the prices of some of their big brands. they make about 60% of the revenue. they did see that drop after they saw profits surging for the first quarter.
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this is just kind of a little bit of a setback. we are seeing the stock itself? >> down not too bad. they got this, interesting, manufacturing and marketing approval for a novel hiv drug. this is an hiv-1 infection drug. complete single tablet regimen for that, they say. they are not sure when they will start releasing it. they did get it up for approval. angie: interesting. drugs and running shoes on the stock exchange. we will be back in an hour to see how we got here. taking a look ahead to the japan opening in just a few minutes we have got that bad trade data, you could say. exports falling more than expected there. pointing to aes
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higher open thanks to a weaker yen. taking a look at the next hour of the show, prices rose last month, but lack rock says the market still looks attractive.
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♪ angie: asia-pacific stocks expected to rise with the latest polls indicating that britain is on course to stay within the european union. the pound jumps with brexit at 30%. david cameron says leave campaigners are deceiving voters. selling the crown jewels, let a mere putin may offload part of rosneft to fund budget shortfalls. live from "first up" our asian headquarters in hong kong and streaming on mobile and bloomberg.com.
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time for the opening bills. early signals showed equities would open higher. have they? i think we gave it away with secret, a.5%, no big positive tone this monday. that the remain camp in britain gaining traction at the moment. decent bids despite this in the pound. you are looking at buying into oil. short-term volatility after the extreme move up late last week. u.s. 10 year treasuries back above 160. we should emphasize that they ended in a better state than they started.
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a massive rally in europe on friday. asia is looking like this. japan, south korea, australia, and new zealand are opening higher. have a look at japan, a lot of , pushing to dollar-yen towards 104, a big move in pound sterling. ,f we can get pound sterling up a massive move there, 1.6%. andact, we are above the 50 100 day moving averages. we will talk more about what is driving this risk on sentiment at the moment. at the moment, it is filtering equity markets. let me recap some of the numbers out of japan. not the best. surprise to the downside, trade billion for may.
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can we get the yen up? , $387 millionlion deficit. we were expecting a surplus of 70 billion japanese yen. you had a miss when it comes to exports, -11.3%. imports down 13.8%, so it looks like this is down to the slightly bigger than expected drop when it comes to the export figure. -- but inmore data the meantime, a positive start. angie: thanks. the u.k. referendum on brexit will dominate the markets this week.
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india will have to deal with another looming departure here. has announced he will not seek another term in september. yvonne man is here with that story. the run-up was so messy. he was insulted. yvonne: a lot of politics leading up to this decision to step down and not seek another term for the governor. they did catch the government by surprise. we have brexit, now you have to to the things weighing on investors in india this week. a goodee has not had year. if you take a look at how far it has come sense raghuram rajan took office, it has come quite a long ways. he strengthened it quite a bit. , weerms of stabilization it weaken
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significantly since then, but stabilization is the key. three years ago, morgan stanley listed the rupee on its fragile five list. if you take a look at the swings, that has come down. this is the one month implied volatility for the rupee, cut in half in the past three years. on the flipside, it helps to prepare fx reserves to an all-time high in india. along with the inflation regime policies has helped to build india's credibility with investors. we have seen inflation come down quite a bit as well. byll far from his goal of 5% helped india to overtake china as one of the fastest-growing economies.
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the impact in the short-term could be very volatile. we could see capital outflows from india. investors may stay on the sidelines in the short-term, but the long-term, plenty still see high growth potential when it comes to positive reforms, potential high carry, still an attractive destination for some foreign investors. monday they say will be a tough day. our guest from the last hour said we know raghuram rajan , foreign investors are familiar with him. he has that international experience. what about the next guy? credibility will be the big thing, and can they maintain what rajan has built. , similar to rajan, oversees experience, 25 years and economic policy. also a key architect of reforms.
