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tv   Bloomberg Markets Asia  Bloomberg  November 23, 2016 9:00pm-10:01pm EST

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emerging-market currencies, with heading for a low, prompting speculation around the reserve bank ticket into the market. finds 80% support for the impeachment of south korea's president. jakarta joining what is going on. we have a look at the markets, and what have we got? as atte: more weakness jakarta comes online, down .6% as the indonesian currency touches a june low. that is having huge ramifications in terms of emerging-market currencies. you are generally saying weakness in emerging markets. hong kong down .4% in early trade, but some upside from casinos. a little bit of weakness dragging the index down.
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stronger, closing weaker during yesterday's session, and weakness from the korean kospi index as the won plays into things there. japan coming back online after that public holiday, continuing to rally, up by 1%, dollar strength, yen weakness boosting the export stocks. it is close to that 17 level on the rsi. we know it is in a bull market. the topix higher for a 10th consecutive session. , downss from australia .1%, gold stocks under pressure. boral down 11.5%. having a look at these emerging currencies, a june low.
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sell outeing investors of indonesian stocks as well. having a look at the offshore room in the, 6.95. it touched that record low against the dollar. first word headlines with sophie kamaruddin. singapore's economy contracted less than expected. singapore's economy contracted less than expected. gdp fell an annualized 2% from the previous three months according to the ministry of trade and industry. last month, they projected a 4.1% decline. the chancellor of the exchequer has cut growth forecast for the united kingdom. philip hammond/expectations next year, saying the government will need to borrow more.
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hammond cited heightened uncertainty and a weaker pound. ctrip jumped, beating forecasts. to buy a u.k.ed start up for $1.7 billion, adding new geographic regions. rio tinto wants to generate $5 billion of cash over the next five years. mining giant will cut capital spending targets as well as finding additional cash savings of $2 billion by the end of 2017. mining companies remain cautious about a recovery and continue to streamline. earlier this year, rio tinto reported its worst profit since
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2004. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. rishaad: we are having a look at what is going on with emerging-market currencies, the slide continues. the malaysian ringgit falling to the lowest against the dollar in more than year. bi, will they intervene in the market? traders think the central bank has been selling dollars, and has done so at least four times in the last couple of weeks and will continue. is near an all-time low. more than 2.5% in
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the month of november. central bank the is trying to support it. a have been talking about number certain fed rate hike coming up, investors pulling money out of stocks and bonds. shows how foreign investors are coming out of that market. global holdings of debt, and the stocks,oldings of india both falling away. rishaad: it is strange you say that, the amount of guess we get in on this show say we are overweight india, and this chart clearly reflects there is an outflow. perhaps things have changed in the last few weeks. president-elect donald trump did change things around for many forecasters, so the dollar --
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rishaad: you can see this is november 8. there we go. this is the election day. ever since then, a bit of them move up into indian equities, but the path has been down ever since that watershed moment. rosalind: i think you could definitely call it that. it's putting more pressure on the rupee. rishaad: malaysia, central-bank sticking to that rate. they are concerned about the currency, forcing them into a straitjacket here. rosalind: according to bloomberg intelligence, the figures they have, they suggest the outlook for inflation and the economy suggests more easing. there is definitely a case for that in malaysia, but the has kept its benchmark rate of 2% in support of the ringgit. the ringgit is hovering near 18
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year lows. it has fallen more than 5% against the dollar since donald trump won the u.s. election. bank on november 18 said it was not supporting the ringgit, some not surprising that it is caring on. is imf warning the ringgit one of the most vulnerable emerging market currencies due to fx weakness. it has foreign reserves lower than the imf recommends. you aboutet's tell what has been going on with the federal reserve. the minutes show policy makers are ready to raise rates in november, reinforcing the view that economists and traders think it is a done deal. kathleen hays joins us for more. tell us, i think it is one of the most clear minutes we have
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ever seen actually with some definitive key phrases there. right.are absolutely this is a fed divided, some focused on slack in the labor market, inflation below target, others saying it is time to move now. that from the minutes of the november meeting of the federal open market committee, that they are together on this hike in december. let's look at some of the key phrases. recent communications were consistent with the near-term rate hike. i guess they are talking about the speeches they made where they said the case for the rate hike has strengthened. "to preserve credibility" some members of the fed wanted to hike at the next meeting, december 14. they repeated they will be data
