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tv   Asia Edge  Bloomberg  June 26, 2016 11:00pm-12:01am EDT

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governance -- language]g foreign >> addressing the world economic forum. managers need to ensure a stable -- measures need to ensure a stable economic environment. the united kingdom voted to leave the european union.
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not sure if he has talked about that just yet. china weakening, that is the most since we saw in august. we will continue to watch the headlines coming out. it's go to david, keeping and on the market. -- keeping an eye on the market. david: talking about the need, the importance of keeping the international financial system stable. they do remain committed to reform. equity markets looking like this. not as bad as friday, but not much better as well. equities in most the u.k. and u.s., oil prices are also getting sold it down as well. looking at gold, getting more
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and more precious every day. i will be back with more in a few minutes. you so much. the markets will be looking for any additional signals on the timeline for a brexit. david cameron addresses parliament today. the conservative and labor parties -- lyrical chaos. -- political chaos. >> we have seen the prime minister step down and no successor has been named. in the opposition labor party, there has been a call for the leader to step down. there have been 11 resignations in the shadow cabinet and one firing. all this political turmoil means
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the eu does not know who it might be a negotiating with. before thes happened negotiations have began. it is only the u.k. that can trigger article 15. at that point yet. in terms of what happens next, you talked about avon cameron addressing -- david cameron addressing parliament. as well as george osborne speaking about the economy. on the eu side, over the weekend, we had some hard-line comment send the u.k. had to exit as quickly as possible. that attitude seems to have soft and -- softened a little bit. staff merkel's chief of said we need to take a timeout and let them assess this.
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david cameron will only be there for part of those talks. the big question is when is going to be the timing of this triggering of article 50 which would start the formal negotiations. hearing -- the chinese premier saying he is hoping to see a unified and stable eu and policy coordination for global recovery. it looks like it is going to be another down day. >> it certainly does look like that. on the policy coronation, we have had similar comments from john kerry and christine lagarde. how this is going to be coordinated investors want to see how the u.k. feels with the nitty-gritty of any exit. utures,e 100 f
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down by 3.6%. on friday. it did retrace some of those losses to close down 3%. exporters gained on a weaker pound. it is extending its decline after that record one-day drop we saw on friday, still at the lowest level since 1985. looking at the pound against other major currencies, you can see that the pound is down against every major currency apart from the norwegian krone. happening off the back of losses in the oil price. sterling is the second worst performer against the dollar today. yvonne: it is all going to be
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about the currency. we have live -- live from london. we are getting more comments coming out of the premier. china hoping to see a unified and stable eu after this brexit referendum and saying special reforms are needed for global economic recovery. they are hoping to see a stable and prosperous u.k.. china -- urging china to change the development mode for global recovery and says that in terms of the brexit's impact on global financial markets, that has reared its head. he is thinking in terms of global trade, growth will continue to be week. -- continue to be weak.
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nation should improve the policy coordination. let's see how markets are reacting to all of this. david: it all goes back to what did the g7 and g-20 agree on? did one of these countries come out preemptively to try to stabilize the markets? we are looking at a lot of things. it is quite timely we are having this world economic forum. a lot of people are looking to china for stability. to a large extent, that is why we are focused on this exchange rate. we had some comments out this morning. stabilizet look to what is going on through the exchange rate. -- asiant a rieger
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currencies are getting sold off. 6.66 is your offshore renminbi. i mention this a few moments ago, can we get the graphic up on asian currencies? just to put a backdrop to this. we are seeing asian currencies weakening on the back of this money getting out of risky assets. thank you so much. the yen continues to gain today, boosted by the uk's decision to reject the eu. 30 year bond yields are falling to a record.