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other names, arundhati bhattacharya, as well as officials from the finance ministry. expressedy, rajan confidence when it came to his policy, saying that he had implement stability that will carry through after his term. he says i'm sure the work we have done well let us ride out like thelatility threat of brexit. angie: thank you so much for that. be consideringto selling stakes in one of its corporate crown jewels. that president putin is considering offloading part of the oil giant rosneft to fund budget shortfalls made worse by cheap crude. have they said anything
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specifically. rosalind: china and india have expressed that they are interested in being part of the privatization of rosneft, but neither has commented on a joint deal. on friday, the oil minister said a joint deal could not be ruled out. he said we are not rivals. that is referring to china and india. both india and china already work together in some areas on joint projects, so he said more joint projects would be nice. offloadis looking to 19.5% stake. that could raise more than $11 billion. it would be russia's largest privatization to date you'd british petroleum already owns a percent of rosneft. rosneft has gained more than 43%
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so far this year. russia is looking at a bit of a budget shortfall and looking to raise money with this privatization. angie: why is russia looking to asia? economies aren growing fast. china and india, two out of the top three fastest-growing economies in asia. india has in fact overtaken china in terms of how fast it's economy is growing. the focus for russian strategy in terms of oil and gas. boost been trying to supplies to china, and china is the biggest market in the region. also, china is a big financier over $100t, providing billion in loans and prepayments over the last decade. that has helped to boost rosneft and let it may key acquisitions
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to help it become the oil giant it is today. india has been a much smaller nower, but it's economy is booming and projected to become one of the biggest energy consumers in asia, and that is an area that russia is looking ahead to. angie: you can deftly argued that their field of friends are shrinking. russian not a key favored partner right now. angie: thank you so much for that. checking other stories making headlines, talks with several asian miners with a view to sell a minority stake. the sale could fetch as much as $7 billion. they are trying to pay down debt through asset sales. vale wants to raise $10 billion through 2017. last year was the first annual
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loss in 19 years. the brazilian joint venture areeen bhp and vale restructuring loans after that disaster at its iron ore mine. hiredorgan chase has been and bhp is working with a rothschild. a tailingdied when stand collapse. home prices rose and fewer chinese cities last month. prices climbed and 60 cities, compared with 65 in april. growth in average new home prices slowed for the first time since october. local government has been introducing restrictions and shanghai and shenzhen, but prices have been surging. a takeover is in doubt now. $6.9 billion plan to buy assets from shenzhen metro failed to
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secure enough votes from the board. the plan would have made shenzhen metro vanke's biggest shareholder. coming up next, find out why pine bridge investments thanks japan's negative rate policy is failing. you're watching bloomberg television. ♪
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>> these are the stories making headlines around the world. credit suisse and ubs advising on a merger between the two u dhabi.banks in abv the deal would be the first major banking merger in the uae
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since 2007. credit suisse has placed five employees on leave while he conducts an internal investigation. a swiss newspaper says the staff worked on the israel desk, focusing on ipos for tech companies. the report said the probe is linked to possible breaches of u.s. tax laws by israelis. the bank declined to comment beyond confirming the staff had been placed on leave. australia has announced support for the struggling steelmaker .rea him -- arrium malcolm turnbull supports the struggling company. turnbull described it as a no regrets investment that will provide profitability and support. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. . am yvonne man
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angie: bookmakers rating the chances of britain leaving the eu it 30%. the pound climbing as campaigning resumed after the murder of jo cox. leaders from both sides visited the sunday talk shows, while 10 nobel economics laureates wrote an open letter saying britain is better off in the eu. prime minister david cameron took questions on a bbc special. choose to leave, we can leave. let's be clear. if we do leave, that's it here at we are walking out the door, quitting, giving up on this organization am a witch even if we leave, will have a huge effect on our lives, our children, our opportunities, our businesses. is a't think britain quitter. i think we stay and fight. that is what we should do. a bloomberg tracker shows
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a sharp drop in support for the leave campaign and arise for remain since the murder of jo cox. support for britain remaining averages 45%, 42% in favor of so-called brexit. let's discuss all of that with pine bridge's chief strategist. a i wouldn't say it is disaster, but it would be economically beneficial for the u.k. to stay in the you, retain the trade relationships the country has with the rest of europe, which is the biggest trading partner for the u.k.. it is also beneficial for the rest of europe. even in cases of brexit, the biggest loser would be the eu and not the u.k.. ofie: it is another example how global events are shaping central-bank moves you'd exactly -- moves. exactly what janet yellen said last week. in terms ofbrexit
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the fed is more of an excuse. there is a potential risk year, bookmakers only giving it a low risk, so for janet yellen to use it in her press conference to clarify what the fed did not do last week, i think it was more of an excuse rather than a real proper economic reason for staying on hold. angie: why is she looking for excuses? >> the biggest revelation last week was the change in the way the st. louis fed looks at the world. of the used to be one hawks on the committee and has now turned into a dove, saying forecasting is rubbish and does not do anything. we should not look further than two and a half years, and all we can say is that things will remain the same as they are. angie: he is that outlier there plot.e dot
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angie: there are always a few dissenters on the committee. >> this is someone who is changing the way he is looking at forecasting, almost like an internal intellectual coup going on in the fed. janet yellen on tuesday and wednesday is testifying to congress in the u.s., and she will have to explain what just happened. you cannot just give us minutes that ellis that most people us that-- that tell most people thought rates should go up in june. even the dissenter has gone away. there is a significant change going on in the way the fed looks at the u.s. and we need some explanation. angie: so we are looking for some clarification. will we get clarification from other central banks this week? >> i don't think so.