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dependent, but the data are strong enough to justify such a move, so let's jump into the bloomberg now. program,atches of this world interest rate projections at 100%. i guess you can't push them even higher. comessting though when it to downside risks, one was the risk of the u.s. labor market overheating, and if they are -- hiking fast enough. what we were hearing about india , china's debt, the u.k. brexit negotiations, so there are some watching,t bear worth but it wirelessly not stop them from a december move. time of there was a data. does it at the end of the day feed into this narrative of a december rate hike? >> i think so. the numbers showing the economy is strong enough to move 25
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basis points, and one number showing there is going to be some fallout from this move. becauseok at jobs, unemployment benefits rebounded from a 40 year low. here is a wonderful chart to give us a sense of this. toless claims back up 251,000, but that 52 week line is still moving lower. you can get much lower than this in the united states, labor markets are so tight. therembers show their could be some consequences you don't like from this, and that would be housing. in home sales out, down 1.9% october. bloomberg intelligence points out that mortgage rates are rising 60 basis points in october, accelerating after the
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election, so that will have an impact on the fourth quarter. durable goods orders have been up for the past five months. we are concerned about fed rate hike's and a dollar, but there were 4.8% last month, and this chart is showing capital , an importantrs indicator of investment, is not strong, but moving in the right direction. yes, enough numbers paving the way for the december hike. rishaad: kathleen, this november meeting taking place before the election, and all the promises of policy changes that has thrown up, but was there any hint as to what might be on the way? which you don't see speaks louder than what you could say. there is no mention of the election in these minutes. the fed did make it clear that they only see a gradual rate hike.
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of thetrump was critical fed before the election, saying they were keeping rates too low for too long. maybe he will like that. one guestere's what said about how donald trump might see the fed now. what donald trump or learn over time is to understand that he need to the fed as an ally rather than an enemy, and when i say an ally, what i mean is he needs somebody who helps him in keeping interest rates relatively low because he has take fiscal plans on the infrastructure and tax reform side. you've mentioned the reason dollar strength, and there is a chance the dollar appreciates too much. ofdonald trump was critical janet yellen when he was campaigning, but now that he is in the white house, maybe he
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will decide he likes a cautious fed chair who will not raise rates to quickly and upset the economy. very muchhank you indeed. kathleen hays joining us from new york, heading for the thanksgiving break there. still ahead, peter coleman about whether the uncertainty of an opec deal is affecting his bottom line. japanese stocks rising as australia and korea dip, why are they diverging? with ♪
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let's have at, look at the business flash headlines. thailand planning to set up an investment company for government shareholding as part of a wider effort to improve the performance of state-controlled
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enterprises. an official told us it should work in the way that singapore and malaysia are. these state-owned enterprises are planning $20 billion of investment in 2017, 3% of gdp. the philippine central bank governor has yet to commit to remaining in the job. the president wants him to stay on for a third term and is ready to change that ball to permit it. is an honor to be asked, but won't accept until congress has had a chance to amend law. not discuss his future with the president. china's attempts to reduce cold capacity could prove difficult. it will complicate efforts to meet the government goal of cutting capacity by 2020. production was cut i 11% this
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year. restrictions were relaxed after prices soared or than 80%. let's get to what has been going se, the dollar on a tear. the highest level more than a decade down to the rate hike being a done deal next month. asian currencies bearing the brunt of it, dropping to seven-year lows. our chief economist is with us now, what do you make of this? normally it is better to travel than arrive. are we overshooting? >> the only reason we might overshoot is if you think the dollar has to price in some risk premium because trump might be more erratic in government than the markets are pricing, but if we are reasonably confident that trump will deliver on fiscal promises, applying a large i think thelus,
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dollars responses reasonable and the response of the interest rate market is reasonable. rishaad: where do we go? >> dollar-yen goes higher, asian currencies have depreciation. the tricky one is across the atlantic. a political risk priced into it. that is going up. rishaad: you're saying people are underestimating those political risks and they're not being priced in at the moment. >> look, there is a scenario under which the euro goes lower -- so theu have major issue is the dollar is not pricing in the political risks. is nh rend.dollar i would expected to slow, but the appreciation, this is real. rishaad: sterling got beaten up after brexit.
