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tv   Asia Edge  Bloomberg  October 2, 2016 11:00pm-12:01am EDT

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curbs. and amazon has grand ambitions for indian investing. they are vying to be online sales number one. biggest shipping line says for team ahead for acquisitions. is consolidation good for a struggling industry? we are live with more this hour. shery: and i'm shery ahn. many markets we are keeping an eye on. they are giving a boost to the regional benchmark index, which from a low. the nikkei is gaining more than 1%. all factors in the green with health care stocks and consumer goods leaving those gains, and remember -- japan just released its boj survey showing large
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manufacturers do not really expect sentiment to get any better. look. they are gaining revenue. they beat expectations. australia on holiday. up 8/10 of 1%. sentiment in japan largely held out over the last three months, even with the stronger yen. we have our north asia economy editor covering the story for us. what were the key takeaways here, henry? henry: hi, angie. the sentiment among large manufacturers did not get any worse. i guess that is the good news. the bad news is, it remains at the lowest level from abenomics more than three years ago.
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the yen has gained about 19% this year. you know, a weaker yen was supposed be one of the key drivers of abenomics, by helping these companies' profits go up and feeding through two wages and consumption inflation. obviously the gains have eaten into that and weaker global growth has also had an impact. non-manufacturing companies have also softened a bit. so, henry, what is next and abenomics then? henry: well, i think, going forward, the forecast is for more of the same for the japanese economy to sputter around, to eke out growth here
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and there. the potential growth rate is about zero. absent major changes, that is what we can expect going forward. most of the policy burden has been on the bank of japan. at this point, there are serious -- about about how whether the boj has reached the limits of its effectiveness. government has made some modest structural reforms, such as taking steps to get more working women into the workforce, more married women into the workforce, but they have not taken on the more politically challenging and deeper forms. angie: ok, yeah, indeed, that is what everyone is waiting for. thank you so much henry hornick
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-- henry hoenig. the manufacturing gauge at a two-year ride. china heading into golden week, feeling better about the rebalancing of the economy. stephen ingles here talking about all of that with us. it showed a little bit of stabilization. we are seeing these disturbances in china, and the stabilization. angie: yeah. months of first two the year there was volatility and now there is stability. sorry, i'm just trying to catch my breath. angie: definitely, we saw the market close and it is falling some -- following some wall street leads. that's really showing the broader story here, isn't it? guest: this is the official cmi the
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this means improving conditions. if we look at the services industry as well, we see they have had rather robust growth in telecom, construction, banking, new economy. now we are going to get third-quarter gdp numbers out on october 19. likely, according to a number of economists we have asked, likely slow down to 6.6% growth after two quarters of 6.7%. angie: yeah. this stabilization is likely to translate to a bit of a shift in policy maker outlook on stimulus. less stimulus because they stabilized the economy? perhaps more tightening of risk control. angie: it's interesting as well to see all of these curves in a number of tier one cities, -- impose aijing
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national week this week when perhaps people were hoping to knock on doors and line up at these developers' offices and invest money into second or third homes? guest: we always know when there is a rush for apartments, because our phone, even in hong kong, keeps ringing from agents. they want to be one or two steps ahead of the emperor and incur -- impending curves. a number of stories out this weekend -- they have announced tightening of these property curbs. beijing property rose, shenzhen was up. jen -- tianjin banning non-locals from buying second homes.
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again, the focus is more to containing risk. they have seen their property prices skyrocket. yet, and when you consider the proper market is strength i present of chinese gdp, policymakers are between a rock and a hard place. guest: underpinned the recovery. angie: very much. ok. overlyr guest -- not optimistic on the outlook for japan. includingicy, monetary policy, they have been trying to push out the japanese growth rate. the economy is doing ok, but i would say the momentum has come down. for the moment, we not expecting theeconomy getting into chinese recession, but in the meantime, we do not expect the growth rate is pick it up again -- is picking up again because
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of depreciation and the power of japanese consumers. angie: he is the chief macro at a company, and he believes the boj can afford to take her time before any further policy revisions. >> it's not shocking to boj people, in my view. probably the boj could wait to think about their next action, with this being the yen currently trading on 1.01. i think if they change the forecast, it will lead to a downward revision. another opinion that
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the banks need during flexible on policy. >> emerging markets have to it if it from liquidity and low interest rates overseas. that has led to search for yield strategies in most asia and and emerging markets. we could see a reversal of that from december into the next year. some central banks will have to change their stances on monetary policy, for instance. a word fromhat was asia. ok, we have a big guest later. the queue -- the cleveland fed president will join our kathleen hays. you do not want to miss that. all right, let's get by to the market. what's moving right now. angie, one of the currencies moving is the indonesian rupee, which is reversing friday for losses.
