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tv   Trending Business  Bloomberg  August 30, 2015 9:00pm-11:01pm EDT

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rishaad: it's monday the 31st of august. i am rishaad salamat and this is "trending business." ♪ we are going to be live and -- in sydney and kuala lumpur this hour. the is holding a four-day slide on upcoming reports that will china'she evidence of banks losing faith.
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there is no sign of stabilization the economy. a defiant message. malaysia's prime minister shrugging off street protests. do follow me on twitter. without further delay, let's get straight to what is happening at the moment. it's a public holiday in a couple of countries. it's the 58th anniversary of independence. we wish them well.
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lifted. yen today this is just a quick snapshot of some of your movers in the japanese market. in australia, we are closely watching that market. we do have the latest inflation numbers. they just came out in the last half hour. shows the td monthly inflation gauge rising a 10th month on month. action aheadt of of the central bank announcement at the rba tomorrow.
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chinese manufacturing numbers are due tomorrow as well. south korea's july industrial output is falling 3%. that is worse than expected. china construction bank is the latest to report zero profits. that seems to be the common theme. >> yeah, the new normal. was unchanged from a year ago in the latest quarter. that mirrors what other big lenders reported as well. littles profit that was .hanged as well the combined earnings of china's five largest banks are projected to rise just 2% this year. that is the least in more than a
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decade. second quarter was near zero. they are not even on pace for that. ccb's nonperforming loans jumping 28% in the first half from a year ago. net interest margin slipped as well. it is a similar story for the other banks. we saw more loans goes sour in the first half. jumped 31%.bc offering less for savers deposits after the pboc cut rates last week. many banks are offering smaller time deposits. that indicates lending might be dwindling in this slowing economy. why pay more for deposits when the loan risks are shrinking? rishaad: we will have a more detailed look at that story later. in about an hour.
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we do want your opinions. let's have a look at some other stories we are following. china has detained an official and the managing director of citic securities on suspicion of insider trading. that theys reporting are being held along with three other citic securities officials accused of trading with insider knowledge. that they ares also accused of spreading false information. almost 200 people have now been allegedly punished in a special campaign by chinese police targeting rumors about china's stock market. shenzhen --ast in tianjin and other key events. closed forve been relevant violations which caused
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people to panic and resulted in disorder in the stock market and society. it is believed the severe crackdown has come as china aims to save face ahead of the this week's commemorations to mark the end of world war ii. the prime minister in india has backtracked on a land reform deal ahead of a key election. it would have been easier for companies to acquire land. there has been increased opposition from farmers. in a radio address, the print minister pledged to help farmers and the executive order -- and said the executive order won't be renewed when it expired today. the change in strategy comes as his party prepares to fight state elections that are crucial to control parliament. it looks like optimism was on the menu at jackson hole, wyoming this past weekend.
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top central world's bankers are confident stronger growth will pull inflation higher in both the u.s. and in europe. the bankers held from the fed, ecb, and the bank of england. -- hailed the option of a september rate hike is still on the table. we have the reserve bank of australia meeting on tuesday to discuss cash rates. we can find out more and head over to sydney. here is paul allen. it is the words that you say rather than the deeds we are looking for tomorrow. hundred percent of economists surveyed expect the cast castrate to stay put at 2%. somell be looking for commentary around the turmoil in china.
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a third of all australian exports go to china and it is by far the country's largest trading partner. swap starter is quite informative. pre-august 11,ok this is before the yuan devaluation and before all the excitement of last week. just a 35% chance of another rate cut which has now gone up to a 60% chance by september -- december. that is something we will be watching very closely tomorrow while we are expecting no change to the cash rates. thanks very much for that. up later, we are looking at a university investing in the next generation of female leaders in asia. coming up next to with thousands joining street protests in malaysia, what does the political unrest mean for the economy? ♪
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rishaad: malaysia is celebrating its national day after two days of bigs re-protest demanding the prime minister's resignation. -- street protest is over allegations of corruption. like -- what is the mood like today? the pressure is definitely mounting for the prime minister. the protest did not spill over today, with malaysians celebrating national independence. the tension was palpable with crowds packing kuala lumpur and other major cities. the number atut
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300,000. all of this is complicating the economic outlook for the malaysian economy. more than $3 billion from the nation shares this year have been dumped from foreign investors. to talk more about the malaysian economy and foreign business malaysia, joining me now is thomas branson. welcome to the program. thank you so much for joining us. how worrisome is all of this political noise for foreign businesses? i think german businesses experience uptrends in malaysia. currently, without looking at yesterday's and today's events, we have done a business survey among the german people and the
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outlook was rather positive. german business people expect good developments. the region is competing more and more with china and more investors are coming into the region. turmoils ofhe discussions don't turn into political instability, the foron has bright prospects german and european investors. are seeing things, on the political side, deteriorating in malaysia. just the fact that this political scandal keeps going on . what is this going to do for malaysia's image in the global economy? >> i think overall, german seen another few examples within structural changes and democratization of societies which have been successful without much
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happening. like in indonesia and myanmar. i believe that malaysia has potential. they have a great workforce. the reason why german and german come here is -- investors come here is the region and success of the region. one factor is the workforce. i believe that german companies views.etty democratic they like it better if people are more open-minded here. we are a business chamber so we don't focus on politics. important is that the policy for investors is persistent and you can rely on what happens tomorrow if a foreign investor comes.