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it's doing well at the moment, 124 or thereabouts in this recent rally. it is 20% or 25% below long-term estimates of fair value. outsure some of the people there are looking at that is of value entry opportunity. that is one that probably continues to sit by the sidelines, and the u.k. economy continues to do reasonably well. certainly the labor market looks like it is continuing to tighten. rishaad: loyal has been having an impact when it comes to fx by the dollar. we have iraq on the side of production cuts, but after being sure, the russians are vacillating now. >> what comes out of that will be important in the short term. medium-term, it's hard to see oil do anything but go up.
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you will get some production cuts, but certainly you have a combination of more restricted supply and you deftly have stronger demand. one of the issues that makes this different apart from the taper tantrum, this is a strong growth market repricing. was abouttantrum restricted liquidity and commodity prices came off aggressively. this time i think is very different. rishaad: all being said, what does it tell us about what is behind commodities? look at copper, a 13 month high. it's almost out of left field. trump has to deliver fiscal stimulus for copper to sustain. rishaad: it seems they're getting ahead of themselves. >> if you think about the election we have been through, people being asked to vote on two different views of the
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u.s., and what we have worked out is that the polls have been awful at telling us anything about the relative probabilities of those outcomes, so you have these events which implies substantial change, and there has to be adjustment afterwards. notsize of the moves, i'm surprised by, but we might be frontloaded. rishaad: how much is down to the reflation trade taking place? >> one of the things that has made the move powerful is the fiscal stimulus is overlaying a trend that was reflationary. china has done better this year, the bear market is definitely over. even in europe, unemployment continues at full. the ecb has discussed the tapering question for next year, so a lot of the market did not want to believe what we were seeing and we were stuck in a secular stagnation frame of mind, and then you have a big
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stimulus in the world's largest economy. rishaad: up next, south korea's sk group rated as part of this influence peddling scandal. l be heading to seoul, korea next. ♪
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korea's influence peddling scandal has turned another page. prosecutors staging raids on corporate buildings, samsung strategy office and the finance ministry. this is putting the pressure on president park, isn't it? what are prosecutors looking for here? >> it seems that prosecutors have moved into another phase of their investigation. earlier, they were looking at
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how much pressure president park's friend was applying on these companies to donate tens of millions of dollars. now they are looking at how did they benefit from it, specifically what did they get in return. for instance, they are searching today the offices of the finance ministry that oversees duty-free businesses, the customs service which has regulatory oversight of these duty-free businesses, , wholl as lotte and sk benefited from duty-free licenses. they are looking at how much pressure the government got to approve these duty-free licenses in return for the donations that gave tod sk and others the foundation run by the president's friend. rishaad: tell me about the allegations against the president. there are more allegations now, aren't there? president is getting
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and battled with a number of allegations. the most recent one is questions about what she was doing during the ferry disaster in 2014, when more than 300 people died. there has been a lot of anger and criticism of the way park was not appearing in public. disengage,she was and now allegations are surfacing that perhaps that is because she was taking cosmetic injections, antiaging cosmetic injections. all kinds of allegations are floating. the reason that appeared is because one of the clinics was run by the president's friend. rishaad: thank you very much indeed for that. talking to us about this pressure on president park in seoul, korea.
