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tv   Asia Edge  Bloomberg  October 4, 2015 11:00pm-12:01am EDT

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on east asia as a driver of growth. angie: the good times are rolling again in macau for now. casino stocks are surging after chinese visitors returned intros. -- in droves. warns itming chairman might be fundamental to the carmakers survival. air quality worsens again around kuala lumpur. the worst on record. all that and more in this edition of "asia edge car." asian stocks higher for a fourth session, the longest winning streak we have seen in three months. the weaker than expected u.s. jobs report will delay a rate hike.
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australia, aing in standout today. japan is on a lunch break, the nikkei up 1.25%. investors in hong kong continuing to take a gamble on casino stocks. in the last hour, the world bank issuing its latest outlook for east asia. the bank expecting economies to post only moderate growth this year. they have been cutting the region's forecast through the end of 2017. full of glam, but we were talking about it -- full of gloom, but some positive notesha. slinda: -- some positive notes. a: china is the second largest economy in the world.
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asia forecast to grow 6.5%, it grew 6.8% last year. china likely to grow 6.9% this year. we are talking about the likes of indonesia, malaysia, the philippines. there forecast for the year -- there forecast for the year as the result of continuing pressure in the industries of tourism. scope is bank says the limited. it is an interdependent world. is asia susceptible to this greater degree of uncertainty? growth,rowth, moderate no need to panic. the world bank says when put into context, east asia remains
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a key growth driver for the global economy. can china do anything to minimize the risk of a slowdown? haslinda: china can do something about it. it has enough policy buffers to address the risk. that is what the world bank says. if china continues with its -- it would erode these buffers over time. ,f it is worse than predicted expect the rest of the region to get hit further. we will see it in terms of capital outflows, greater volatility, and with expectations of a u.s. rate hike, markets may overreact in the short-term. we have been talking about a possible rate hike for ever. rishaad: thank you. angie: in other news, hong
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kong's richest man has been shopping again, picking up portuguese windfarm developer and a deal worth $320 million. once approved, the acquisition will give him control of 15% of the portuguese wind power market. the vw chairman has warned that the soul -- these so - diesel could threaten it's very existence. software in some motors. october is looking like a winning month for casinos. the number of chinese visitors
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to the city surged more than 16%. more than 420,000 tourists arrived for the holiday. getting back to the markets, looking at the impact of the weaker jobs report from the u.s., another case of bad news being good. investorswe have seen follow that rally. the weaker than expected jobs report, a lot of traders betting that an imminent rate hike will be delayed. japan is still on a lunch break, up by 1.25%. verysx 200 getting a strong gain. significant gains in hong kong. glencore shares have jumped the
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most on record. they have been up by as much as 26% today. that follows the big rally we had in england. looking at some of the other newcrest lifting very strongly. we have been watching those casino stocks in hong kong. the hang seng is very much lifted. galaxy entertainment having a solid session today. it is higher at the moment by more than 6%. casino stocks still getting that very strong rally. do last week's disappointing job numbers mean for rate rise? what is next for the fed, we
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have been asking all morning. at theou look unemployment rate, 5.1%, look a little bit deeper. it fell yet again. to us, expect to see in october rate hike off the table. markets are giving it a 3% probability. data has to come in very strong over the next two months for the fed to justify any rate hike this year in 2015. angie: the bank of singapore says all is not lost. october may be a wash, but there is one more meeting before the end of the year. think the fed will raise rates by december.
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october looks likely right now given the payroll. it would raise the likelihood that a rate hike may be pushed into next year. we think most likely, december. meet: policymakers tomorrow to discuss their latest decision. denmark -- daniel martin says all signs are for a hold. >> if we look at the real economy, some of the activity data has not been that bad. china activity proxy measures the growth of the economy based on unusual measures, electricity production, freight traffic, passenger traffic. that activity is picking up. australian shares have
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sold off quite a bit. i am kind of reassured on the china effect. angie: that is the word from asia. rishaad: we take a look at these talks over the transpacific partnership, they stalled again. the 12 countries continue to disagree over final details. we thought we would get something this morning. what is holding things up? >> the key issue is the dairy debate. a press conference could be happening later on today after postponing it several times. wire rightto the now. they have been talking about this ongoing discussion where u.s. and new zealand remain at odds on market access.
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new zealand wants more access. the u.s. offer so far is insufficient. we need to make sure that mexico and canada opens its doors first. that is a big sticking point right now. mentioningu keep on dairy. it is the key sticking point. yvonne: they have narrowed it down to a few. let's talk about drugs, they have come to terms on the intellectual property rights. basically, the u.s. said they wanted to extend these protections of these patent laws to eight years. other nations say that is too long. -- could be about five years of exclusive data rights.