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us now.ins tell us what the trigger was for today's move. reallyactually, i think just probably the risk off sentiment eventually took its toll on the currency. in terms of jitters, they are certainly there and the yuan fixing today did raise concerns about china. these concerns have been here before exit -- brexit and some people want to buy up the yen on that. in the end, i guess -- with these jitters so strong, people went to buy the yen. yvonne: looks like all the talk from this emergency meeting early this morning in tokyo between the boj and government officials seems to be limited in terms of the effect of bringing
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down the currency. tell us about the significance of this meeting. or policymakers just afraid to take action? kevin: the immediate concern is to make sure markets are functioning ok. they want to make sure there is enough liquidity. traders are very focused on the fact of where the line is. the question really is, will they act in july at their meeting or will they act sooner? when will the boj act? the line in the sand, people are looking at 100. there is a little bit of room left to go.
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government officials are expressing concern. yvonne: let's check in on some other news. not an overall majority. seats as took 137 voters seem to shy away from the the lastlishment at moment. the election came after uk's decision to abandon the european union and the benchmark stock market plunge 12% in madrid. shareholders have called for an extraordinary meeting. they are opposed to the $6.9 billion stock plan. they say it will dilute the interest of existing shareholders.
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a chinese container ship has had the honor of making its debut voyage through the new penama canal. the $5 billion project is two years overdue but allows a new class of mega ships to transit the canal. it all comes amid a downturn in global shipping. coming up later on, bt group and what changes they may make if the u.k. pushes ahead with brexit. investors search for safe havens. ♪
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safelypeople aboard after a singapore airlines plane caught fire.
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the star board engine of the -- investigation is already underway in the airline says it is cooperating fully. china is imposing new restrictions on internet search engines requiring them to report band content posted -- content.nned -- banned they will also have to verify advertisers, specify the ratio of pay for search results. the governor said the pboc encourages the development of internet companies but they must comply with banking rules. alibaba's financial has evolved into a finance giant.
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it controls the nation's largest money market funds. dayal news 24 hours a powered by over 2600 journalists. this is bloomberg. more now on what brexit might mean for investors. oil falling while gold prices rise. joining us is jeff lewis. jeff, people say markets are usually pretty good at pricing and political events such as one like brexit. why were they so wrong this time around? closethe polls are very at the start of the real campaign earlier this year and they remained very close. it was such a binary event. markets are not very good with coping with binary events. we have a lot of uncertainty, so .any unknowns we are seeing
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so many potential scenarios. markets are not very good at that. suggestcal evidence there will be some negative possibly the u.k., some spillover to the european economy. it will not be a big enough shock to the global economy. it is not another lehman's. yvonne: is it still too early to look for opportunities? what do you think? such sharp falls actually do
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generate some good buying opportunities. you can look for companies that have been oversold. in a risk off episode, the correlations tend to spike toward unity. that is not justified. yvonne: in terms of treasuries cyclical-wise, we continue to ,ee low growth, negative yields negative returns, i should say. does that change the picture for where you seek safety? caseoesn't undermine the for looking towards fixed income as a safer alternative. the trouble is, wherever you look, there is very little
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value. it will make u.s. treasuries look relatively attractive as one of the higher-yielding developed bond markets. yvonne: in terms of the yen, down about 9/10 of 1%, the most we have seen since the august evaluation. do you think this renews concerns about a hard landing in ?hina effect, that is their reference to chaos theory. small shockfairly as far as the chinese economy is concerned. it is domestically driven and exports from asia on average are only .9% of gdp. unless the u.k. brexit shock spreads to a europe like
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recession, i think the trait affect on china will be pretty small. you would need to see major financial contagion to make something china would have to respond to an worry about. do you think the region could benefit and get some inflows in light of brexit in the turmoil in europe? : in this light to safety, which brexit is encouraging -- in this flight to safety, which brexit is encouraging. it is not helpful. it is not going to overturn everything. yvonne: thank you. next, here from luxenberg's finance minister next. ♪
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yvonne: you are watching "asia edge." brexit has dominated discussions at policymakers gather at the world economic forum. exclusive interview with luxembourg's finance minister. >> it was a shock, but is definitely not a crisis. a shock that will last a couple of days and we have to take the time to analyze the situation. i would advocate for the fact that we should not rush to conclusions. when you live for more than 40 years together, it you have a long history together, you have common legislation and it takes a lot of time to unwind that in order to make sure you have a new framework that is good for both parties. patientend in a very
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way that we should take the necessary time and not haste in making fast judgment. >> the problem is, the shock has not worn off yet. the markets are reacting negatively. the blame game has already begun. all comes up voices going on right now. how is this going to play out? limitlso think we should the blame game or not play that game at all. relationshipy deep with the united kingdom, actual trade and commerce is extremely important, and we will keep business in the future with the united kingdom and so we should be aware of that. >> what should be the first priority in these exit negotiations?