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coming up, look at singapore, cutting growth forecast after the prime minister said the economy was not in crisis. we will have a look at that. plus, the latest market action. details are coming up. this is bloomberg. ♪
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>> it is 1020 9 a.m. in hong kong. i am sophie kamaruddin. the latest fed minutes validate a rate hike next month, policymakers see rates helped by a stronger labor market. the fed met before the election, but uncertainties have not shifted expectations of a hike. the minutes reemphasize that hikes will be gradual and data dependent. sources have told bloomberg that credit suisse is courting investment of $2 billion to buy stakes in hedge funds. the capital partners unit aiming for minority stakes in a dozen
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money managers, letting banks profit from higher fees while post crisis regulations the turn lenders from using their own money to trade. $900 million with the projects theelp sustain growth, construction chairman has dismissed critics of the company's 900% rally since it september debut. the surge has turned the company into the seventh biggest on the index. the billionaire heading one of china's most acquisitive companies says president-elect donald trump is likely -- unlikely to follow through on his threat of a trade war. donald trump talked of imposing but he said he will continue to invest in the u.s. has common interests will outweigh any of donald trump's
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protectionist leanings. >> i believe that leaders of both countries are smart enough to find the best way to cooperate. i am not particularly concerned. i am optimistic about the changes that a businessman turned president would bring to america. maybe it is good. maybe there are some opportunities. sophie: you can watch the rest of that interview in one hour at 11:30 a.m. hong kong time. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. rishaad: right, this is "bloomberg markets: asia." . i am rishaad salamat. tokyo is office lunch break. juliette: what a great session, the nikkei heading into lunch up 1%, continuing that rally, in
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bull market territory, and the topix is higher for a 10th consecutive session. all of this on dollar strength, meaning the yen is weaker. elsewhere, weakness in emerging hitets, their currencies quite hard, a lot of selling coming through in indonesia and malaysia. in hong kong, the hang seng down i .5%, some solid support for insurance and casino stocks, and flat on the shanghai composite and the asx 200, all new zealand is up by almost .8%. ourw stocks we are keeping eye on, china airlines come up by almost 7% in taipei after the taiwan government said it will take over all the trends asia routes from next month, trans asia assets were frozen, one -- one point $2 billion of
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assets have to cover labor costs and refund customers and travel agencies. sydney, boral falling significantly. it is falling the most since january 2009, but the retail offer opening on november 30. tokyo theaters hitting the daily japan, up by over 26% on a report that its latest animated block lester -- blockbuster will do very well. some stocks making big moves in the asian session. rishaad: the bears continue to alk. let's find out what is going on here. >> were seeing further weakness against the u.s. dollar for the yuan, and short positions on the yuan are adding up, and there
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does not seem to be in the foreseeable future a floor being put in. yesterday, we thought -- rishaad: they stop to the rot. >> that does not seem to be the case. they set the fixing rate at the midpoint, further weaker. this currency is now down to an eight and a half year low and continuing to fall, the weakest since 2008. if we go into the bloomberg terminal, we can see the wonky reasons why. set,ad: when you came on we were having a look at it, and it has weakened further since we talked. there we go. 1.92 that's gone. >> we are heading towards seven on the offshore, but this is on shore.
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this is offshore, the blue line, the precipitous fall heading toward seven, and the white line is the three-month risk reversal prices, the extra costs for options to sell the yuan versus the dollar rather than by it. it is the highest since june 30 and double the level we saw when donald trump was elected president. that is showing us that the shorts are in play and the yuan will continue to fall. rishaad: 6.95 at the moment, the offshore yuan. why is china allowing this depreciation? it seems like a policy of benign neglect. they want a managed appreciation of their currency. they saw what happened august last year and the volatility caused in the early part of this year, so they want to manage it and keep it steady at ahead of
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the inclusion into the sdr basket a month or so ago, but now that has passed, so there is dollar strength and it looks as if the pboc has not drawn the line in the sand yet in as allowing it to week further. -- to weaken further. goldman last friday said shorting the yuan is one of their top investment strategies for 2017. it will be a theme that will be around. rishaad: we will see how much track is left on that train. right, let's take you about singapore, cutting its growth forecast for this year, gdp down 2% in the last quarter. the government says the economy will probably avoid recession. david, why the downgrade and why now? ,avid: we had confirmation
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goldman said the economy contracted less, but still contracted. goldman is saying they simply are accounting for an economy that is doing worse than anticipated. the economy has more uncertainty and there is a big decline in global trade. singapore is asia's most dependent nation when it comes to trade, so the fact that global trade is in decline, it's coming to bite singapore. rishaad: what are they saying about next year? they are saying things are not as bad as other people had been thinking, the economy is not in crisis. economy isey say the not in crisis and they are still expecting growth this year, so the situation is not dire come up that they are coming with a range that is pretty wide, between 1% and 3%.
