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tv   Asia Edge  Bloomberg  October 25, 2015 11:00pm-12:01am EDT

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start their next economic blueprint. the 13th five-year plan. please, mr. post man. japan post said to name its final share price. rishaad: it will be the biggest since the late 1980's. we will take a look at jakarta and see what the indonesian president has on his to-do list. the reaction, we look at the new downward pressure on the yuan. that report and loads more on this monday edition of "asia edge." >> chinese stocks are trading at a two-year high. can you believe the hang seng enterprises index, just about to enter a bull market?
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just remarkable. take a look at the markets across the region, all advancing on this latest stimulus measures from the pboc. a lot of questions about the health of the chinese economy given the fact they have taken the interest rate cuts. investors are seeing an opportunity to buy. stimulus continues around the world. the hang seng index advancing .3%. you are seeing some casino names, gaming stocks moving to the front of the boards. we are seeing a nice move from property related shares. checking in on the city market, the asx 200 advancing a quarter of 1%. markets.driving the
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a lot of action in the commodities space. the pboc says the latest stimulus measures were not an act of quantitative easing. policymakers stepped on the gas again friday. cutting interest rates for the sixth time this year. some clarification this morning from the pboc. how are they spinning this? this is traditional monetary policy, not quantitative easing. the pboc cutting interest rates for the sixth time this year. 24.35%, which is a record -- 4.6 to 4.35%, which is a record. reserve requirements cut by 50 basis points.
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the deposit rate ceiling scrapped. very targeted action from the pboc, some saying it was not expected. all of this coming ahead of potential moves from europe to japan. policying monetary potentially in the u.s. china cutting rates to a record low. angie: stimulus measures had the desired effects on the market, but how are chinese investors taking all of this? juliette: all of the efforts have had the desired short-term effects. the shanghai composite has written 17.5% from those close we saw in august. -- has risen 7.5% from those lows we saw in august.
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the increase we have seen since those lows of the summer in china. the year to date, investors about 6%., up by this is not going to change things longer-term, some analysts are saying. look, higher stock prices writing on cheaper credit instead of improving fundamentals not sustainable in the longer run. angie: it is a broader story. rishaad: the rate cut could be seen as a gift to what we could expect later on this week. we have the communist party meeting in beijing. they are coming together to talk about a possible revision to china's growth target and structural changes to the economy. what are we looking for?
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>> we can expect the president xi jinping, he is rolling out his first-ever five-year plan. some are saying this will be transformational because of the economy. what do we have to read between the lines? sometime since china has opened up. we will see an annual growth target below 7%. from theorce them -- 2010 levels. the annual growth will be around 7.5. there is some -- a move
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to get the imf. >> we had a big reform plan. the top economic planning body -- we are expecting the five-year plan to incorporate that. the same case with china's monetary policy as well. angie: we have been talking about china's stimulus moves all morning on bloomberg television. told -- investments said the rate cuts were not the most interesting part of the announcement. in anotherfactoring cut. what is promising is the whole removal of the ceiling with deposit rates. rishaad: that makes a massive difference. >> it should make a big difference.
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their ultimate plan of opening etc. ital markets, etc., we will probably remain in the easing environment. the pboc is mindful that the window of opportunity is getting smaller. angie: the rate cut is not the end of the story. is the economy generating enough growth to create employment opportunities? joining therce market. if it is not, they could do more. angie: china's leaders gather in beijing to formulate the 13th five-year plan for the nation. of policynty continuity as manufacturing and construction growth continue to
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fly. >> what we are looking for is a little bit more detail, perhaps a little bit of a twist in policy terms. green growth, green industry, dealing with the environmental challenges, that is something that has been moving up the agenda. clear on there, not what the parties overall strategy is on this, that that is the area we can look for more detail. angie: that is the word on china's latest stimulus measures. is said topan post price its holding company ipo soon, expected to be the biggest debut in almost two decades. tell us which one of the ipo is being valued now and now that relates to last weeks pricing. >> the one that has been price
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today is the japan post holding, the holding company for the insurance unit and the banking unit. and the japan postal service. what is interesting about this, before last week when we had the banking and insurance pricing, we had some people tell us it is likely to be priced at the higher end of the range. but it could be priced at the lower end to make sure that when it does debut in tokyo, the price will rise. abe and his government have a huge interest in making sure this ipo look successful. we did hear that the ipo will be priced at the higher range for the holding company as well. even still, compared to its sector, the holding company will be in the services sector.