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on the the central banks calendar this week are looking for guidance from some of the major banks, the bank of japan is one that everybody is focusing on. forit may also play a role the boj not moving last week in the wake of the fed, but i think the pressure on the boj is increasing with the fact that growth is weak in japan. angie: export figures today, -11.3%, a little more than even below expectations from economist. >> first quarter gp was surprisingly strong. -- gdp was surprisingly strong. i think the pressure on the boj will increase a lot, especially in the run-up to the elections this summer. will: do you think they extend negative rates deeper into negative territory? >> i think they will do that. i am not a proponent of negative interest rates. they don't work as an active tool.
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they are not bad as a defensive tool, for example in sweden and switzerland, to prevent account depreciation. example,apan is a good and the angie: ecb the same thing. angie:what other options are there for japan? >> what would help japan the most is if the fed would raise interest rates. i believe the boj was betting on that this year, that the fed would essentially take care of weakening the yen, but as we can see -- angie: by strengthening the dollar? >> yeah, but that's not happening. angie: so what, helicopter money? >> that is not going to work. that is an illusion. we need to introduce more structural reforms everywhere. ideas like investment in infrastructure are good. lead theld probably
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time of austerity behind us. spending inent terms of infrastructure would be gdpful not just for current growth, but for future gdp growth. the hope that that will gradually over time raise the growth potential around the world. there are no quick fixes. angie: the growth potential out of china looks dire, especially after the weekend figures for property prices showed a little cool off in the recovery there. put toosonally don't much stock into the high-frequency news that comes out of china. i am more of a believer in the short cycles we are seeing in china. angie: where are we in the cycle right now? >> we are in a structural slowdown. year on year growth will be lower. there is nothing bad about it. every other country has gone through this. it has been going to this for five years now.
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but q1 growth was always particularly week, which then incentivize the government to stimuli -- stimulate the economy. the same thisect year as we saw last year, and maybe pboc will help things out. we will leave it there. thank you so much for that. forward as, rupee india's central bank governor will step down. we will take a look at that and what else is moving the fx markets next. ♪
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>> welcome back. these are your fx headlines. dollar-yen in the green. equities getting a decent bid. big week for the japanese currency in light of the brexit vote. bank warning the boj
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will likely intervene if it falls to 100. b in european currenciesid. there is likely some short covering involved in the pound, which is above its 50 and 100 day moving average. ,he headline this morning several polls show that the remain camp in the lead. backing tied to the economy rather than the killing of jo cox. offive probability is 31% leaving. sterling-dollar continues to be the main focus with goldman
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sachs saying in the event of a leave vote, it is these two key crosses you will want to pay attention to the most. let's move to india, where rexit made the rounds following the announcement from raghuram rajan that he was stepping down after his term ends in two and a half months. no secret that the market is not liking this development. traders reducing their exposure when you look at non-deliverable forwards. inhore rupee starts trading three hours. last quote on that with 67 to the u.s. dollar, so some weakness early on. have a look at the pound's--- pound-sterling. it has been all over the place. lines, one drove to is this, and one is that.