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that inflation expectations are rising. we are expecting cpi data to come out anytime today. cpi is expected to rise or than 3% the month of september. at thealso taking a look kiwi dollar. it is losing ground, reversing those gains on friday. we just heard from an analyst, -- now the kiwi dollar is losing ground, 2/10 of 1%. they are saying at two strong kiwi dollar would not face a chance with the fed downgrading inflation expectations which would mean more rate cuts throughout 2017. let me have a check of the
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offshore you on. it's really not moving. the yuan was included in currencies,et of they said to expect a boring becauseyuan. authorities will want to protect their image and not allow any volatility. at 6 now the offshore is 7.50. angie. angie: coming up later, prize possessions. a look from australia. and one of the largest private car collections in the world. coming up next, another bump in the road for japan, unless the boj can provide clarity. we get jpmorgan's take. this is bloomberg.
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angie: a check of the latest business flash headlines. debt surged to $250 billion. borrowers want to lock in lower borrowing rates. pimco says asia's credit is rising faster than economic growth and does not expect the rising debt to slow. resorts, they are beating expectations. gamingrevenue from resorts, well over 4% predicted by analysts. coulday that the recovery be buffered by a visit from the chinese premier.
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beijing wants the city to become less dependent on gambling. and there will be a new midrange for club med. they will target multigenerational families who live close to major cities. they hope the resorts will appeal to families who just want a weekend getaway. there's a limited number of secondary homes. at the same time, the cities are already even bigger. gothere is the need to outside. it's even greater than we have elsewhere. angie: we are joined by richard titherington, the cio of emerging market equities at j.p. morgan. last month was very interesting.
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we thought we would get a pickup and the month kind of tapered off here. and now back to that resumption of a rally. what is driving it, do you think? richard: i think it couple of things. in the first place, the stability of the dollar in recent months is very positive for the emerging world. is very sensitive to move currencies and commodities. but also, you are seeing better asiamic news come out of and you are starting to see a return in corporate earnings. lothe picture is looking a better than it did 6, 9 months ago. angie: i want to target on japan right now because we are watching the yen dissent for -- descendent for a straight session. manufacturers, showing disappointment in the economy, reflect on the future to be sure.
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why the disconnect her? are trading the yen almost at a cost beyond risk, if you like? when the yen is strengthening, it's actually telling you that people are really nervous. if anything, the weakening yen is a sign of confidence in the outlook in japan. the survey came out with not so bad. it stillt so bad, but reflects, what is the general mood in japan, which is things are fine, but they're not great and if they are not great and there's no third arrow to support future growth, why should we as manufacturers lift our hands to support that would capital expenditure? clearly, as you say, when you look at what is going on in japan, the boj is trying to get this mythical 2% number. actually, they are pretty much flat. deflation has at least moderated.