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the insurance and banking units will be in their respective units. even at the top range, it is not surprising. why is this significant? what are you looking for during the announcement later today? isa: the pricing significant, this is taxpayer money, so the government will be making sure they get enough money for the taxpayers and use this for reconstruction after their 2011 earthquake. it is significant to make sure, it is a popular deal and hearing verybrokers, it is oversubscribed. people are trading ahead of the listing, the prices keep rising and there are not enough sellers in the market. they will price this at the top
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range now. you will see how popular the shares actually are. rishaad: thank you very much for that. china'sther stories, first joint venture investment bank is more than $810 million in the hong kong ipo. by the shareholders are offering 612 more shares. cicc plans to set a final price for its ipo on friday. sony is said to be in talks to buy toshiba rose -- to shiva's image sensor unit. they are planning to build dominance in the smartphone camera sector. sales of sensors are expected to grow more than 60% over the next
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three years. toshiba is looking to raise cash after an accounting scandal. volkswagen ceo will join angela merkel on her trip to china. he will give merkel and update he willutomakers -- also meet topics that gives in inna -- topics that gives china as the company tries to limit fallout from the pollution scandal. beijing has also launched an investigation into the issue. rishaad: pressure to weaken the yuan mounting. more on that story later on in the program. after this break, the great a look at their diverging policies. ♪
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rishaad: china's 13th interest rate cut since november. expectations for additional stimulus from the bank of japan. consideringed is the timing for its first rate hike in almost a decade. joining us to discuss this divergence is peter lewis. why is it so challenging over there at the fomc? peter: it is going to get very interesting. we have the ecb talking about negative rates, the bank of japan under pressure for more stimulus, the fed is really in a
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hole. it will be difficult for it to raise rates without causing volatility in the financial markets, the very thing it said it is concerned about in the first place. i think we would see a lot of volatility in the fx markets, the dollar would strengthen quite considerably and that would cause problems for the emerging markets and commodities, and everyone has tried to devalue their currency. the ecb is targeting the euro. the bank of japan has been targeting the yen. rishaad: the worst thing would be to hike rates -- peter: that would be disastrous. fomc.yellen has a divided i do not think she has a consensus at all on her committee about what to do. the hawks are just about holding the balance of power, but there are some major dissenters almost
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criticizing janet yellen's policy. angie: i wonder how much lack of discipline that it starts looking like for janet yellen. her predecessor kept very tight reins on even the public announcements and comments and statements from the fed presidents and janet yellen has not been able to do that. peter: she herself has come out quite publicly and said what we need to do is not normalize rates. despite what the data says, she says she sees that as transitory and it is better to act anyway before inflation gets to its target. these rates are not normal, we need to start normalizing policy. members coming out and saying, that is nonsense.