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50 and 100 day moving average. those are the stories driving your fx markets. angie: more coming up on "first up". stay with us. ♪
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,ngie: 8:30 a.m. in singapore beautiful skyline view. you are watching "first up". to risk on returning as the chances of britain leaving the eu diminished. stock benchmarks rising for a second day with book markers putting the chance of brexit at just 30%. oil making gains, the yen weaker. data shows japanese exports falling more than expected in may. expected to come under renewed pressure today following raghuram rajan's decision not to seek a further term.
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chief economist help to strengthen the rupee. vladimir putin considering selling stakes in rosneft to china and india as it struggles to hit targets ahead of the next election. moscow was to raise $11 billion .y selling 20% of rosneft the deal would strengthen ties with each and cover budget shortfalls. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. japan posted a surprising trade deficit in may as exports fell four and eight straight month. expecting aad been 70 billion yen surplus, but instead a deficit of ¥40 billion. let's get more on that story. brian fowler joining us right
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now. despite the deficit, what stands out today in japan's report? i think the big number to look at is the exports to china, which fell 14.9%. trading japan's biggest partner, and that 14.9 percent decline is twice the pace of decline we saw in the last two months, so it is clear japan exports are being hit by slowing markets, emerging as well as the strong yen. companies have then warning that they will see profits fall for the first time in five years. agie: governor kuroda giving speech later today. do expect him to say anything new about the economic out look after the boj did not do anything last week? to a bunch ofing the country's best and brightest young prospects, smart, ambitious people, so i expect he will be up he today -- upbeat
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today. risks, some of the brexit are now diminishing, but we will be looking at those results early in the morning friday, and differs a reason the u.k. winds up pulling out of the eu, then i think you could expect the boj to be in contact with its counterparts around the world, and anything could happen, any kind of coordinated action or message, so we are really focused on friday at this point for the bank of japan. angie: today, we are seeing pickup for japanese equities akeningto the yen, we slightly. could we see the ministry of finance intervene if it starts weakening again? >> you never say never with japan. japan goes its own way in terms of intervention and verbal intervention. having said that, with brexit still undecided, it would be
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considered bad form for japan to start intervening in the markets on a solo basis. i would expect no action, -- ough i believe he can move the direction. thank you so much for that. else take a look at what we are following for you on the bloomberg this morning. rosalind: reports from tehran say iran has signed an agreement to buy 100 planes from boeing, the first deal in the country since u.s. sanctions were lifted and follows the $27 billion agreement to buy planes from airbus. boeing still needs a license from the u.s. treasury. iran says more details will be revealed once washington gives its approval. apple facing a new legal holder
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-- hurdle in china. apple says it has filed an appeal which allows iphone sixes to remain on the market. the iphone 6 and six plus in french on the patent rights of a phone maker because of similarities to its model. an alibaba unit will by 20% stake in a thailand company to become a key financial services player. once the option to increase its holdings to 30%. it offers online payment services and is said to be planning an ipo this year. netflix is expanding its push into japan, planning to produce more original japanese shows after a series introduced this month exceeded expectations. expecting $6 million
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this year to buy and produce content. newlix is adding over 130 markets this year, although it faces regulatory issues in china. that was a look at some of the stories making headlines. angie: the embattled malaysian enjoyed victory into elections over the weekend, helping to tighten his grip on power. withw the coalition win bigger majorities than expected. this was a widely expected, and i guess he can shrug off those allegations against him? >> it's quite difficult to shrug it off, but support is there. it is significant because it is seen as a litmus test, the first test to see if allegations against najib have had support.
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he hasn't been hurt by the 1mdb scandal. the results validate his position at the top. voters who rural form the backbone of his party are still behind them. take a look at what najib said. to be sure here, several factors did help najib win over the weekend. the opposition has been pretty divided. there was even an independent candidate. that made it much easier for the ruling party to win. was visible in the lead up to the polls. his cabinet ministers made daily trips, shaking hands with voters, handing out bags of rise tothose in need -- rice those in need. angie: is it fair to say that
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the opposition has not been able to capitalize on gains made three years ago, that they are losing ground? >> you can say that. the opposition has been in disarray. there has been political infighting within the group from the very start. over just about everything, leadership, policies. they clashed on whether or not to implement the islamic penal code. there have been an reconcilable differences. it does not help that the key opposition leader has been behind bars. needless to say, the ruling ,oalition capitalized on that and not surprisingly some political observers say the young voters who would have voted for the opposition just did not cast their vote. showingare with najib off his power and building support on the next general election in 2018. angie: thank you for that.