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just to make the remark on indonesia, because whoever is leading the country and which team is leading the country at the end, it comes back to the real challenges which in malaysia are just around the decrease of income for the government out of oil and gas. there areyears ago -- a lot of challenges, not only globally but locally as well. shery: foreign funds have dumped billions of dollars this year. how does that affect business sentiment about malaysia? >> that is the currency market. there are a lot of speculations. property is another one. i think what we look at the german-malaysian business, we look at large companies coming isbut moreover, germany strong because of the medium-sized companies.
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they regard malaysia as a rather, not only safe haven, but it is a medium-sized country. it has less risks than china. it is trustful. the legal system is fine. the infrastructure starts with people and the language as well. the infrastructure is good. they believe malaysia is a very good option to come to the region. the country is about the size of populatedly densely and has proven in the past to be a good partner. get a cheaper currency make it attractive for some foreign investors to come here and do business because it is just cheaper? >> absolutely. i understand all of the arguments from france and others that the weakening currency is making trouble for them when they travel abroad. on the flip side of the coin, it has advantages as well because
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it could increase tourism from europe and other countries. malaysia is still a strong agricultural country. malaysian-produced products are cheaper to the world. ,hery: malaysia is well-known infamous, actually, or implementing draconian members measures at times of crisis. are you worried about that? >> not so much. number one because things have happened in the past, but on the other side, malaysia is worldwide known for having a very established and successful central-bank.
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i think the institutions will leave whatever happened untouched. it has a global worldwide reputation. it has done well in the recent crisis as well. i don't believe there will be currency packing. i am hoping. shery: thank you so much for joining us, thomas. the industry is talking about the malaysian economy which has slowed to almost a two-year low in the last quarter. back to you. rishaad: thanks a lot. let's have a look at some other stories. as many as 120,000 people gathered in tokyo to protest against the prime minister's plans to expand the power of the military. critics believe it will lead to japan becoming entangled in foreign wars.
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voters have been told to ignore intimidation ahead of the election. suu kyi is expected to make gains. talks with says south korea last week brought the two countries back on the track of reconciliation and trust. these comments are coming as he and senior party members talked about the standoff and flooding which caused thousands of dollars of damage. next, china is moving to stifle the spread of market rumors online. we are back in a couple of minutes. ♪
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rishaad: we are looking at what is trending on social media. thesete: it is all about arrests out of china. a massive crackdown on i line -- on online accounts.
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165 online accounts have been closed. close to 200 people have been punished for allegedly spreading rumors about china's stock market. the recent equity plunge, the blast at tianjin, and other things. those detained have expressed repentance. number of people arrested for falsifying rumors. also due to the fact that more than 1400 people allegedly died in the tianjin blast. we have a quote coming through that should come up on your screen soon about that. no, it's not there. here we go. that is what the ministry of public security is saying. those arrested also include a
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reporter from a magazine. the major chinese social media site is abuzz. let's take a look at some of those updates that have come through. this one says that investors can sue journalists. another one says that he is at fault. people detained and also china really not wanting anyone to rain on its parade ahead of this week's commemoration. rishaad: after a chaotic week for global markets, investors in closes. are paying attention to upcoming economic data for signs on which way the fed is leaning when it comes to interest rates. >> the week ahead on wall street will be a test for the market's resilience and investors as the
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-- appetite for further volatility. last week's rise was one for the books. the market index is closed unchanged. the s&p 500 is now on track for its worst month since may 2012. the focus many investors will continue to be on the latest economic data. this coming week, we will be getting a raft of reports that american that employers probably added more than 200,000 workers or jobs in august, offering federal reserve policymakers the latest monthly labor market snapshot before that big anticipated september decision on whether they will raise interest rates or not. forecastce industry is to expand in august in the u.s.. is expected to show the deficit expanded in august.
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the jackson hole summit in wyoming will be wrapping up with the focus turning to finance ministers meeting in turkey. are looking at strain amid the slowdown of china banks. we had lots -- the trading period ended here in hong kong about five minutes ago. the opening numbers are coming up next. ♪
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rishaad: a look at our top stories. asian stock markets are down for the top of the week. shares are down in tokyo and the sydney. shanghai is set to open down about 1%. there are still concerns about china's faulty economy. china construction bank joining the other big lenders in halting rising bad loans.
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the government is struggling to reinvigorate the economy. malaysia's prime minister is standing firm after two days of mass antigovernment protesting in kuala lumpur. on him tocalled resign amid allegations of corruption and mismanagement. the rallies failed because they didn't drop significant numbers of-- raw significant numbers the premise or's main political base. it is certainly a down day across the asian pacific. everyone is watching china because we closed the day on friday up nearly 5% on the shanghai market. couple that with a 5% advance on thursday. on the government
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intervening in the market on thursday and then the central bank with an interest rate cut a few days before that. we are watching very closely. theks are falling across asian pacific. you see it in japan where we do see some currency buying. safe haven buying of the japanese yen ahead of tomorrow's manufacturing numbers in china. japan is one economy sensitive to those numbers. japan unexpectedly declined in july. in south korea, we had economic numbers not good. the industrial output fell 3.3% year on year which is worse than expected. in td inflation gauge australia rose a 10th of 1% month on month. this is the august number. let's take a look at what is moving. the afx 200 looks like this.