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so the consumer is relatively confident at the moment. japan, are right for corporate japan is not prepared to spend. we see more things going on domestically with consumer oriented japan than industrial japan. --ie: what are your investor what are your ideas for japan question mark for global investors, at least, what is a good index for a portfolio? richard: to a certain extent, japan is a bit of a diversify her. u.s./chinae dichotomy. japan is, if you like, your ultimate diversify her. and i don't really think that people should focus on exporting japan. i think the story is more
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domestic. and to a certain extent, as a foreign investor, a rising yen increases the returns from japanese assets, and that is why interestingly, yen bonds have been a fantastic investment for foreign investors. ok, but unless you are an exporter and have seen again in the equity market, in export stocks, that does hurt and curb the outlook for those stocks and companies. richard: that is how we have talked in the past -- i never really thought the story about why should invest in japanese equities is about exporters or about the macro picture. it's really about finding companies within japan that are gaining market share. and you can see them on the consumer side. you see the line recently that has done very well. i think it's much more domestic market share gain companies you
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want to look at. angie: is this going to be moves in theny boj future? buying equities, buying etf's? trying: well, the boj is to get this 2% inflation number. i don't think they are going to be particularly successful. i think the market is telling you that. buying equities does not achieve much, i don't think from their point of view. the japaneseately economy is pretty stable and i don't think anything the boj is over the next few months is going to change that. angie: it's interesting to see the mood with the boj, the same day the fed leaves things unchanged. do you think that pattern will continue to play out?
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richard: well, i think actually what happens at the fed is far more important for global markets than what the boj does. has a domestic agenda. markets,look at global really what the fed is going to do is going to make a big difference. angie: yeah, and the other country worried about another lost decade scenario could be china, but let's talk about that when we get you back for the group discussion. richard titherington from j.p. morgan. he will be joining us in about 20 minutes time. but first, amazon has it i on a spot in india. this is bloomberg. ♪
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angie: welcome back.
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you are watching "asia edge ." amazon is throwing billions at india. it is hoping to take advantage of the shopping season. our correspondent joins us from webcam. why is it that important here? is thewell, angie, india of 1.2 5t is a country million. not online retail has entered traded all of the corners of the country. for online retail, there is a really big prize, the prize of india's biggest retailer waiting to be one. represents india -- it is giftgiving season -- people
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like cars, things for themselves, electronics, tv's. it's a really big buying season. angie: like any good holiday, buy, but why is india a market for amazon? amazon has not done that spectacularly in china. it has been there for many years and spend billions of dollars without making much headway. india is really amazon's lasted chance to conquer a big global market outside of the united states. india does represent for amazon its chance to become the country's biggest retailer, a title up for the taking because there isn't a big off-line retailer -- there's not a big brick-and-mortar retailer in india. so come amazon actually can
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become india's biggest retailer -- not just on mine, but biggest retailer. there is a lot to gain here. -- not just online, but biggest retailer. there's a lot to gain here. angie: yes, exactly. what action is it taking? guest: amazon learned its lessons from china. it deployed customizations for the indian market. it has gone into offering languages, especially for retailers, for its sellers, it has deployed things like small gettingere sellers are the milky indian tea which is chai, and people are teaching them how to get online and to promote their products. and also, another amazon india -- manye in
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things amazon is doing for the market. itha, thank you very much for that. let's take it forward to the afternoon business in tokyo, where we get the latest on japan's's opening after the short break. this is bloomberg. ♪
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angie: japanese policymakers will take later -- little comfort from the survey unchanged from the previous period and just below expectations. capital investment across all large companies is expected to rise 6.3% this fiscal year. gauges official factory remains at its highest level in two years. manufacturing pmi came in at 50.4. have nownese cities tightened rules for home
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purchases in a bid to curb the property boom. and, new resorts such as sans parisian helped macau beat expectations. total revenue from gaming rose 7.4%. the news hasn't helped shares of wynn, though other gaming stocks are faring better in hong kong. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. let's get the latest from the markets. shery, japan act from lunch. how is it looking? shery: definitely that weaker yen is helping exporters. now weakening for a fifth consecutive session at one of 1.47 -- 101.47. that helped boost the nikkei in the morning session.
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they are coming back from lunch break. 1.2% gain in the afternoon session. we are seeing all of those sectors on the nikkei gaining. consumer goods as well as health care stocks leading those gains in japan. we had some data on japan showing the tankan survey of business sentiment disappointed, showing they came in at six instead of seven. take a look at the stocks you need to keep an eye on. they are helping advance the nikkei. sessionin the morning after the clothing store operator raised its full-year net income forecast. holdings, the leading manufacturer of specialty inks, jumping on an upgrade. coca-cola west also advancing in the morning session. at $2.7s valued
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billion. today, the trading session in asia, pretty thin because we are seeing many markets right now on break for a holiday. angie: struggling airbag maker takata is said to have received investment offers from five suitors. let's bring in rosalind chin. how big would the investments me? toalind: we have $1 billion $2 billion from these five suitors. s market cap is now $290 million. a pretty big jump in terms of market cap compared to these offers. kkr, the bionclude company. the last two being airbag makers as well.