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this is a single undertaking. nothing is considered settled until everything is agreed to. rishaad: two i. -- thank you. angie: body art is sometimes looked down on in asia. a celebrity tattoo artist aims to change that perspective. coming up next, we will ask if there is any prospect the fed will raise rates this month or this year. management joins us when asia edge returns. ♪
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rishaad: the israeli prime minister benjamin netanyahu vowing a harsh response to separate attacks that killed four israelis.
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--instructed security forces and to use the tension without trial more likely. president says the middle east will be destroyed if the russian air campaign fails. moscow's attacks on the islamic asaad and other anti- groups. china's canceled flights to and from nepal pointing to fuel shortages with supplies from india still blocked. china southern has halted ticket sales until next weekend. kathmandu airport says it has no fuel to offer. blocked citizens have border crossings.
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it says it denies them equal rights. is 50-50r next guest on a rate hike this year. he joins us today in studio. >> our view is more hawkish than the moment at the moment. if you look at the way the futures are betting, they are only looking at the probability of 34%. we still give it a 50-50 chance. what happens if the next employment number. i think the number of people have done the work and it is seasonably. the month of september is not a great number. rishaad: i thought the numbers
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were seasonally adjusted anyway. >> you do have cycles. it was lower than the low number people expected. angie: janet yellen pointed to china as being the other -- we did hear from rba. he does not know why china was such a big deal for the fed. as an impact for australia's economy, he does not see that should be something to consider. >> i think it would be a big deal if you look at the devaluation angle. feelsna -- if the fed china will continue to devalue, ,hat could cause another crisis 1997, 1998 asian financial crisis. that is what the fed had in mind. emerging currencies already weak enough.
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commodity prices have fallen so dramatically. they have a crash flow issue -- cash flow issue. within that context, ms. yellen showed some concern. rishaad: things may be bad, but what happens domestically? u.s. ist sector in the not big. it has been impacted. think enough -- once -- you need to liquidate them. you have an issue with growth. angie: what happens with this reprieve? what should asian emerging
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markets and investors be looking at when it comes to emerging markets right now? >> prices have been marked down between 25 and 30%. out,china growth bottoming you talked about that before. china growth is bottoming out. the fed runs -- the fed funds rate could be delayed. i think investors are putting back into the stock market. if you see the volatility come think youficantly, i see the risk 30 type of people -- risk parity type of people. about the price of these equities?
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>> rather than the valuation? book wasok at price below one. -- that is quite cheap, especially when the return on equity is about 13 or 14%. angie: we want to are you with more questions -- we want to pepper you with more questions. indonesia says the forest fires may take years to resolve. continuesasia edge" in just a minute. ♪
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angie: you are watching "asia edge." that the case covering southeast asia -- the thick haze covering southeast asia is showing no signs of letting up. for more, let's go to our asia editor in singapore right now. the problem has happened again and again. the economic impacts have been huge. countries in the region have agreed to work together to combat it. why is it getting worse? >> they have agreed.
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indonesia ratified the trounce boundary haze -- transboundary haze agreement. it is based on consensus, no penalty for not complying. indonesia and malaysia have been reluctant to supply maps showing the exact locations in order to pinpoint culprits. they have not been as helpful as they could be. angie: what needs to be done to really fix this problem? laws in are strong place already. indonesia has laws allowing them to jail people for up to 15 years for setting fires. part of the problem is enforcement. the central government does not have as much control as the local -- at the local level as one would like.
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angie: is there anything consumers can do to change the way these companies behave? >> it is hard for consumers because palm oil is used in many different products, it would be hard to organize a boycott. banks and private equity groups could impose standards on lending to these companies, which would require they pay more attention to where they are buying from, their suppliers, what kind of practices are happening on the ground. consumers could demand a real certification, something that is independently audited, that would make clear which palm oil products are sustainable practices and which are not. can do a lot in terms of their procurement.
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many governments are moving toward 100% sustainable palm oil in paper pledges. angie: sounds like it boils down to enforcement and accountability. thank you so much for that. it was a big weekend at the rugby world cup. -- england goes out after defeat by australia. south america with a win over scotland. argentina took another step toward the quarterfinals. ireland booked their place after an edgy win against italy.
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two-time winners australia prove they are a good bet for this tournament with an overwhelming victory. wales to now face will win.which nation let's check in on trading in the asia-pacific. south korea, up 1%. hong kong, we are also seeing gains. looking to the afternoon business in tokyo where we will get the latest from japan. ♪
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angie: asian shares start the week with a bang as the disappointing u.s. payrolls trigger a return to form for the market. the regional benchmark posting its biggest winning streak since 2011. asia areg countries in full and the full weight of china's slowdown. economic growth is expected to slow by 6.5%.