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inflation below target is a big problem. we really need to wait. i think she would lose credibility for committee does not raise rates. rishaad: it does seem an empty statement. she talks about the economic data. the only real argument for raising rates, they have been abnormal for a long time. peter: they have also focused on teams that -- on things that are quite unusual. they made it very clear that china was one of their concerns as well. they are being too transparent in the process, sending out mixed signals. no one is really quite sure. one month seems to be the inflation data and another month seems to be china. angie: it is almost like you are describing the complaints we have about china. let's leave it here for now
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because we want to bring back part of the conversation when we get you back. we will see you in 20 minutes. rishaad: some of the stories making headlines. angie: leaders have agreed on what they are calling a 17 point action plan to tackle the migrant crisis. it came out of an emergency summit called by chancellor merkel. the eu says greece will increase its reception capacity. financial support will boost the ability to process arrivals. have -- poised to become the new prime minister, promising a $90 billion central bank loan program. and a tougher line on migrants. 20% of workers still live in
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poverty. angie: the woman once known as the napalm girl has been receiving laser treatments in the u.s. she is being treated in miami for scar tissue that runs along her left arm and down most of her back. the treatment is relieving the pain she suffered for more than 40 years. prize.oto won a pulitzer rishaad: the indonesian president making his first statement as we look at what his agenda -- as we look at his agenda. ♪
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angie: the indonesian president is making his first trip to the united states and is due to make -- to meet president obama today. we have the jakarta bureau chief joining us right now. what will they be talking about? >> i think it is a chance to visit the white house while there is still a definite friend of indonesia there. i think they will be talking about trade and investments, the u.s. having completed talks on tpp. tpp,esia is not a part of
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but he says he will consider it after his talks with obama. it would take a few years for that to happen. they will also be talking about investment, indonesia is looking for more energy investment. they will be talking about efforts to combat terrorism, indonesia being the country with the biggest muslim population. they will talk about the environment. indonesia looking for energy investment and with its recent fires sending haze over to singapore, more greenhouse gas emissions. long laundrys a list of issues the two men will be talking about. let's focus on indonesia's economy. reform,een a man about but that reform has been criticized as to how effective
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and what kind of impact that has had. the focus is the meeting on any investment possibilities with u.s. companies. we expect any deals to be announced? be some are supposed to agreements. he is meeting -- possibly in clean energy, chevron has some geothermal investment here. google is expected to make an announcement. franciscoad to san after d.c. these will be quite small investments. u.s. companies are waiting to see what he can deliver in the next three years, still concerns over the rule of law any tunisia, the corruption -- rule of law in indonesia, the corruption. is thei think that
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consensus. thank you so much for that. rishaad: just heading over to sydney to take a look at the afx. we are seeing -- take a look at the asx 200. the bullish spirit is just waning. rise. very small hong kong, the hang seng, where are we now? 1.2% up. korea. seoul, south tokyo resumes after this break. ♪ ♪
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sure is an asia trading up after china's surprise rate cuts. -- shares in asia trading up after china's surprise rate cuts. the communist party officials are gathering in beijing to sign off on their 13th five-year plan. watching forl be next year's official growth
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targets. china's reinsurance making gains, after a $2 billion ipo. it is the biggest test for investor appetite for new listings. markets, japan returning from the lunch break. let's take a look at the moves across this part of the world. i guess we are just paring back some of the gains we had earlier. >> take look at the numbers as we await tokyo to come back from the lunch break. it is a day of gains. we started out about 1% higher on the shanghai composite and the hang seng. we are off the highs of the session. macau casino shares, take a look at the numbers. galaxy entertainment leading the way in terms of the hang seng.
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those chinese shares traded in hong kong, they are nearing a bull market, if you can believe it. insurers, another story we want to watch. we have china reinsurance debuting in the hong kong market , that stock is up 2.7%. that is a nice performance. analyst say the company faces competitive pressure from new entrants to the insurance market. -- a quick check on australia because commodity prices have been in focus. bluescope has matched an offer from cargo. it is buying cargo stake in northern star. minerals up as well. tokyo, back from the lunch break.