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we did see a big move in crude oil as well as brent on friday. we are seeing a move in copper today. is leading on the downside in terms of retailers. we do have some trading action now in the shanghai composite. it starts the day with a decline of 1.77%. last week was a harrowing week in the market. there are renewed concerns about the strength of chinese banks because the latest profitability numbers are certainly disappointing. let's take a look at what is happening with china's banks because they are virtually not caring -- earning much money. i want to give you a snapshot of how those shares are performing at the outset. this is what we had at the very beginning. these are the hong kong listed shares of chinese megabanks here
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it -- megabanks compete -- megabanks. there are some pretty striking statistics here. china's banks are the latest to show a lack of confidence in the economic situation in china. vendors are offering much less. steve, what are you seeing? what does this tell us? after both lending and deposit rate cuts last week, the fifth lending rate cut by the pboc last week, what you are seeing now is the local banks not showing a lot of confidence in their loan books if you will doause what they often times when the benchmark deposit rates in the banks offer a fairly competitive want to attract the deposit.
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one bank is now offering on a two-year deposit, two point 85%. the benchmark deposit rate in china is 2.35%. 2.85%. they are paying less for sabres to dump their money in their bank. -- savers the bottom line here, it's a good indication, why would a bank want to pay you more for the deposit? if they are not lending in kind. they don't need to pay a premium for those deposits. tao is exactly what richard was saying. his quote sums it up. if you can't lend out the money, why would you bother to gather deposit, let alone pay a lot for
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it? that's the bottom line. rishaad: the answer is? steve: no. go to another bank and see if they will give you a better rate for your below inflation deposit. rishaad: let's talk about the numbers. there is concern that there is no growth. now ccb is the latest bank to basically indicate what we have known in that there is zero profit growth at these banks. we are talking less than 1% if at all. ccb is completely unchanged. 64.9 so it is below estimates. it is basically unchanged year-over-year. the bigger issue is the nonperforming loans increasing white substantially. let's bring up the basic big
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four banks. as a ratio of their outstanding loan book, it is still pretty low. the industry is one for the 1.5%.-- icbc saw more than twice the rise.f ndl's that's why their profit was basically zero because of the more provisions they have had to do for those salary loans. rishaad: let's quickly check on some other stories we are following. there is no basis for further depreciation of the u.n. -- you on -- yuan. devalueeen allowed to
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about 3% this month. kong is warned to expect a slow down. there growth may weekend -- we can in the second half -- weaken in the second half. equities have tumbled amid concerns about china. hong kong is always -- has already been getting relatively more expensive while most other asian currencies have weekend. reserve banks in india are expected to cut rates. the benchmark have been lowered by 75 points. the r.b.i. governor told bloomberg what is next for the indian bond market. if we can get a good
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bankruptcy quote, we can start moving through bonds which is necessary for the finance infrastructure to finance all the big things the government plans. rishaad: on to something else completely different. asian countries have been trying to boost the number of women in the workplace but a critical component to making that possible is education. is probably best known for quadrupling the and down meant of harvard university during his 15 year tenure. -- endowment he is also a leading advocate for the education of women and cofounder of the asian university. let's start off with education before we put your other hat on. let's talk about the need to educate women in this part of the world. >> we are pretty convinced that women's education is key to
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progress in the developing world. we think that we have developed the university, a liberal arts college in bangladesh. we think we have a very powerful model for delivering that education. we focus on critical thinking, problem solving, memorization. ,e have a rigorous curriculum lots of diversity. we have women from 15 different countries that attend. rishaad: you had about 370 graduates since 2008. >> yes we have had three graduating classes. rishaad: which countries are they from? in bangladesh obviously. sri lanka, vietnam, cambodia, nepal, afghanistan, syria, china. rishaad: how did you get involved?
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i managed the rockefeller foundation before. i traveled all over the world with them. it became pretty obvious that the key in the developing world was women's education. that started 20 or 25 years ago. i met the founder and visionary behind this goal. when he called me in 2000 and said he would do it, i knew exactly what he was talking about and signed up. you want to build a proper campus. the government has given you the land. >> yes. we are operating now in six leased buildings. it's not terrible. if we can have a small campus, it would greatly improve the interactions between student and faculty, allow us to do a broader curriculum, more in the sciences, and being able to
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handle 1200 rather than 500 students. it tremendously leverages this concept. you want to build it out. how much money are you trying to get hold of to do that? >> we are launching a campaign to raise about $100 million. $50 million of that to build a small campus. rishaad: you have already attracted the gates foundation. ikea, even, a whole gamut of people. >> we hope they will be on board. this is day one. we hope we can put this together. this -- a lot of societies in this part of the world are male dominated. how will and all women's college
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prepare them for that? >> one of the things we are sensitive to is during their stay, each of the women will have at least one internship and many of them have two or three. that gets them a taste of the real world. rishaad: let's put your other hat on. but notice what's been going on here. what is your take on this? we have had a spread of volatility in the equity markets, not so much in the fixed income markets. you will not get a market for guest out of me. i think investors should invest as though they don't know. just stay long-term, stay diversified, keep fees down, keep taxes down. spat of volatility will eventually cease. 10% corrections are not that unusual. rishaad: thank you so much and good luck with the university.
