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tv   Trending Business  Bloomberg  January 10, 2016 8:00pm-10:01pm EST

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rishaad: this is "trending business". we are going to be visiting shanghai on the singapore, and tokyo this hour. we are watching trading slide again today. oil and commodity links.
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the sale of the century, saudi arabia confirming it may sell a stake in aramco, the world's biggest oil company. jp morgan is in position to handle that sale. star wars feels the force in china. number three on the all-time movie list behind avatar and titanic. do follow me on twitter for our top stories. without further a do, investors bracing for possible more pain. feeling fortunate because they are closed for a public holiday. we have taipei and singapore coming online. iette: not such a great morning for investors. the sixth trading day of 2016, the sixth session in the red. we are seeing japan at least
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spared today, closed for a public holiday. in early trade, the first hour, the cost be downright 9/10 of 1%. the australian share market has been having a lot of pressure today. its lowestling to level since july 2013. new zealand also under pressure in the first few hours of trade, down by 1%. these markets are coming online and joining in the selling. following the weakness on wall street that we saw on friday. singapore him by 1%. malaysia being spared coming down by 1/10 of 1%. emerging markets -- emerging currencies rallied on friday on the speculation that there was perhaps some intervention coming through from chinese authorities great this is the picture of the regional index, excluding japan. there has been a little pickup in the oil and gas space, up by half of 1%.
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telco is looking ok. the basic materials coming under byot of pressure, it down 1.7 percent. having a big impact on the australian share market. day, 29 versus 21. you can see there has been some pressure coming through particularly in those korean banks in early trade. is the have been seeing flight to safeway than. -- to save heaven. -- safehaven. stronger there by a 10th of 1%. against the dollar. holding at 117.18. the aussie dollar coming under further pressure. it has spiked up a little in the early session. let us have a quick look on the crude oil price. it has been having quite a big
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impact in the region as well. crude contract and by 1.6%. 32.64. rishaad: the chinese currency got off to a shaky start in 2016, falling close to record lows. chinese and global markets. we are looking at what to expect with the pboc daily fixing taking place. haidi: not a great way to start up this trading week. is stemming the volatility, the fear that play daysast week put a top 28 of fixing. we are keenly awaiting the start in terms of the pboc fixing this monday morning because that will set the tone for the asian markets which are looking pretty poorly at the moment. we are getting a number of
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forecast being slashed -- the yuan continues to weaken. gettingt of the pboc the yuan into that basket is trying to close the gap between onshore and offshore yen. that gap is widening to record highs. we also had the pboc putting a doingo certain banks trade because it was becoming too profitable and to comment. the latest revisions we have had is the luncheon -- london hedge let us bring up the latest cause as to where they expect to see that you want over the next 12 months. some are saying it could fall 15% in 2016. they are saying it could go down even further because the pboc
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cannot fight economic fundamentals when you talk about how much the economy is slowing and the rebalancing in the chinese economy. it could potentially come down to a percent against the dollar. conservative estimate is 2.7 against the dollar. goldman sachs is revising down to 7%. most act -- most accurate taking it down to 6.70. we are only one week into trading so far. expectations that the bearishness towards the chinese will continue. we are awaiting daily fixing out of the pboc. rishaad: we will have a more detailed look at that story later in the program. we do want your program. -- we do want your opinion. considering an ipo.