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waslast time that takata valued at more than $1 billion was definitely last year. this increasing cost due to recalls really eating away at its value, as well as, the situation goes on -- as more recalls get announced, we also see that the recalls could total more than 100 million devices worldwide. the cost is estimated to be more than ¥1 trillion, which is more than 10 billion u.s. dollars. angie: let's take a closer look. not all bids considered equal. why are some viewed more favorably? rosalind: there's three bidders that sources are telling us takata may lean towards because all five did propose rossi as an option, but two insist on it. that is one of the reasons t
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akata may not look at those favorably. kkr,hree are daicel, and specs and gate. at this point, we are told none of the bids have been ruled out and the talks are still ongoing. could be sometime before they arrive on a bitter. angie: thank you so much for that. mitsubishi heavy says no decision has been made on whether its much delayed new domestic airliner may be held back. the aircraft division says delivery to its first company may have to wait because of some technical modifications. ana says it was warned of the possible delay. shares fairly flat at the moment, having fallen sharply at the open. shares of japan's largest retailer have jumped in tokyo. we are talking about seven and i slashing its forecast profit,
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but still seeking 2% gains. 7-eleven parent sees full-year company falling to a seven-year low. the president has been struggling to revive the company after a power struggle and he missed his deadline to deliver a recovery plan within 100 days of taking over. kawasaki heavy has added to the atmosphere of gloom around shipping with shares plunging in tokyo. the stock is heading for its biggest loss in eight years. profitits operating fo forecast in half. heavy says it will conduct a review on whether to continue with its ships business. the world's largest online container line says it is open to acquisitions if the right opportunities come up. the ceo said consolidation is
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good for the industry. he was speaking to juliette saly, who joins us now, right here in hong kong. what do you have to say? gamgee, of course consolidation is what everyone in the shipping industry is talking about. shipping analysts have told bloomberg that you've had years of surplus capacity, and the only way forward is merger and acquisition, which we have seen from a number of container lines. the collapse of south korea's largest firm, hanjin shipping, which filed for court protections in august, that left $14 billion of cargo stranded. to the on board, i spoke ceo of maersk and asked him whether or not they are having their eye on hanjin's assets.
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>> we've said if there is interest in the right partner, we are open to acquisition. i cannot speculate. juliette: do you think there needs to be some consolidation in the industry? >> we have long said that consolidation would benefit the shippers overall. helpll, consolidation will the shivers balance out supply and demand, so we think consolidation is good for the industry. juliette: can you tell me a little bit about breaking up the band, splitting the energy assets, focusing more into shipping? how is that going to work? >> there are significant relationships between our sister companies and ourselves. this strengthens the bond between us and helps us grow the top line. this exercise has been done to help try to grow the top line of
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the group. we think it is a golden opportunity to work on more synergies. juliette: you were saying before, in terms of things slowing down, seeing some bright upside from trade in the asian region, specifically china? >> overall, shipping trade is not growing as much as it did over the last couple years. within the new normal, we see the pacific trade has been a good situation so far where we've seen some growth. asia-europe is still showing some growth for us. i would say there are pockets of growth opportunities that people should pay attention to. normal,: angie, the new robert talking about there. interesting as well in terms of picking up the slack from hanjin being grounded. maersk has launched a new route which sees six vessels a week move through the asia pac region
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into the u.s. they've got a new route starting from tomorrow on their triple star vessel, which is going to start in new zealand and service asia, including south korea, china, hong kong, and japan. this is to try to service that jen and -- that demand for fresh fruit and vegetables, and meat from new zealand. there is certainly a lot of demand for transpacific goods. angie: reporting from one of the world's busiest ports in hong kong, thanks for that. over to singapore now, where home prices have posted their biggest drop in years as the government sticks with cooling measures. let's get to southeast asia correspondent haslinda amin. a further drop in prices, but is it enough? haslinda: the short answer is, not really. prices have not dropped far enough.