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exacerbate theto situation. negotiations over a transpacific partnership has stalled, threatening hopes a deal can be reached. the japanese trade minister said an accord could be agreed today, but issues remain. new zealand is unhappy about its access to the u.s. market. rishaad: investors appearing to start the week in a buying moo d. a very good start to the week here in asia. japan coming back online and getting more of a pickup. certainly some more buying orders coming through. the costr yuan lifting be -- kospi. it is a public holiday in new
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south wales. lift on the good hang seng index. we do have china remaining closed until thursday. you can see some great gains coming through from the mining players, and also oil and gas. having a gain in asian trade, the sector up by 2%. a very good winning streak. it is the longest winning streak we have seen since july and the biggest in four years. here are how the casino stocks are faring. galaxy entertainment, it's best gain since october of 2011. sands china, up by more than 4%. the casino stocks leading the gains in hong kong today.
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bets.: interesting macau appears to be getting a much-needed shot in the arm. stephen engle is joining us to break all of these numbers down. arrivalsve the tourist . that is a shot in the arm. this story that led to those gains, a report that the head of the liaison office in macau telling the local media that the central government was considering some support measures. macau has been under pressure. september alone, gaming revenue was down 32% from a year ago. going,tral government is ok, maybe we need to step in. what has fallen off, those vip
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gamblers. there is a corruption crackdown going on and the slowing of china's economy and that has hurt revenue at the gaming table. parks.the water and the shows. thailand?oving thailand really depends on its tourism, but they had that bombing in bangkok. >> we only have anecdotal evidence because we do not have the numbers for the full week. we are five days into the seven day holiday. china is an increasingly important market for thailand. is about 10%eeing of thailand's gdp is tied to tourism. the bombing is hurting sentiment
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and the slowing economy in china is hurting the wallets of travelers. >> china -- the tourists are here -- the tourists that are here are chinese, but they are not in the numbers you would expect. >> they go for spot is, they go shopping -- four spas, they go shopping, not really beach going. the tourism authority expecting at least 6 million this year. again, this is anecdotal evidence. angie: thank you for looking into that for us. despite the turmoil in macau, philippine gaming millionaire remains upbeat.
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he says the country's biggest private casino operator is set to see losses narrow because gaming revenue is growing. he spoke exclusively with us. >> some month, you make money. the whole industry has been painted with the same brush. we are nowhere near the situation in macau. angie: speaking exclusively to bloomberg. ashaad: stocks experienced wild ride, that would be putting it mildly. here.aighead is tim: it is an opportune time to take a step back and reassess.
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we have been through the elation, the depression. where we find the shanghai composite on a forward earnings multiple is back to about 11.5, 12 times forward earnings. that is down from almost 20 times, only four month ago, and if you put that into some context with the rest of asia, we have gone from china being the highest value market to being one of the lower valued markets. hong kong is still below, a lot of that is chinese banks. very different story. rishaad: tell me about this trend. things stick out. the most significant one within
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the mainland china market is the divergence between large-cap and small-cap. if you take a look at the largest of the chinese stocks in the shanghai composite, a number belowse are trading from peer groups. if you look at it on a decile , you actually see the large-cap stocks underperforming since july when state support measures were put in place. that is a bit counterintuitive. you see a very big diversions and valuation. there he interesting to us looking forward. rishaad: thank you very much. angie: checking in on some other stories, there are signs that a deal is near for a transpacific
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partnership. the japanese minister told the government a deal will be agreed in principle today. the u.s. and australia came to terms on intellectual property rights for biologic drugs. leaving dairy as the final obstacle. new zealand is unhappy about access to the u.s. market. saudi arabia has cut oil prices to asia and the u.s.. it will sell its putin -- median arabia and other opec members have raised supplies to raise market share. u.s. isount to the narrower and aramco has raised prices for northwest europe.
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alibaba's jack ma is a man of many talents and he may have a future in art. his collaboration with a chinese artist fetched $5.4 million at sotheby's in hong kong. that is 17 times more than expected. it depicts the earth and was created last year. the proceeds are going to charity to promote environmental awareness. rishaad: a dire warning from volkswagen's top boss. he is using stark language to describe the diesel emissions scandal. synonymous with germany and quality. >> a shock to the market in a shock to those who believed in the german quality. 11 million vehicles subject to recall an investigation and the
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company needing to explain itself. making some headlines when he said, this is a threatening crisis for the company. they have taken out full-page advertisements, pleading for public support amid this very significant scandal, one that continues to call into question the very future of the company. politicians in germany questioning the criminal element, how many managers were involved. who knew, who was involved, and the extent of that? you are hearing comments from many public officials. manufacturing -- angela merkel must have something to say about this. >> it is a dramatic event. she said volkswagen must clarify itself quickly. it faces a wednesday deadline to
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fix nearly 3 million vehicles in the home market. that is just a fraction of the 11 a million around the world that may be -- 11 million around the world that may be affected. the charge is they used this software to hoodwink regulators and the public for years. that has many people upset from a brand that many trusted. rishaad: thank you for that. angie: what will a fourth quarter look like when china comes back online this week? our group discussion when "asia edge" returns. ♪
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angie: authorities in the south of france say 17 people have died in the weekend violent storms and four are still unaccounted for.