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new details are coming out about the plan that may offer investors a lucrative alternative to a full-blown selloff. knew that they were perhaps planning this on friday but we got a little more flesh on the bones, haven't we. confirmation last week on friday that saudi aramco was considering an ipo. it seems now that they have shifted the focus to their downstream assets which means that the 10 million barrels a day of oil in the field they produce from may be off the table. but, there could be refinanced assets, a global refining empire that runs from the u.s. to saudi arabia. into asia, south korea, and china. did would make it, if they make that a public company, that would put it at the fourth largest refinery globally after
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exxon, shell, and china was sinopec. the value of that company could be seen at $100 billion which would still be quite sizable. at the moment, the banks in the running, and the front running are seen as taking the ipo, would be jp morgan and hsbc. they have worked with aramco in the past and they have worked in the country a lot. they helped arrange a $10 million loan last year. deutsche bank is also being seen as something that could get involved as well in the ipo. this comes at a time when saudi arabia and aramco are suffering from some of the lowest oil prices in a decade. they attached a 12 year low last week. there is an interest in raising money. the country coming to the bond market to raise money. them to is a way for help it further expand these
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refining assets in other countries, downstream to lock up some demand long-term. they have done it in china and they want to do it in indonesia. they have also been very successful in the u.s. having refining assets. again, the ipo is really focused on the refining assets at the moment. the 10 million barrels a day of fields do and the oil not seem to be in play at the moment. if they were, that would be creating a company as big as a trillion or $100 trillion company with assets that large or with oil reserves that large. it is still to be seen. we are waiting for further details from the country and we will see what we can get from bankers there to find out exactly what they want to put on
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the block, what they want to be offering, and where this ipo could be going from here. rishaad: thank you very much. let us turn to some other stories we are watching. to the japanese conglomerate considering a shakeup. yvonne: talking about sharp this morning considering a government led bailout that may include spinning off its troubled lcd business. japan's public-private innovation network fund may take a majority stake and may eventually combine it with japan display. under the proposal, to -- sharp would get an investment, to be she and another company are said to be among the lenders involved. also have their eyes on buying sharp. u.s.nheim precision, some investment funds are also interested in sharp. -- the in bit has the -- id
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and $85 million operating loss from sharp which would be the companies first loss in three years. lectured could tesla have a fully self driving car park in three years? a car that can part. elon musk says he isn't slightly optimistic that it is a sure thing. cars will be able to drive themselves from los angeles to new york before the end of the decade. spoke as tesla released a software upgrade that allows its cars to part themselves. he claims it is better than humans driving on a highway and tesla cars can now reverse park into parking spaces and parallel park while you're standing outside of the vehicle. musk called it a baby step in the development of driverless cars, a pursuit stirring interest across the auto industry and beyond. google has been working on its driverless cars, gm and ford
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also pushing and that direction. well invest in lift a network.create india has one bank 2 million likes for their facebook program. facebook plans for free but limited access. education, health care, and job listings. the program has faced a lot of backlash in india. it threatens the principles of net neutrality and could change pricing in india for access to different websites. different pricing plans as well. to respondents and facebook to get more detail -- more detailed opinions but the approval should be coming up at the end of the month. the stories on
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the website, looking at five reasons north korea is obsessed with the nuclear bomb. have a look at it, it is a good read. steve engle is at the ubs greater china conference. steve: we have a lot to look forward to. coming up in the next hour, we will have exclusive interviews with a ubs group ceo. he will give us some details of his china plants. also coming up next after the break, chief china economist for pessimistich a outlook for the chinese economy. we will find out why, coming up in about 10 minutes time. ♪
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rishaad: this is "trending business" as we head over to the
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ubs greater china conference. steve engle is there with our next guest. let us get right to the guest. the chief china economist. about the path forward in 2016. what is that path? it has already been a rocky road. >> china has to embark on structural reforms and the government has talked about supply-side reform. that will include getting rid of some big companies, cutting some tax, and also supporting new industries and further easing of monetary policy. steve: easing helps for the growth progress but restructuring is a tax on short-term growth. can they do that given the pace of growth which you are predicting at 6.2% of gdp growth and 5.8% next year. >> in the short-term, the
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, the capacityment overhead will be a downward pressure on growth. the government will have to balance the need to restructure and support growth. on the supporting site they will continue to use fiscal support, ease property policy, those will be helpful. but at the same time, they do need to bite the bullet and start to restructure as well. steve: this property overhang which is mostly in third and fourth tier cities is one of the largest risks to the chinese economy. >> the biggest downward pressure. the week property construction means we demand for commodities. it has a pretty big negative impact on the industry and mining sector. steve: there is a two speed economy. a good indication that services
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are taking up a better part of the economy. pmi.e that in the services while that offset some of that weakness or are you taking more of a pessimistic view this year? >> services have been resilient. the consumer sector has also been resilient. -- government has eased cutting taxes to all those, tourism, health care, movie ticket sales and so on. those are pretty strong. they will still be resilient. they may face a headwind at the restructuring starts but the services and consumption have been rising as a share in the economy and they will continue to rise. steve: how many rate cuts? 50 basis points for interest rate cuts. reserves points of cuts. it could be more if there is more capital outflows. the short-term rates will go down to 1.8%.