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panasonicand hitachi, up 7%. same for hitachi. beatting profits, they forecast and the stocks are doing quite well. sony is also up on possible dealnews involving the toshiba image sensor unit, that would be $160 million deal. there are still some bright spots in this market. yuan set to come under further pressure. let's bring in our fx reporter who joins us live from singapore. is it reasonable to say the market is positioned for further depreciation? expectationse are in the short-term. the pboc will manage those
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expectations very carefully. if you look at the yuan difference, the pboc said it higher. if you look this month, the currency has been guided higher by almost .1%. for all the noise about the devaluation that happened in august when they devalued the currency by almost 4.6% against the dollar, and all of that easing, it is down 2% plus this year. other asianxt of currencies that have fallen over 10%, like the malaysian ringgit, it is a pretty solid performance. angie: some question as to how pboc is propping it up with its fiscal reserves. let's talk about the fdr reserve basket. get ineally wants to
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very much. what have you heard in your reporting? ven: that is right. it seems the imf officials told china it is likely to join -- to basketsded in the imf of reserve currency which enjoy the special rights. the decision is not do before next month when -- is not due before next month. concerns earlier have been how it us been in the global market. a recent report suggested the yuan is among the top five globally used currencies. that should allay the fears. angie: thank you so much for joining us out of singapore. news, netome breaking
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income figures coming through. 22.2 billion rupees. just marginally higher than what had been estimated. have at the we moment. ci cc,ave a look at looking to raise as much as 811 in hong kong. let's start off with investors. , the goldman sachs of china. a very well flagged ipo, people have been looking forward to this transaction. more than half of this ipo is going to the cornerstone
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investors, these are people who will be long-term holders and help to stabilize or shelter the stock from volatility. a lot of the cornerstone's are state owned enterprises in china. this is what our sources are telling us. there has been no official announcement. we are getting -- they will start marketing this transaction as early as next week. we may well see an official term sheet in the next couple of weeks. they are trying to reduce the volatility of investment banking revenues. it is something that not only cicc is doing. they are focusing on more stable revenue lines, wealth management is something they have been focusing on. hopefully, they will take their
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money and do that. rishaad: we have china reinsurance today. the market has been pretty volatile this year for ipos. >> we were running the numbers earlier on. if you take the whole year, as far as hong kong, we are looking at what is likely to be the biggest year for ipos since 2010. we have had a volatile year because of the collapse in chinese stock markets. rally over theig last couple of weeks. months out of that. there has been a bit of a rush, people starting to take advantage of that. were twoin 2010, there massive ipo's.
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angie: seeking a one-year waiver on financial conditions. sources tell bloomberg that it will send out a formal request next week. the casino operator has been given 250 tables for its new $3.2 billion project, below the 400 it had hoped for. the new resort in macau opens tomorrow. honda could increase its cooperation with general motors. the two companies work together on fuel cells and are in talks to expand cooperation beyond that agreement. no decision has been made by either carmaker, but he also said honda plans to raise next year's china sales target. australia's financial regulator investigating an unspecified number of traders for placing orders on the futures markets
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that they had no intention of filling and then canceling them. the practice can be used as a strategy to gain the system. current levels of high-frequency trading and dark liquidy are not adversely affecting the way australia's markets function. rishaad: bluescope shares had a good start today. the steelmaker announcing it will be cutting costs and that program will help to propel earnings 40% in the next -- in the first half of next year. let's get over to sydney. on top of all of this, on the acquisition trail. paul: that is right. other halfying the of northstar, which they owned with their joint venture partner. northstar is the most profitable steel mill in the united states.
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they are satisfied with that purchase. over here in australia, quite the opposite. they have been aggressively cutting costs. the bulk of that is coming from savings in their labor force, already lost 500 jobs. ,ustralia's largest steel mill a couple of drivers -- a couple of hours drive south of us here in sydney. , wages will a deal be frozen. they will get a tax break from the new south wales government for three years. viable, buthe mill able to cut costs. it is good for the town, good for shareholders as well. is expected to be 40% higher so
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the market really welcome to that. bluegroup shares spiked by about 20% this morning. now they are up 11.3%. rishaad: thank you for that, paul allen. angie: what is in a plan? china's political elite meet to chart the nation's next five years. ♪
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>> lets it go look at some of these stories making headlines around the world. calm: he appealed for after his deputy was arrested for an assassination attempt. it follows last month's explosion which is said to have been an assassination attempt. the vice president was detained
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on saturday and will be charged with treason. rishaad: tony blair said the 2003 invasion of iraq was partly responsible for the spread of islamic state in the middle east. he apologized for mistakes made in postwar planning. but insists the toppling saddam hussein had been the right thing to do. angie: korean families from both -- 250f the peninsula koreans traveled to the resort for the emotional meetings. more than 30 of them are in their 90's. south korea fired warning shots on saturday towards a north korean patrol boat that crossed there to factor maritime border -- de facto maritime border. be the fivet would things you want to see out of
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it? peter: the growth targets. i would rather than having the growth target, i would like to see them abolished altogether. angie: how will we figure out if they are doing well? focus on thish one number hitting a 7% target. see iswould much rather a series of targets about what are they trying to do with the economy, what kinds of reforms, how would you like to improve people's lives? encouragesget, it people to fiddle the numbers. the focus becomes entirely on meeting a particular number as opposed to what is really going on in the underlying economy. are these structural reforms being made? if they are being made, you
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might not hit that growth target anyway. it is far more important the central government shows it really is concerned about china rather than trying to pull the strings and control every aspect of the chinese economy, which you cannot do any way in a country of that size. i suspect they will come up with a lower target. the second one is reforms of the state owned enterprises. i would like to see a much more willingness to let them find their own way. i think i would like to see some social reforms enacted. will they drop the one child policy? the licensing system? i would like to see them reformed.