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rail service remains shut down along much of the riviera. the weather dumped almost 27 meters of rain on saturday night, leaving 27,000 homes without electricity. more than two months of rain in just two hours. alexis tsipras will announce his new cabinet today. he must balance creditors demand for cuts with his campaign promise to alleviate austerity. portugal's ruling social democrats coalition is expected to regain power. it was the first coalition government to survive a full term when the four-year dictatorship ended. adidas and kia have refused to join the campaign by fifa to call for the president's immediate exit.
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coke demanded the removal on friday. adidas calls for reform. kia declines to comment at all. we have the man who is the focus of our attention today. thank you for returning. is off until thursday. what is next? >> i think china will wake up a little bit more happy than the past few months. angie: really? why? excepting the fact -- they are accepting the fact that a
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number of areas in china are not in recession. angie: you are not allowed to be a bear in china. [laughter] >> when you look at china, in the past few months, it is glass cap -- it is glass half empty. we have switched to an equal glass. rishaad: 50% full. angie: this is a philosophical debate. >> if you look at tourism, it has gone through the roof. luxury spending has come back. i have a lot of figures and data to show that. the manufacturing sector has
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been terrible. when you look at the u.s., the manufacturing sector has been turning down as well. goods around the world have had a holiday for the past few months. >> have about the confidence measures into -- how about the confidence measures into the stock market? we heard rumblings that maybe they will remove the moratorium on ipo's. what kind of stimulus measures are needed? >> it might be too soon for the asian markets. the asian markets are somewhat artificial, no doubt about it. think thelk china, we shares listed in hong kong. to us, they are much more attractive. angie: you are still neutral on
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chinese equities? fact do recognize the there are some long-term issues yet to be solved. it includes the shadow banking system. how can the government manage with lowering rates, holding the currency the same, measuring the inflows and outflows successfully. it is very difficult to do. angie: if we were to push you off this fence, where would you want to fall? >> at this level, one has to be a bit more bullish. the government still has policy options. we talk about this. why does the banking system in
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china need that ratio? >> must be worried about something. >> they are worried about money going into the wrong hands. can release some free reserves into the banking system, especially when you have a recent devaluation and when you have capital outflows. >> you do not see anymore devaluations? >> the u.s. dollar is going through a correction. this is a window of opportunity for asian central banks or any other central banks to ease rates. this is a window of opportunity. >> you talked about your risk
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appetite is near panic level. >> goal did not fall as much as others. the only one half assets were going down. gold and bond prices were the only asset classes -- ratesd: you had 50-50 on as well. >> you are very tough on me today. -- of equities rishaad: not 50%? i know some others are way lower. angie: some people we spoke to last week, waiting on the
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sidelines. what about those people who have cashed out? when is the time to get your foot back? >> over the past few days, the reports have been that some money has come back. risk parity, i do not think that is back yet. we need to see volatility a lot lower. a vix below 15. you have to go down to the chicago board of trade and take over the bar there. thank you so much for that. rishaad: should tattoos be seen as an art? angie: that perception is changing right here in asia. ♪
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angie: one in five americans sport inc. somewhere -- sport ink somewhere on their body. rishaad: tattoos facing serious stigma in this part of the world. angie: in japan, people with tattoos find it hard to find jobs and can even be banned in public baths. >> tattooing is part of japanese tradition. in that sense, i was always interested as a kid. nowadays, you have these conventions. back in the day, it was very difficult to get information.
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i imported magazines from america and europe and that is how i started. the tattoo industry has changed tremendously over the past 20 years. so much change. my gekas -- i biggest goal is to understand the history and culture of japanese tattooing. the perception of japanese -- of tattooing in japan is just so different. that is why i want to be part of these conventions. -- the tattoo industry is becoming more and difficult -- more and more difficult in japan and i want to change that. customers -- i have many customers fly in from overseas.
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liars, --tors, and and lawyers, and craftsmen. oncustomers can to be more the sophisticated side. no trading in china. still golden week. angie: markets resume after that. i am going to mention it again. bad news is good news. angie: is it the new normal? rishaad: looks like interest rates will not be moving in the u.s. until the new year. angie: we are seeing some gains in australia and new zealand. we are still waiting for that
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tpp deal. rishaad: that is it for this monday edition of "asia edge." ♪
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