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that is why the government says it is too early to remove the property cooling measures yet. prices have fallen for this 12 straight quarter. this bloomberg chart shows how the prices have dropped, the longest losing streak of quarterly losses since prices were first published back in 1975. but if you track home prices here in the lion city, they've dropped only 11% from the peak. prior to that, they surged. prices have not dropped enough. low interest rates and demand from foreign buyers have boosted demand, raising concerns prices have risen too fast. high-end remains a housing market in asia. my city is ranked the most expensive to buy a luxury home in asia after only yours, hong kong. angie: we surely know how each
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other feels here. but there is a glut in singapore's property sector. how is it looking right now? haslinda: home vacancy rates are the highest in more than 11 years. some analysts say it may take three years to stem the supply of unsold homes. the issue is this low rate environment and the overflow of cash. built, anded, they now the market is flush with supply. cinb says the large supply due to hit the market next year will add to the drag on prices. market, oneproperty of the worst performing in the world last year. they are concerned that some , butopers may run aground s&p says larger developers have the financial ability to weather the storm. the question is whether the smaller players can do the same.
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angie: haslinda amin live in singapore, thanks for that. coming up next, the danger from deutsche, concerns persist about its finances. we're going to ask who is overexposed. this is bloomberg. ♪
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angie: welcome back. joining me now, the cio of emerging markets in j.p. morgan asset management. it is happening in another continent, but it is really kind of making global markets very nervous. should we be nervous? >> deutsche bank is a systemically important institution. whenever you have a problem, yeah, it has a global impact. angie: but what are the direct lines to asia-pacific?
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what is our exposure, if any? >> i think the real issue with deutsche is it is one of the worlds largest derivative players. it has huge exposure everywhere around the world. i suspect that will be the real impact in asia. its lending business here is not significant. >> i guess the point we are trying to ask is, to what extent will there be contagion? >> i don't actually think deutsche bank is going to have a problem. i think we all learned when lehman went under that the consequences were much greater than people thought at the time. i think the speculation is probably overdone. if systemic failure in the european banking system isn't one that you are worried about now, is it the u.s. elections, the fact that we now have a trigger on brexit? showedwhole brexit issue
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that you should never be complacent about the outcome of elections. look what is happening in columbia. they turned down a peace agreement. event cany political be a shock. but i think from a global perspective, i would be far more worried about just a risk off environment, some problems around the credit markets is something i would be more worried about then who wins the u.s. election. >> the indicators from china seem to be improving. pmi numbers seem to be pointing the way forward. is it too soon to say things are turning a corner? are we looking at more easing? >> i think i've been fairly consistent, saying that china isn't as bad as a lot of people have been saying. whether i would say it has
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turned the corner, i mean, it has certainly stabilized. that is what is important. no one expect china to go back to a person, 9%, 10% growth. but the pessimists said, you would have 6%, 5%, 4%, 3%. if they can stabilize the economy, that is important for the global economy. the more you are convinced that china is stable, then >> the safer the global economy looks. >> they stabilize with cheap credit and they've inflated bubbles in property. if they are now tightening the screws on property, are you risking undermining the underpinning of the economy? bear in mind -- >> bear in mind, cheap credit is ubiquitous around the world. it is not just china in that situation. chinese domestic capital markets, financial markets,
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property or anything else, are still pretty immature. they are volatile. you look at the divorce rate spiking on the back of -- [laughter] is still in the early stages of its development as a financial market. no one is pretending china is the same as the u.s., but the authorities recognize these issues. angie: they have also kind of come in and recognized the issue and tried to at least curb their addiction to cheap liquidity through stimulus, which did underpin the first half of the year. can we expect that to continue in the second half? >> i think the pessimist would say, look, all they've done is increased the credit in order to keep the economy moving. the optimist would say, look, that is the first stage.