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we are waiting for the united kingdom to make up its mind, the decision to apply for article 50. the united kingdom will remain a member of the european union, legislation will be the same, the united kingdom will be part of the market. in the case of luxenberg, -- luxembourg, we will continue to cooperate with london. we are there to do business with london. that was the exclusive interview with luxembourg finance minister. we're also speaking with the co of transfer wise about the uk's decision to leave the
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eu. >> it puts europe and a much worse position from a competitive -- it puts europe in a much worse position from a competitive point of view. a lot of the discussion is on immigration and we are failing to understand without immigration, europe would be slowly contracting. yvonne: let's do a quick market check. slump deepening for the pound after hitting that record drop on friday. shares in australia, a little bit of upside. gold miners are rising today with gold at a two-year high. let's go to hong kong. ,e did see the pboc weakening the most since its august evaluation. that is sparking some fears across the market.
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we are looking forward to the afternoon business in tokyo. governmentom the boj . ♪
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>> japanese stocks have rebounded from the worst day in five years after priming to all they called for action -- prime e called for action to stabilize. equities higher in china and australia today, but we are seeing losses in hong kong, taiwan, and seoul. turmoil in both major parties while scottish independence is back on the agenda. brexit leaders say there is no rush to leave europe.
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china's central bank has weekend -- weakened the lowest in five years. that is after a gauge of dollar strength surged following the u.k. referendum decision. stable and to see a prosperous u.k. dayal news 24 hours a powered by over 24 6 -- by over 2600 journalists and analysts. david: have a look at what is happening. we are still looking at a fairly weak tone to the market, much more stable compared to friday, of course. this to thepare picture on friday, a much better picture.
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decent macro wise, gold and sovereign bonds. equities have come off the lows of the day. maybe finding some order, if you will. back into the mix, we have been swinging between gains and losses. it should be interesting to see how far the uptick goes in japan. futures on the way up during the break. ftse continuing to get sold off. hsbc, have a look at this. it underscores how volatile the currency markets remain.
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have a look at this word of caution. they are telling their clients to be extra vigilant, stop, look, and listen before you cross a road because of these wild swings in the currency markets. japan's biggest brokerages have fallen in tokyo despite a rebound for other equities. to asia finance editor russell ward. russell, why are investors so worried? has --: brexit really much more than other financial firms trading in tokyo this morning. numbers down as much as 17% over two days. both companies were downgraded by jefferies on friday evening
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which cited the brexit outcome exacerbating concern they already had over the two brokerages earnings prospects for the year. the brokerages are at the mercy of the markets this year, they do not have any market initiatives that can boost the bottom line. cutting hundreds of jobs in london earlier this year. the fallout from brexit is going to make it worse for the businesses in the region. yvonne: brokerages taking a hit. what about bank stocks? areell: the biggest banks also down. strangely, smaller banks, financial firms and brokerages are not doing so badly. exposure to the region that is hit the most with the
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more domestic oriented firms doing ok. this early stage, investors do not see a broader shock to the financial system in japan stemming from the brexit crisis. another concern investors have about daiwa, their london headquarters, they might have to shift operations out of london to elsewhere. the ceo saying on friday the company may have to set up operations in the eu. the headquarters are in london, 400 staff. retain passannot sporting rights -- is london cannot retain pass sporting -- rights,ing writes, --
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daiwa would have to move operations there. potentially, a very large impact, very costly to relocate operations outside of london into the rest of europe. yvonne: the question is, where would they moved to? russell board, thank you so much. -- russell ward, thank you so much. the yen is on the agenda and the bank's president says fair value at the moment. >> the key is to provide sufficient liquidity to the economy without creating future inflationary pressures.