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we have to take a break but coming up, the growing worries about china at the optimists say there is no sign of a hard landing. ♪
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juliette: two days of antigovernment protests have wrapped up in kuala lumpur. the government says crowds pete at about 50,000. protesters want the prime minister to resign over allegations he misappropriated $700 million from estate investment fund. from a the money came donor in the middle east. police in thailand have arrested a man in connection with the bangkok last, saying they -- saying they found bomb
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making materials in his home. it is not clear if he is one of two men caught on security cameras on august 17. there is no evidence of international terrorism, but rumors in bangkok claim he is linked to china. after slashing the budget for the stadium, it has been capped left --billion which is less than half the original plan. the olympic venue will host rugby matches in four years time. rishaad: we have a ton of economic data coming our way this week with the focus on china.
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that is tuesday. we have an interest rate decision in australia. let's get more now with mark mcfarland. looking ahead to this week, will we be any the wiser this time next week? look at onehink you week data and forget what happened last week. we think the weekly trends look sound. we see a reasonably healthy world economy. we are quite prepared to take risks. i think the pmi numbers have been a little bit soft in china. i think a lot of data you have seen in terms of corporate profits suggests that there is quite a lot of downside risk to growth. if you look at the price to earnings ratio you are getting , we think that is
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unwarranted. we are quite willing to take risks. rishaad: are you less convinced by chinese authorities to manage the economy then you were two months ago? >> i don't think so because we were never convinced to begin with. 30 years ago, it was a communist state. it is difficult to get convincing numbers on a regular basis. economic policy is about nudging people's positions -- decisions. the monetary policy tools and fiscal policy tools in china are still quite undeveloped. wehaad: do you think concentrate too much on that when we have the service side of the economy which is now bigger? >> i think you do. you can see there is a problem on the manufacturing side. global trade really hasn't been showing much sign of pickup.
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but the service sector is doing pretty well. that is what is being targeted .y lower interest rates eventually, it will respond as you can see in the property market. rishaad: that is about a quarter of gdp. bank earningsw came through, little or no profit growth there. what does that tell you? >> that tells you you have two statistics coming out. there's that and also the total financing, a great big review of credit growth. the creditlling you growth is weak and banks aren't lending as much as they were before. that is why you see the lending rate coming down, bank liberalization in the last couple weeks, and cutting the reserve requirement will help banks to make better earnings. it's a long, slow process. what we are effectively telling investors is that it's a good time to buy whenever prices are oppressed and when prices are
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reflecting an overly pessimistic view of events to come. what about the effect of china on the wider age and region -- asian region? >> one is currency depreciation .nd one of the perception the downward pressure on currency is likely to continue. you have a number of currencies which are still off quite heavily like the malaysian ringgit. there are also currencies where the authorities are facing deflation risk like singapore where you could see more currency depreciation. is -- the asian pacific is in a much better place than it was in 1997. debt is much better and information about that debt is much better. when it comes to , is thatt themes
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purely done on evaluations? >> it depends on the size. developed markets are much bigger than emerging markets. what we have done is looked at the fundamental drivers of growth in most of our markets and said, europe is off a long way because of greece and china. japan have also done the same. we think you can take more risk of there. but we are also looking of volatility as a strategy and saying you see a lot more volatility in the index that tracks fixed income. you want to think about long and short strategies as well. rishaad: mark, have a good one. we have to take a break but coming up next, could a 3-d printer become the latest must-have item for fashionistas? a special report right after this. ♪
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rishaad: we are coming to you live from hong kong. 3-d printing is changing the world from the way we make things to the way we look at things. it has been used to build homes, bridges, car parts, and even instruments. it is being embraced now by the world of fashion. it is home to creation and concept, but now the catwalk is taking designed to a new level. the red dress modeled here wasn't stitched or sewn but printed. designsold dani digitally and then feed the elastic thread into a 3-d printer. out the other end comes plastic fashion. us to be able to wear
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this kind of stuff. it is not only for celebrities anymore. it is not made out of hard plastic. it is very flexible. you can wash it in the dishwasher. >> even for high end fashion, the process is expensive. -- $2500.t cost 2.5 >> it's just like a paper printer that is now available for anyone. we are thinking a few years and then it will be much more reasonable. >> anyone with the device can print exclusive fashion at home. with the cost of printers falling quickly, clothing will be the latest 3-d fashion -- won't be the latest 3-d fashion for much longer. rishaad: let's look ahead to
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what is coming up on the program. china's banking system is under increasing strain as the economy continues to flow. we will speak with a veteran of the industry in the next hour. ♪
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rishaad: if the 31st of august and it's monday. i am rishaad salamat and this is "trending business." ♪ rishaad: we are going to be's -- be in sydney, kuala lumpur, and mumbai this hour. the yen is holding a four-day slide on speculations of upcoming data. the latest assessment of china's in theis in short supply
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banks. modi is vying to indian farmers ahead of a crucial election. do follow me on twitter. #t't forget the rendingbusiness. what's going on as far as the market goes. the financialbout sector in china. we will get to that in a moment. i want to give you an overall sense of what is happening in the asia-pacific. you are seeing the biggest streak of losses since 2012. we should see some positive moves as jakarta comes online. malaysia is closed for a holiday today.
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is a ofall story concern with respect to china's economy, manufacturing sector. we will get new numbers tomorrow. let's take a look at what is moving in hong kong. the hang seng index is muted at the moment. the banks among them at 3%. oil, bigrebound in time for brent. end of the near the week after such selling pressure. entertainment is among the stocks you want to watch today. as for the overall markets in shanghai, the a-shares market, what you are seeing here is the first rise in three days. this amid concerns about the government's level of support, the ability to support the market.