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you've got to stabilize things before you move on to reforms. i suspect the reality is somewhere between the two. reform probably won't be as much as we like to see, but credit creation won't be as bad as the pessimists say. i don't think you should expect dramatic change. angie: ok. still a country on the move. richard, thank you so much for that. coming up, we're going to go inside one of the largest private car collections in the world. a special report from australia, next. this is bloomberg. ♪
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angie: welcome back. you are watching "asia edge." the owner of australia's largest private car collection has thrown it open to the public and is putting some treasures up for sale. with 500 cars on display, the collection is one of the biggest
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in the world. paul allen has been taking a look around. paul: this warehouse was once a budget hardware store. now it is home to one man's expensive private car collection. roundabout 500 cars. just on $70 million. that is probably being conservative. worth $5ari alone is million, never mind the vintage rolls-royce collection. >> this is a very rare car. >> this is a rather expensive list of instructions for starting and stopping the vehicle. 15 steps to get it going, three to stop. >> not easy to drive. the chauffeurs who drive these vehicles -- paul: also near impossible to drive is this new arrival which we took for a spin. true to the era, it has no
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seatbelts, but does have a bar in the door to stash your whiskey. the entire collection is owned by one man, tony danny, who owned aaa auto, one of europe's biggest car marketplaces. after selling most of his stake, he came home to indulge his hobby. >> are you breaking even? how is it going? it looks like a passion. >> it is a business, but it is essentially a car collection. i understand some of the collection or most of it is for sale. >> some is for sale. paul: some of them are works of art. i can't imagine driving that on the road. what do you do with it? >> it is a car that will appreciate. it is only sold to a select few people. paul: on the other side, the people's cars of communist eastern europe. two-stroke engine, perhaps
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the world's most powerful lawnmower. this has made its way from the former soviet union. it used to be the ride of politburo members. and in the spirit of the cone of silence, the insurance bill for this vast collection is also a closely guarded secret. paul allen, bloomberg. angie: all right, to the modern car now. tesla delivered 24 and a half thousand cars in the third quarter, beating estimates after the ceo implored staff to boost sales. this was its last chance to show it can be profitable. tesla reiterated its ambition to deliver 50,000 cars in the second half and hopes to make half a million vehicles annually by 2018. the zoom of financial and daiichi insurance have formed a halfompany with a combined
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trillion dollars in assets, asia's biggest asset management. one officiallyt open for business on saturday. the ceo says the company plans to break into the global top 15 by doubling its assets under management. he also backed the boj's current policy direction. india has ratified the paris climate accord, committing the world's fastest-growing economy to limit carbon dioxide emissions and reduce fossil fuel use. 4.5% ofoduces about global greenhouse gas pollution. so far, they've only got 48%. we are told donald trump won't release any new information in response to revelations that a claimed loss in 1995 allowed him to pay no federal income tax for
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almost two decades. the "new york times" report is expected to increase pressure on the tycoon to release his returns. trump's supporters called him a genius for minimizing his taxes, and a turnaround artist who would be good for america. bloomberg markets middle east coming up at the top of the hour. we got yousef gamal el-din standing by in dubai. what do you have for us today? yousef: plenty coming your way. we will be picking up the conversation around opec and taking a close look at how they are going to implement their decision. we will carve out that conversation. also, implications for this part of the world. we will look at aviation, specifically dubai airports. the chief executive officer joins us to talk about the aftermath of the accident in the summer and the expansion plans.
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are they going to become the world's busiest airport? we will get you those answers throughout today's edition. make sure you tune in for that. angie: absolutely. looking forward to that. let's take a look at the markets open in this region. this is how hong kong and japan look. here in hong kong, we are seeing some gains. after that chinese official pmi coming in, showing stabilization, as you know, we are reflecting that chinese data as china markets are closed all week this week. over in japan, are seeing gains as well as the yen continues to weaken. across the region, we are seeing gains as asian stocks kick off the new trading month. bankrns about deutsche
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finances eased after the lender said it was going to be paying less to the doj and the u.s. then probably investors had feared. that is a
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cuts andpec's immediate hurdle. iraq challenges the figures and says it won't accept. new pressure for abenomics. the boj governor insists he still has plenty of ammo. yousef: dubai airport continues to set records. it is now the busiest international hub in the world. angie: the world's


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