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that is partly because of brexit , also china. they cited the property market in china as a risk, and the u.s. what will happen with donald trump his new policies? optimism, but the pessimism is self-contained for now. trade and employment in singapore has been going higher, but still low. rishaad: thank you. next, the currency ban in india turning out to be a boon for digital payment apps. we will a you who is making money. this is bloomberg. ♪
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rishaad: a quick check of the
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latest business flash headlines. thehead of lufthansa says airline will not survive if forced to submit to pilot demands for higher pay. anre is no leeway for improved offer and pilots must agree to arbitration. extendingilots are their action to friday, scrapping 1800 services on wednesday and thursday. indonesia has its eyes on facebook. ofclaims the social network those $148 million in taxes and penalties and has made a request to meet company representatives. the company is said -- country says it is nearing a claim with google. buy a and talks to company to expand in china. there have been several meetings and talks are at an advanced
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stage with a deal likely. a challengecing .rom a local rival the company has 75,000 properties in china and is increasing its staff threefold. highad: india's ban denomination for some presents an opportunity, digital payment companies hope to seize the moment, hoping india is becoming a cashless society. denomination, replacing notes at the moment, people cannot get their hands on them or use them, the older notes, so tell me about the unexpected windfall first. it is an unexpected windfall for payment companies. the prime minister announced the decision to withdraw the notes,
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the object is clear. it wanted to squeeze fake currency out of the system and remove black wealth from the system. removing 90 percent cash in circulation, it leads bankss a mad scramble for and atms to withdraw currency, and the other is people moving towards plastic and digital payment. to big winners are companies cash in on these opportunities. that the throw out some numbers. daily transactions have averaged $7 million since the announcement by the prime minister. gross merchandise value on payments have reached $5 billion. this is just one player. another company claims a base of
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40 million users. the interesting bit is that pa vendors, dailyaw labors are beginning to use mobile payments. were talking about a country ns don't0 million india have access to a banking system. haveg said that, companies reason to be laughing their way to the bank. rishaad: thank you very much indeed. joining us from mumbai. an output dealof have improved with iraq saying it will shoulder some cuts. iea sees "great market volatility a head." ifask the executive director
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he is confident opec will reach an agreement next week. >> it will be up to the opec ministers to decide what they countriesd for their and the global economy. many people expect a freeze or a cut from the vienna meeting. we should also think about the next steps after the possible cut or freeze. is after this move, prices go up let's say toward , we may see a significant amount of oil, maybe shale oil from the united states, but other countries can put in the market, and this puts downward pressure on the prices again. months, 12take nine months, u.s. shale oil being
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active and bringing oil to the market, but the into the story is -- >> let's talk about that. does this mean that more needs to be discussed in this deal? that the initial guidelines in out years seems to be dated now that we see a surgeon production in countries like nigeria and libya? surge in production in countries like nigeria and libya? >> it is dependent upon the opec ministers, what they see as appropriate. in my view, the markets are best with the market forces, such as demand and supply, but if the producing countries do cut the production, do freeze the production, this will have an impact on the prices, but once think if theould
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prices go up, what are the implications of that for the other markets? $40e have been trading from to $50 for most of the year. if there is a deal, what is the expected rise range for oil, and if it fails, what is the price? weekshave said for two across the world that our analysis shows that we are entering a time of greater oil price volatility because of the market dynamics and also as a result of three years in a row, global oil investments are in decline. happeninge first time in the history of oil that oil levels are declining three cheers in a row, and as result we may see bigger difficulties the global oil markets. rishaad: that was the executive
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director of the ie a talking to talking to if on. how we will speak to the chief executive of woodside petroleum from tokyo. that is coming up. "bloomberg markets: asia". ♪
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rishaad: this is global news 24 hours a day powered by more than
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2600 journalists and analysts in more than 120 countries. this is bloomberg. -- this is "bloomberg markets: asia". one man is not concerned, fosun 's chairman. he told tom mackenzie while he's positive. >> high believed the leaders of both countries are smart enough to find the best way to cooperate. n will be guided by our strategy of combining global resources with china's growth momentum. i don't think a president is free to do whatever he wants. a balancing act. it is only a four-year term. the best thing about democracy is this balancing and self correction. if the president does not do a good job, the people will vote him out, so i am not concerned.