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we are following currency as well today. let's take a look at those in the region because we have economic data to note. in japan, we have the latest numbers on industrial production. that is having a bit of an impact on the yen because it is declining. the biggest impact is china. 2115 levels.ng at the rba levels will give us a china.ndication of in south korea, industrial output for july was significantly disappointing. not doing so well. take a look. these are the banks we have been following. you.l send it back to
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rishaad: there does seem to be a bit of a lack of confidence in china's banking industry with another big lender reporting a big rise in credit along with the zero profit growth. china construction bank is adding to fears that zero may not be out of the ordinary anymore. >> ccb was unchanged from a year ago. zero profit growth year-over-year, mirroring what the other big lenders in china reported as well. icbc last week had profit that was little changed while agbank saw a similar story. the combined earnings of china's big five and -- banks are excited to rise 2% this year which is the least in more than a decade. jumped 28%ng loans in the first half from a year
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ago. the interest margins slipped as well. we also more loans go sour in the first of icbc. bad loans dump to 31%. we are getting further evidence chinese banks are losing confidence in the country's economic prospects. more banks are offering less for savers deposits. many banks are offering a smaller premium to the benchmark deposit rate for the time deposits, indicating lending at those banks may be dwindling in this slowing economy. why pay more for deposits when the loan books are shrinking deco -- shrinking? jim is here later joining us for more on that. do tweet us your thoughts. let's have a look at some other stories we are watching for you today.
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it appears investors are turning their backs on alibaba and heading for smaller rivals. less than a year ago, alibaba was hot property and investors were scrambling to pick up shares. now, it's smaller competitor jd.com has become a hedge fund favorite. hedge funds have boosted their holdings in jd.com by 18% since of last yearrter and have cut back on alibaba by a third in the same period. detained acs rca official and the managing director of citic securities on suspicion of insider trading. we have heard this morning as well that they have concerns that they have had these
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allegations of insider trading. they are being held along with three other citic securities investors accused of trading with inside knowledge during the most recent rout. most 200 people have allegedly been punished in this special campaign by chinese police, targeting rumors about china's stock market and also the blast in tianjin. a statement from china's ministry of public security saying that 165 online accounts have also been closed for relevant violations which cause people to panic and resulted in disorders in the stock market and society. it is believed this crackdown ahead of this week's commemoration to mark the and of world war ii. two days of antigovernment protests have wrapped up in malaysia's capital.
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as many as ay quarter of a million people joined the rally but the government that crowds peaked around 50,000. protesters want the prime minister to resign over allegations he misappropriated $700 million. he says the money came from a political donor in the middle east. the weekend rallies also failed to draw ethnic malays. the rally was dominated by ethnic chinese who have been drifting from his ruling, lycian in recent -- coalition in recent years. rishaad: the bank of australia meets on tuesday to set the cash rate. we can head over to sydney and have a look at what we can expect out of the rba. we are not expecting the rba to do anything, but we are
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going to watch closely what they say. all 100% of economists surveyed say they think the cash rate will stay at 2%. but they are going to make the language around the decision quite interesting. nearly a third of all exports go to china. is particularly informative at the moment. ,f we look before august 11 have now risen to 60% since then. we have one economists predicting the cash rate could be as low as 1.5% in australia by the time december rolls around. the rba is not expected to cut tomorrow, but we may get a few clues as to what is happening
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later in the year and what has been going on in china is impacting the thinking there. rishaad: coming up later on, political expediency. modi bowing to indian farmers ahead of a key election. the latest assessment of china showing banks are losing faith. ♪
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rishaad: it is a tough times for china's big banks. was thetruction bank latest to report zero profit growth.
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jim, i will start off with this tweet we had. china can blame a journalist story for a market crash, but how can he explain zero growth for your big four banks? >> that's exactly right. what is the difference between -1%?rnings growth and windowdressing. the whole sector went up about .9% in the second quarter. this is down from about 1.5% growth in the first quarter. we are heading south. if this is not a negative growth year, i am a monkey's uncle. rishaad: but will it show up in the official figures? >> absolutely. there is only a certain amount of leeway. rate is about 55%. rishaad: when is an npl an npl?
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>> even worse. from loansching them which are being paid to bonds. -- aren't this is something that when economies are in trouble banks tend to do. it isn't that legitimate. they are still paying out decent dividends and seem to have decent return on equity. why are you so down? i think the thing about it is , the big four banks that from year. 33% or 32% next -- last year. the real problem is that the underlying economy just doesn't support the banking sector. a hard landing?
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are we seeing the start of one or are we in the middle of one? >> just a year ago when you went to the results meetings, a number of the banks would say the npl crisis, this is just in certain areas of china. actually, we are having a systemic meltdown from the credit point of view and we had it last year too. at least the rose-colored glasses are off now. with the economy still heading south, the problem is, where does it end? there is no light at the end of the tunnel just yet and it would be very difficult to predict with any certainty when we are going to see a turnaround for problem loans. rishaad: the question then is, ,e talk about the credit cycle is this also a structural problem, too? >> yes. this is the hangover after the
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2009 credit expansion program. that is one thing. the other thing is that all the government has been able to do is basically to try mild measures to try to support the economy. it is nice that they lowered interest rates, but the truth of the matter is, if your company cannot pay its loans, a half percent cut in the loan rate does nothing for you. that is the problem. rishaad: what about the deposit rate we have seen some of the banks giving you more money you go -- money? banks are trying to keep costs as low as possible. it is just treasury management. i think that's really an application about why their .conomy is slowing down the fact that there are so many npl's, that's the real indicator. chinese banks are plain, vanilla
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lenders. they do invest in bonds. what is interesting this time market to have huge market gains. we have huge market to market losses for other banks. i wonder why that is? and you have a more volatile interest rate. rishaad: when you do market to market, sometimes it is smoke and mirrors. it can quite often give you a very bad view of where you really are at the moment. of theember that was one problems we had trying to financial institutions during tfe. look at the net interest income. look at the loan growth. look at the bad loans. look at the expense level. these things don't look too good. rishaad: thank you very much.