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risk-aversefairly and what they decide. that growth target, you are hoping they will not get to that. this is the first time they have gone in sub seven. peter: the real growth is much lower than that. if you look at imports -- >> you mentioned some of the components of gdp. peter: retail sales are at an 11-year low. gdp do notponents of suggest this is an economy that is growing at 6.9%. look at things like electricity consumption, down over 3%, railway freights. angie: for china, the health of the economy is directly tied to
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the health of this political and social stability. where are we in terms of numbers and supporting labor growth? peter: this is their number one concern. whatever happens, they do not want to see unemployment increased because that is the risk of having social upsets and problems and people complaining. you are absolutely right. rishaad: it is a hugely bloated state sector. you have to make them more efficient. are you going to give them jobs elsewhere in the private sector? sector is big in china, more than half of the economy. peter: i believe if you allow companies to really find their own way in the economy, initially, you do find people
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from bloated industries either lose jobs, but then find jobs in new industries. we are seeing this in the u.k. people lose jobs in traditional sectors, but they find jobs in newer areas. angie: that takes a couple of decades. rishaad: it did take a long time in the 1980's. peter: which is why i question whether the government can allow some of these reforms to take place and allow growth to slip too far below its targets. in order to do that, you have to sacrifice some growth. there will be changes in employment, that is a natural part of reforming the economy. >> will the new plan encourage lending to small and medium-sized businesses? nonperforming
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will they keep focusing on that area? peter: the banks do not want to lend to those areas. one of the steps, freeing up interest rates, for example, in the way in which they did on friday by taking away the cap, that is one of the things that helps encourage banks. angie: the language the pboc came out with, for those who are too excessive, we have got your number. peter: this is typical pboc language, isn't it? we are watching you very closely to make sure you do not take this too far. >> six time in a year. have they used up their arsenal? peter: unlike most central banks, the pboc still does have a lot of -- it is not a zero
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interest rate. it is not like the eurozone or japan. tools it plenty of could deploy to stimulate the economy. the fact that it has cut six times does show you how concerned they are about the real slow down in the economy in china. angie: to be a fly on that wall. rishaad: would not do me any good, i would not understand a word. angie: thank you so much for joining us. affair with's love big brands. rishaad: all this win -- angie: all this when "asia edge" continues. ♪
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answer: the world's most fictional -- angie: the world's most fictional spy has attracted brands. "spectre" is due to be released next weekend. we take a look at how product placement has shown up in the films. >> james bond and product placement have gone hand-in-hand since the films were produced. of pierce brosnan, they had 20 brand partners on board. you have daniel craig and his interpretation, but they paired that down with seven brent partners -- seven brand
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partners. obviousies have had placements. were eva royale green's character says -- gone a bit too far. her reaction to that is where the audience went -- ooh. >> why should i trust you? >> right now, i'm your best chance of staying alive. >> a lot of -- the websites have been going crazy about what james bond is wearing and what he will be drinking. they'll the deer has produced -- belvedere has produced a limited edition bottle. in advertising campaign. >> shaken, not stirred.
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-- wherever bond goes bond goes, he personifies their brand. >> that is why you have heineken, gillette, tom ford. >> excellent choice, mr. bond. angie: mr. bond. for?does spectre stand good, thank a. -- thank you. overtakeled to "the martian" at the box office this weekend. rishaad: it managed to return to the top spot.
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angie: goosebumps came in a close second.
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