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that is the central role of the central bank. have actually pretty much latitude to deal with this kind of difficult issues. the outsideis, world has overreacted to the slowdown of the chinese economy. when economy slowed down from 8% to 6.5%, what is the worry? one percentage point of growth. it is not the same thing as the growth can or 15 or 20 years ago. the size is much bigger. the economic base is bigger. the increase in our growth rate would be very much different. you cannot look at the numbers.
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that is not the same thing. if you look at the politics of growth, you see the different structures of trace economy compared to the economy 20 years ago. >> all eyes tracking the chinese yuan. people are wondering if the yuan will be strengthened in line with the dollar or will be weakened. where do you see it had it? >> market volatility is inevitable. when something big happens in this world, market overreacts and overreacts to much. -- too much. what is important is for the central bank and government to be more tolerable of volatility. as long as you are more tolerable, the market will be stabilizing. muchu try to intervene too
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, the volatility will be getting worse. you should be a little more patient allowing the market to correct itself rather than keepg drastic measures to the market down, which often backfires. my view is as long as there is no excessive intervention of the market, the value of the currency will give you the correct exchange rate in the market. -- eventually, you will see a curve, which is more or less realistic. china's central bank
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significantly weakened the yen today after friday's selloff. with theng in haidi story. it is a big move. forecast from what people were expecting. haidi: there are so many different ways you can look at this. fixating on you on fixing has become a national sport. yuan fixing has become a national sport. not a fixing that moves very much. it tends to be pretty stable. against thea look basket, bloomberg intelligence
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has calculated it was flat. the yuan has strengthened. be, rather than own, it does appear to be online with the pboc's recent strategy. yvonne: that is because of dollar strength. -- callingrd from for a stable eu and the staple u.k.. -- and a stable u.k. line, he reiterated the there is no assumption we will
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get longer-term depreciation when it comes to the yuan. maintain a stable foreign exchange rate. i keep using the word because he kept using or. dust using -- using the word. there is no need to assume we will get another round of devaluation. if there is further strengthening in the dollar, the yuan would respond. yvonne: we have to focus on that basket as well. more reaction to brexit, we will be speaking to bt global services. that interview is coming up. ♪
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>> these are the latest headlines. brexit is making headlines in a presidential campaign. hillary clinton rushed out a tv forttacking donald trump saying of falling pound would help his golf courses. minister isime expected to announce a cabinet reshuffle later today after strengthening his grip on his ruling party. on friday, the supreme council expelled two opponents of his leadership. they were sanctioned for appearing with opposition leaders. the chairman has defeated a challenge from his brother for control of the south korean conglomerate. they rejected the proposal to remove seven directors from the board.
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global news 24 hours a day journalistsver 2600 and analysts. yvonne: time to return to the world economic forum. brexit fallout has been at the top of the agenda. formal speeches and him -- and ininterviews bloomberg interviews today. stephen engle is there for us. at the summer dav os. i want to get to kevin taylor. some problems going on in the u.k., you've probably heard. what was your initial reaction?