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we will tell you about some top stories making world news headlines. we have had as many as 120,000 aople in tokyo to protest of to expand the japanese military. they believe it will cause japan to become entangled in foreign wars. 's opposition is being told to ignore distractions to voting. says everyone should vote without fear. she is expected to make gains.
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is expected to announce its commitment to the 2016 rugby world cup and the 2020 olympics. cap is being listed as $1.3 million which is half the original amount. it puts organizers under pressure to complete the stadium in time. up, cracking down. china detaining hundreds of people accused of spreading false information about the stock market. ♪
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rishaad: welcome back. we are having a look at suzuki's troubled relationship with volkswagen. it is coming to an end. >> no love lost between these two. this really went wrong when suzuki went looking for diesel engines and worked with fiat chrysler. aat company happens to have
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really tense relationship with volkswagen. that certainly got this going, but also, volkswagen has done its part in slinging mud in this issue as well. in its annualuki report years ago as a company that had essentially had control it essentially had control over. that rubbed suzuki the wrong way. another thing suzuki said yes -- said yesterday was that any precondition for future cooperation that suzuki does if it does look for an alliance or partnership similar to this, a precondition will be that suzuki maintains its independence. clearly, that is something that was problematic in suzuki's eyes. he contributed to this messy breakup. rishaad: the hindustan times
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said that automakers have asked the government to help them recover money in subsidies and tax refunds. the companies have declined to comment. two engineers hacked a jeep to expose security flaws. -- says the two men will join their company. let's have a look at what is trending on social media. juliette: it is all about these arrests out of china. a massive crackdown, china trying to save face ahead of this week's military parade to commemorate the end of world war ii.
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close to 200 people are being punished for allegedly spending -- spreading rumors about the stock market and the tianjin blast. for executives of citic securities have confessed to these charges of insider trading. -- four -- onlinees at accounts have been closed down. expressed --has has released a statement saying that those detained have expressed repentance. among those arrested is a --orter from kiting magazine a large magazine. let's take a look at what is being said on the largest social media site in china. also another one coming through.
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today plus government gives hope to stockholders. another one coming through also saying that investors can sue this analysts. let him compensate for the drama that he has allegedly caused. all of these are coming ahead of china's military commemoration. it seems nothing is going to rain on china's parade. rishaad: thanks for that. just a quick look at some other stories. hanergy was the most valuable company for a short time and its leader was china's most rich person. its relationship with its parent company, which provided about 61% of its revenue, has posted a $7.7 million loss.
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netflix has decided not to renew its contract with epix. they said they wanted to focus more on creating original content. at next, we will be taking a look at what has been happening in india. does india and the reserve bank in india have another rate cut in mind? would it do any good to have another rate cut this year? we will be hearing from the r.b.i. governor when "trending business" returns. stocks arec generally heading to the downside now. ♪
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♪ rishaad: looking at the top stories, asian equity markets theopening down with regional benchmark heading for the worst months since 2012. shares are down. concerns remain over the faltering chinese economy and uncertainty on over whether of the fence will delay the rate hike. the chinese construction banks joined lenders in reporting bad loans and zero profit growth.
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$10 billion country from a year ago. -- unchanged from a year ago. the government struggling to reinvigorate the economy. india batting about the r.b.i. will cut the interest rates. etting the r.b.i. will cut interest rates. speaking to bloomberg at jackson the, the gopverno -- governor has said that the central bankers have done all that they can. more red out there. zeb: other markets are coming online and if you look across the spectrum, what you see is a lot of red. the philippians and malaysia are closed for a holiday and stocks are heading for the biggest decline in three years.