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coming up, chinese home prices rose and fewer cities last month, but black rock says the market still looks attractive. we will will hear from the head of asia real estate next. ♪
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,> it is 8:41 a.m. in hong kong and these of the stories making headlines around the world house speaker paul ryan has confirmed his support for donald trump, saying republican unity is more important heading towards novembers election. he says that as bigger he has a responsibility to prevent a democratic win, but will challenge donald trump if the nominee does not stick to conservative principles. ryan has already review the for threatening to ban muslims from entering america. rowsands of people joined a left in okinawa, protesting the u.s. military presence on the island. they demanded a review of the
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bilateral security agreement which sees okinawa hosting american forces in japan. anger has grown after the rape and killing of a local woman and which an american contractor is a suspect. a former marine was arrested last month, but has not been charged. the u.n. is warning of a humanitarian disaster in falluja as thousands of civilians try to escape the fighting. the so-called islamic state militants seized the city two years ago, but the iraqi army has now declared it liberated. more than 80,000 people have fled since the operation began last month, 10,000 in the past three days. mosul isern city of the only urban area under islamic state control. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. i am yvonne man. wase: if you thought msci hard to please, china may have a tougher time winning over the
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compilers of bond indexes. china has made some progress when it comes to bond markets, but the question people are asking is if it is enough. haidi credit where credit is due, yes, china has taken a major step towards allowing foreigners greater access to the bond market. it has become the world's biggest market, but it is fraught with issues. have seenf volume, we the interest in terms of foreign holdings in chinese bonds travel in tandem with equities, up 70% from the start -- end of 2013 to the first quarter of 2016. in terms of equities, a 66% gain in foreign ownership. in february, the pboc got rid of his quote is when it comes to the interbank on market for these foreign institutional investors. last month, we had further reforms of the currency exchange rules.
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despite these moves, they may not be enough when it comes to china wanting to get its domestic notes added to global bond indices. they are compiled by citigroup, j.p. morgan, barclays, etc. the hurdles are the same cited by the msci when it rebuffed chinese stocks, assess ability, curbs on bringing home profits, repatriation issues, and unresolved tax issues. bond investors more so than equity investors are more likely to be driven by these technicalities and need clarity on them. market is onehe thing, but exiting is a greater concern when we have market volatility. is at stake here? does china really need foreign funding?
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that's right. about $150 billion is at stake. if you want to bring this up on up thatomberg, bring top story on the chinese bond market. government amount of debt that china could raise with inclusion in global bond indices. that's compared to $30 billion when it comes to msci inclusion. this comes at a time when china could use that funding. beijing is looking to track record bond these issuance levels we have seen. $1 trillion in outflows could be seen to pick up again. what is thestion is likelihood of getting approval. on shorean has placed government bonds on review to be included in its market indices.