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i am optimiic about the changes that a businessman-turned-president will bring to america. maybe there are some opportunities. >> i wonder what you think are the key risks now for china's economy. >> nonperforming loans may still be on the rise in the next 1-2 years because of a overcapacity, but i don't think this is a major issue because other types of loans and residential mortgages are still benign. of overcapacity is almost complete in the coal and steel making sectors. commodity prices are bottoming out. the chinese economy has many challenges. on the other hand, consumption is rising, especially consumption by the middle class. there are challenges and everything, but i am confident that china's economy will maintain 6% growth in the next 5-10 years. >> what are your ambitions in the moviemaking world. it is a much riskier business
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than insurance. in ourre fully confident investments in studio eight. investments in a single phil may be risky, but fosun plans to invest in 3-5 films the year. we are also developing other projects. as the market changes, we will have more options in film investments. rishaad: that was the fosun chairman speaking to tom mackenzie. coming up ahead, updating you with the big stories of the day so far. where having a look at what is on the way. >> asian markets fluctuating, struggling to hang on to this rally. japan outperforming. emerging market currencies still the losers out of this trump trade, and fed expectations coming into play. speak with john belton about all of this, and more.
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also, pressure on south korea, group thep and sk latest to be rated. we will talk more about donald trump's victory and what it means for relationships with china. chairman sayn's they won't give up on investing in the u.s. that is in the next hour. rishaad: japan has an unwanted title, that it's millennials are the gloomiest in the world. to revive's attempts the economy have left young people expecting a future of continuing struggle. beene kamaruddin has looking at this. why the long faces? we have surveyed by the manpower group showing they are the most bleak among 18
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countries polled, more than greece. we have figures from the government that reinforces that. about 40% of japanese millennials are not feeling so hot about their futures compared to german or american millennials. it has to do with stagnating wage growth, a tightening labor market, said japanese millennials are not feeling that great about taking on risks, hoping for a simpler age of the salary man. theaad: we had a story on bloomberg a few weeks ago about how this level of startups, the number of them, is paltry compared to other countries with similar income brackets as well. what does that portend for the economy? sophie: there is corporate cash that could be unleashed if that
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entrepreneurial spirit is tapped. that is not what we are seeing. are not spending, they are saving, so household spending has been coming down. we have the public debt burden as one of the biggest in the world with an aging population. the burden of shouldering that falls on these young workers. they are looking at the future and not feeling too great about it. this does have implications for shinzo abe's policies. more than a third of japanese millennials expect to work until they die. rishaad: you are mentioning it oflier on about that concept the salary man going by the wayside, but is it? .ophie: i would say no we are seeing more corporate jobs when it comes this age group. they are saying we need stability, otherwise there will not be a reason to buy homes or
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start families, so we are seeing a scaling back on that front, which leads to more of that demographic shift. rishaad: it is also conservative for millennials. there is a great quote that says if they can, they want to join a major company. that is a stable future for them? sophie: one would think so. it contrasts with what we're seeing in the rest of the world, little silicon valley's popping up in the rest of asia, and for japan not being able to tap into that, that will be a concern. rishaad: thank you for that. woodside petroleum chief executive will be coming up in the next hour. this is bloomberg. ♪
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announcer: from our studios in new york city, this is "charlie rose." charlie: chris smith, jon stewart, thank you for doing this. we talked a lot about a lot of things. chris, why an oral history? yeah, why? chris: the title was taken. because -- charlie: it is an oral history. chris: the voices of people who


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