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kevin: initial reaction was pretty surprising. i think we were all a bit shocked. we had already prepared for both alternatives. from our perspective, it is business as usual. we invest heavily in europe. we are operating in 170 countries and we have growth across the globe. it is going to be interesting to ministert a new prime how a new trade deal will be cut. >> that is critical. i would assume you would advocate business having a role in those negotiations. there will be a lot of fist pounding on the stables. >> absolutely needs to have the in thesethe business negotiations. it is critical we have as much free trade as possible. be -- wet is going to
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need to move forward and take the right investments accordingly. >> what would be the most tangible impact on business? what is the biggest sticking point? >> we have agreements with the operators across the globe. from a technology perspective, we need to look at the implications of that. from a private company perspective, we see no difference. we will continue with the investment. >> the markets are getting walloped right now. this has become a global shock. >> it is going to be interesting. i just don't know yet. whenever there is a shock, people look what is going on and move forward. whenever you see major changes
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in the market, in three or four years, it always comes back anyway. >> have about your efforts in china? china has been one of the greatest beneficiaries of globalization. your sector has been closed to foreigners. >> we see the needle changing. we see as a fantastic opportunity to work with our multinationals investing in china. the chinese multinationals going across the globe, we are providing services across the globe to them. very exciting times for us. i think it is going to be much more exciting times. >> more pressure on you to deliver? ins of reports about one five financial companies or technology companies considering relocating out of the u.k. following the brexit. the pound has been decimated.
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>> no pressure at all. in terms of asia, growth. he knows what is going to happen going forward in terms of business. we see it as business as usual. happen, wetiations will take stop and make the appropriate adjustments to our strategy. our focus is on delivering to our customers. >> you are truly a global company. is there a possibility of a global crisis because of this that affects global profitability? >> i don't think so. i just read jpmorgan's philosophy in terms of the brexit today. u.s. markets have had a little bit of an impact. i do not see a major impact globally. i think we will eventually get
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that. when the u.k. gets its new business model with eu established and new trade relationship, it will be business as usual. it will be interesting to see how that model develops. >> where what you get the most traction in asia in the next couple of years? >> we have seen growth across asia, the middle east, africa. we see an exciting time in this region. >> we will leave it there. they are telling us to wrap it up. kevin taylor -- that does it for this morning from the world economic forum. we will be back tomorrow. up, the incoming philippine president lays down the law promising a nationwide
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curfew in the battle against crime and corruption. we are live in manila next. ♪
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yvonne: welcome back. from beingaway officially sworn in as the new president of the philippines. he has been laying down his priorities. -- he has some tough new policies. what are his plans? it was relatively short by his standards. we are used to hearing him speak for hours on end. it was relatively brief by his standards. he covered a number of points.
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reinvigoratings family-planning in the philippines. part of that was a suggestion. to suggest the families to keep the child limit to three. to --r or not he refers colorful methods of controlling the size of the family. it is a push that has been quite controversial. the philippines is a predominately catholic country. yvonne: he is also implementing a 1:00 a.m. liquor ban as well. in terms of his stance on security, he remains tough. saying he was hell-bent on stopping corruption.
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is one of the points he also made. , he is encouraging government officials who are not corrupt to quietly step down before he assumes office. drugs asard stance on well as a curfew to instill a sense of discipline and to promote a safer environment for business. aret of businesses interested in how he implements this. island where he is based has been rife with a lot of and order of peace issues, corruption as well. incidences of unrest. if he is able to follow through on his actions or his
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directives, it is something the business community is watching very closely. he has been mayor for more than 20 years. what struck me was that if he could run again and go back in time to run for president, he would not do so. >> it is sort of indicative of the melodrama that surrounds a .ot of philippine politics it reminds me of the mexican soap operas, for lack of a better term. if he could go back in time, he would choose not to run. constituents his it is the support in manila that forced him to run. towards the end of the speech,
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he was able to work in a quote from abraham lincoln. you will be hard-pressed to find a more flowery way to communicate to the people that yes, i am committing to my policies and my actions regardless of how controversial they might seem to the outside. yvonne: first day a couple of days away for the president. bloomberg markets middle east coming up at the top of the hour. >> good morning. let me give you a little bit of a overview entities -- and tease. we will be joined by the nigerian oil minister live from beijing. he will provide some context for the oil market.
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taste. a little bit of a yvonne: that is it for
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♪ rishaad: -- yousef: bracelet sending the pound down again. there is a growing sense of unease. the decision is mired in political chaos. yousef: crude sliding again although it has recovered losses. we will have


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