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not saying much. in march, it said it is monitoring the situation. 2018 could be the year that they get the green light. china is closer when it comes to getting their bond market included in these indices. chinese government bond yields are almost 200 basis points above the u.s. treasury counterpart. passive inflows from that inclusion could be a enough of a kicker to compel global central investors torefore get into china sovereign bond market. angie: thanks. new home prices rose and fewer chinese cities last month, a sign the recovery is easing. price climbed in 60 cities , andred with 65 in april
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growth in average new home prices also slowed for the first time since october. local governments have been introducing restrictions in lending centers, including shanghai and shenzhen, where prices have been surging. let's discuss all of this. when you take a look at the portfolio of investments you have in china, are they diminishing in value or are you looking to expand? >> we tend to focus on commercial properties, offices and retail. i don't think were out of the woods yet here it on the commercial side -- yet. on the commercial side, offices in tier one cities, starting to see a bit of a resurgence. angie: why? >> the main reason is lending is starting to open up slightly. , there isrations side
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still good demand for office space. the good shopping centers are still good for retail. in tier one and on the retail side in tier two. a's economy is slowing down. if you are in the luxury goods in, that is not a good spot to be in right now. we are seeing that in hong kong. , middle market retail, there is a lot of perspective. we have a shopping center that caters to those sort of brands and it is actually doing well with 90% rate growth. angie: anything that taps into that service sector rebalancing? >> exactly. the middle market economy is what you have to go for. super high-endg fashion, jewelry, watches,
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that's not a great place to be. there was a real dearth of lending, so the transaction volume fell very sharply. we are just starting to see a bit of an opening up on the taps of lending, and so were seeing more trade going on on the hard assets. angie: where are you expanding in china? for office cities and retail, and were looking at selected tier two cities for retail. in the region, we operate mostly in the five big markets, hong kong, singapore, china, australia, and japan. out of all of those, we are buyers with the exception of hong kong. hong kong is suffering. it has had years of low interest rates and huge growth from china. are you finding capital controls actually affecting the residential market here in hong kong with mainland china buyers ability to buy here? >> it has had an impact. the thing that has had the biggest impact is the punitive
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stamp duty for nonresidents, multiple purchases. it is a brutal stamp duty rate. you're a normal hong kong person and you want to so one property and by another, even that is difficult, because if you end up holding two properties by mistake, you will get hit by stamp duties. of, the mainland issue capital controls have issued and taken some of the froth off. angie: what about singapore? >> not in the residential market. it seems to be all across the buyersto punish foreign and multiple owners. angie: a lot of pressure on domestic buyers here. >> absolutely. address theing to affordability issue, but i wonder if government control is the way to do it. the market will tend to self
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correct. it is usually the best way to do it, promote more supply rather than reduce demand. angie: australia is seeing some pressure. they've tried to cool off the markets are little bit when it comes to foreign ownership. everybody knows what they're talking about. >> they have. they have done that with some success. the difference with australia is that there is the ability to create a lot more supplied than there is in hong kong or singapore. going back to singapore, the residential market is still weak. i feel we may have just turned the corner on the commercial markets. there have been a few big sales recently. i could see rents firming there. if there isially nothing and pipeline, current supply will go up and value as demand goes up. what about japan? demand for the residential
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market, anything property, even previously you cruise the link cusas and options -- yet >> policy rates are hugely important in terms of real estate or it that's what were living with, a lower for longer global environment. at the same time, we have not gotten rid of inflation. no interest rates, no yields, no inflation, people had towards property in general, residential for domestic purposes and commercial generally. japanese negative real interest rates will move things up another notch in japan. angie: negative is a positive when it comes to real estate, at least in japan. thank you for a comprehensive look at the region. coming up, japanese sportswear maker may be losing some energy. find out why it is expecting a slowdown, next.
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angie: welcome to the stock exchange. trading underway in asia. how do you say asics? >> americans pronounce it one
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way, and japan pronounces it another way. angie: let's call the whole thing off. it is a running shoe company that makes other sports wear as well. forecastts net income by 27%. yen, reallys the hurting it, stronger than expected. it is now revising its estimates and will base its forecast on 110 to the dollar. the stronger yen has been an issue for asics. angie: gold? >> what? mean it is brexit week,
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hedge funds betting the gold rally will continue. big decline on friday after a block trade crossed. yes, having a bit of a slow monday today. angie: blame the monday blues. >> yeah. usually the stock reacts very heavily on reaction of its earnings forecast. about 3.5%,before, but this is after we saw domestic sales of cigarettes fell 4.5%. this is after prices were hiked in april on some of its brands. this is a reactionary drop. got approval of its anti-hiv drug. angie: thanks, guys.
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that's the verdict from the stock exchange. our reporters picks are based on news events. that is it for us. raghuram rajan not seeking another term of the rbi. what damage will this do to confidence in india? , 100 against the dollar targeted as the line in the sand. mr. yen is on and about 10 minutes. ♪
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>♪ it is monday, the 20th of june. i am rishaad salamat. this is "trending business" . ♪ rishaad: japan leading the asia-pacific higher. the markets convinced britain will stay in the european union. the pound reflecting that as the latest polls show the remain campaign gaining momentum. oddsmakers see a 30% chance of a brexit now. the rupee

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