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this upset if officials this weekend and signals increased interest rates. ofd further concerns strength of the chinese economy. that is playing out in the shanghai composite where shares are down 3%, quite a reversal from the 5% gain friday afternoon. helped by the government decision to buy the stocks listed in china. central-bank action last week cutting the lending rate, giving more flexibility to dole out cash. none of this having an impact on investor confidence. pressureing in the market. on the downside it is curious because those shares, food related stocks, 5% drop for lenovo. despiteese financials,
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dismal results, not necessarily communications but rivals, are doing well today. reallyg seng index was a are in the session and right now it is between gain and loss. we have the nikkei 225 printing trendingconcerns -- lower on concerns that it will people are but seeking a safe haven. in the commodities space we have seen a pullback in commodity prices with the aussie dollar with correlation to as well. a quick check on currencies and here is what we have in the july numbers disappointed the market by falling 3.3%. this is where you have the korean won right now. i mentioned the weakness in the aussie. strengthening-yen
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to the tune of 1.5%. -- over 5%. -- of 5%. s pertaining to the market in asia. a lack of confidence in the economic recovery fresh off of the latest fall. banks are offering must for deposits. a look at what we are seeing. it seems like we are giving more. >> in the years or months during the bubble time, banks have a more difficult time attracting deposits because they were to -- went to wealth management projects. and now the tables have turned quite a bit. the stock market's down and we have had five interest rate cuts and cuts to the deposit rates and what banks have done is offer premiums to the benchmark
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to get depositors to deposit so they can lend it out to borrowers. this is a reflection now, they are willing to pay less now for those premiums. let me give you an example. this bank is offering 2.8% on a two-year deposit. is 2.35 so that is 50 basis points. before this round they were offering 65 basis point premium. bank, another example. back to five basis points over benchmark. it is a reflection of weak demand for loans. rishaad: they cannot lend the money out. stephen: why attract more deposits and pay a premium when you are not lending out? that is what they say. there is no sign of the chinesen in
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economy. if you cannot lend the money, why would you gather deposits? that sums it up in layman's terms. rishaad: it does, rather. all of this being reflected in the earnings statements. growth, people are very worried. stephen: at the end of the work, 0% profit growth year-over-year in the latest quarter. the number two lender, number three i should say. reporting, the interchange sometimes, second-quarter yuan.s 64.9 billion below estimates, unchanged, basically. nonperforming loans, not to mention interest margins which comes as a result of the lower interest rate environment. the sickly nonperforming loans up 28%, is it?
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yes. basically nonperforming loans of 28%, is it? yes. they have non-growth because of the nonperforming loans. rishaad: thank you very much, stephen engle. let's check in on the other stories we are following. the chinese premier says that there is no basis for the depreciation of the yuan. he says that the currency can remain stable on a reasonable level. they have allowed it to devalue this month. there have been five rate cuts and a lowering of the reserve requirement ratio. kong has been warned to expect a slowdown would be finance secretary saying that growth may weaken in the second half and that volatility might decline with foreign trade and tourism having adverse effects. is the growth forecast from earlier in the month, equities have tumbled because of concerns
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about china. hong kong on top of this has become more expensive as the currency strengthened while other asian currencies weekend. the australian reserve bank will make the interest rate announcement tomorrow in the next gauge of the global fallout from the chinese slowdown. the rba is managing an economy which is most exposed to try to and while they are expecting it -- most exposed to china and while there are expecting rates to old, they expected to cut to 60%. growing speculation that there could be a rate cut in india the bond funds betting that slowdown could push the r.b.i. into action. they have lowered the benchmark this year. they told bloomberg that there is a limit to what the central bank can achieve. >> i would say we are in a period of growth what it would
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be faster if we grew faster. i will also say that central banks are pretty much done as far as what they can do. it is not a view that is universally held by central bankers but i think in general across the world, central banks have done pretty much what they are capable of. now, others have to step up. whether it is through structural reforms, in some cases, fiscal those might be the source of the fragility. that we try doing too much and as a result, in certain asset markets, prices are not correct. and they remain incorrect they will correct. whether that happens smoothly or a volatile fashion is anybody's guess. >> do you believe the secular stagnation argument? >> i think there is some
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validity to the argument that we are growing more slowly than previous recoveries. is it all because of that overhang? i do not think so. something else is going on. in more long-term, a factor. given all of the innovation that is happening, you would hope that we would find some way of monetizing all of the good stuff that is happening and let it add to the gdp and find that we are growing pretty strongly. >> one of the consequences of innovation is that if you have a surplus of labor, you cannot use it to grow in the way that, say, china has in the past. given the pace of automation, as india missed the chance to develop? -- has india missed the chance to develop? >> i do not think so. we have to do more work than if we have followed the past 20 years ago. we certainly need to still be
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theforce -- skill workforce. the real value will be the management of technology and human beings. replacing the human being. and that there will be scope for a lot of value added by people. we figure outthat how to do those things. i will give you a simple example. these classes, massive, big classes given over the internet. just transferred over the internet, people start but drop out very quickly. but if you have a tutor holding your hand, figuring out exactly what you do not understand and helping you along the way, those classes can become effective. a top-notch teacher giving you the lecture and a good assistant helping you understand what you do not understand and prodding you to continue. my sense of the marriage of
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technology and the human being would be the most successful way of delivering those courses. >> can india skip the step where it becomes a manufacturing exporter and become a consumer driven society? >> i do not want to prejudge which way is right. the environment where we can become a manufacturing giant or that we emphasize services as we go along. i would think that we would certainly up our level in manufacturing, we have started exporting more than now but services like education, we could be exporting educational services around the world if we play our cards right. rishaad: 70 years after the end of world war ii, china's strength is ringing alarm bells across asia. more on that after this short break. ♪
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rishaad: a check on stories making headlines around the world. as many as 120,000 people have gathered in tokyo to protest the plan to expand the power of the military. the would like to open postwar constitution but critics feel it will lead to japan being involved in foreign wars. feels including the u.s. they are needed to counter balance the rising power of china. the opposition leader has told voters to ignore intimidation ahead of the election. in what she called a voter education exercise. finished thep -- final session. the party is expected to make gains but a quarter is still allocated to the military. the latest prime minister and
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did his term after days of protest and kuala lumpur. -- in kuala lumpur. supporters say that the rallies failed because they did not draw significant number of ethnic malays that make up the base. in guadeloupe or we joined shery ahn. what did the protests achieve -- in kuala lumpur, we join shery ahn. what did the protests achieve? sherry: the protests were among the largest that malaysia has ever seen so they sent a clear message to the government. one protester telling me he did not expect much to change after the rallies but he did want to send a clear signal to the government. is a peaceful, it
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day. not many cars are people. that is because it is a national holiday in malaysia with malaysians celebrating independence day. it is significant that the protests did not spill over into this important and proud day for roads werebut blocked all over malaysia over the past two days as tens of thousands of protesters flooded yellow,ets, dressed in demanding the prime minister resigned. the protests did not draw a large number of ethnic malays who formed the base of the prime minister. they were dominated by ethnic chinese. the opposition might not have the ammunition to say that the majority population is against the prime minister so the political ground has not shifted significantly that it is worth mentioning that we are seeing growing division within the system would be former prime minister attending the rally -- with the former prime minister attending the rally and calling
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on the protesters to carry on. analysts i spoke to are telling me that it is quite significant to see this civic movement happen in malaysia, as more people take on social media and also let concerns be voiced publicly. all of this public unrest of course is complicating the outlook for the malaysian economy. we have seen foreign funds dumped more than $3 billion in the country's equity this year, currencyntion that the has declined for the 10th consecutive week, the longest since 2013. back to you. rishaad: thanks. let's have a look at the events we have been watching out in the asia-pacific. on tuesday, the chinese manufacturing fell to the lowest in three years. economists were expecting a figure of 49.7 compared to 50 in july.
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expecting beijing to enact further stimulus measures. netflix launches in japan on wednesday. the country is offering original local content, the first in a asian markets. they have expanded to over 150 countries by the end of next year. time for the battle between sam's on an apple. on thursday, samsung will release the update to the smart watch at the trade show in berlin. an executive has already published a picture of the new device. ishas a round face and rumored to feature onboard gps. also thursday, the president welcoming world leaders to beijing to mark 70 years since the end of world war ii. the air has been cleared up in the markets are calming down ahead of the event. president obama and prime minister shinzo all they will not be there. abe will not be there.
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let's look at the guest list. david is with me. who is coming? comingvladimir putin is and that is reflective of the fact that people are very alert to the fact that china might use this for propaganda purposes, anyone that comes along would be caught up in the chinese propaganda message which looks to be an anti-japanese message. we know that they have done that before in berlin. xi went to berlin and wanted angela merkel to visit the holocaust museum and the and that wasorial part of the chinese wanting to bring angela merkel in and say to the japanese, look, these people are looking squarely history in the face which is the message from the chinese that the japanese have not done enough. rishaad: so many world leaders taking away, former allies,
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that is the deal. it is only vladimir putin going. mentioned that she was going but she has a different agenda because the good relations are coming at the expense of good relations between china and the north koreans. the north koreans, for example, have the worst relations with china since the end of the cold to xid yet pak is closer and trying to broker a trilateral summit between south korea and china and japan which would be a game changer. rishaad: if it didn't happen. is there an internal message? one for the people? david: one can look at this as asinformal anointment as xi the most powerful leader in china since deng and maybe even farther and he will be presiding over the parade.
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that is a tough message about who is in control. there is the other message which is that we have a strong military and that puts the parade right in the center of xi economic and diplomatic and military resurgence after the hundred years of humiliation which ended in 1949 after the defeat of the japanese. of the messages, not least that it is the communist party that you can thank for getting the japanese out of china although there is a bit of a recognition at the kremlin that the nationalists have the role. some veterans have been invited. rishaad: taiwan has some of these as well. david: taiwan has recommended that veterans do not go. rishaad: david tweed. up next, reversing reforms. we find out why the indian prime minister is backtracking on key land changes.
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rishaad: we are back with "trending business." looking into the prime minister indianto pressure from farmers to go back on land reforms that would make it easier for business owners to acquire property. we have been tracking this in mumbai. what is going on exactly? >> the official word we heard from the prime minister, of the radio address where he said that rather than try to keep the land the going, he would let contentious build. the last day was today. -- bil go. -- bill go. lapsecision to let it
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following unsuccessful attempts by the government to build consensus in parliament to get amendments cleared. in fact, the entire session of the parliament was in monsoon session, a washout because of opposition from the political parties and of contention that the political parties, the itosition is saying that exempts investment projects from obtaining consent from farmers which the opposition said was overriding the farmers' rights. government has made every effort to assure of the farmers that rights will be kept in mind, the government has been quick to blame misinformation and a misinformation campaign being cared out -- carried out to derail the process. what does it mean? easier for the industry to acquire land and now it will be harder. this is the first time the modi
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government is taking a backstop as a part of the process. rishaad: thank you for joining us for "trending business." "asia edge" is next. angie is joining us to recap. ♪
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♪ rishaad: victoria harbour, this is "asia edge." a look at the top stories, and expensive august with $5 trillion wiped out with the biggest fall in three years. two, being pessimistic about china -- out of tune, being pessimistic about china.
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wrong?re did it all go a troubled relationship that failed to produce a single success. angie: divorce. firm, thousands demand the resignation of the malaysian prime minister over corruption claims but he remains defiant. pragmatic politics. modi backtracks on a land plan after a backlash from indian farmers. plus, mixed messages. china plans to display growing military might while proclaiming commitment to peace. all of that and much more in the monday edition of "asia edge." i am zeb eckert keeping an eye on the asian markets, stocks are down broadly. china, concern about the u.s. interest rate hikes, all factoring in and certainly profitability t

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