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steve: what about the renminbi? seven to the dollar is what some are saying. as the dollar is strengthening. how does a weaker currency help china but also exacerbate some problems globally? >> a weaker currency can help somewhat but as china is already a very big part of the global economy and other currencies may theeciate with the r&b, help will be limited. our forecast remains 6.8 against the dollar. about 5% from the end of last year. steve: by the end of this year, 6.8? they are blowing through a a lot of their reserves right now. >> yes, they need to stabilize expectations. on that, they will tighten some cross-border capital flow controls. fixing -- they are
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when they fix the rmb at a lower rate, that may help stabilize the expectations. for youranks so much time. it is day one of the greater china conference, the ubs greater china conference. more in the next hour with the ubs ceo. turning now to the first word on the stories making headlines around the world. showing the tv is celebration of last week's nuclear test with senior military officials. kim called the test a self-defensive step and it was a legitimate right of a sovereign state. united states has called on china to support actions against the north. said theynot -- they were not informed of the weapons test for -- beforehand. a strong response from the u.s., flying a b-52 armor over the peninsula. 's decision toul
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resume broadcasts in the d military size -- demilitarized zone. the two countries are being pushed closer to war according to korean officials. mexico is moving towards extradition of el chapo to the united states. chapo humiliated the authorities last july by escaping from prison for the second time. house has criticized sean penn for his october interview with el chapo at a secret jungle location. it was for a rolling stone article. some say sean penn's actions help police tracked down el chapo. from themoments away start of trading in china. we will have a look at the premarket numbers when "trending business" returns. ♪
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minutes to go until markets in china and hong kong get underway after the worst start for stocks since 2011. let us have a look at what the pundits are saying. e: we are probably expecting a little bit more of a tough day considering what we are seeing across the region so far already today. worth noting that the pboc yuan reference rate has been left little changed for a second day. by 1.4 percent during the eight days it was cut last week that the central bank today the fixing at it has limited that loss over the course of last week to 1.07%. having a look at the futures in hong kong on the index. we are seeing a fall of about
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2.4% when hong kong opens. someu would expect, pressure coming through from friday. we did see speculation of intervention because the shanghai composite closed higher are suggestinges we will see weakness when we open in less than 10 minutes time. rishaad: looking at star wars. china has proved fertile ground for the film. generating some $53 million in a record-setting opening weekend. forceccess helping awakens to the number three of all time earnings. zeb: this is an important marketwatch. the world's second-largest movie market. hollywood council china to deliver the audience is to deliver the revenues. million, it generated that this weekend. over the past cointreau weeks, 1.7e the newly launched,
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billion dollars. it has seen phenomenal success in china and around the world. appetite in the chinese movie market for american-made films and increasingly hollywood tailoring the films it makes to the chinese appetite. you will see little elements that cater or appeal to chinese viewers. it looks like star wars is a hit indeed. rishaad: let us have a look at avatar. that is the next milestone. zeb: it still has a long way to go but it is catching up. some people are saying, some analysts and movie critics are saying it may surpass it. looking at the numbers practically speaking, star wars has grown $1.6 billion so far. avatar hit $2.8 billion. we need to watch this closely. that was back in 2009. china certainly helping out star wars overalls success. rishaad: let us tell you about
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china's challenges. we heard from the nobel prize laureate joseph and what he made of the current market volatility. we are talking about whether more is coming. opening numbers coming up after the break. hang seng down quite considerably. the open is next. ♪
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rishaad: looking at our top stories. the theme is the same. commodity alld sliding under renewed worries about china. sydney leading that charge. july 2013.since the focus is on to china. inecord 46 monthly declines
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consumer prices. concerns about falling demand. new york crude futures dropping further after losing 10% in the first week of the year. at its lowest since june of 2004. eligibility in chinese stocks compounding concerns that demand a be falling in the world's leading energy consumer. investment banks lining up for what could be the biggest ever ipo. j.p. morgan and hsbc and deutsche bank may win a role if saudi arabia and saudi aramco -- pursue and i. they are considering selling part of the business or a stake in some of their subsidiaries. it does look like we are starting with a red arrow story so far. the sixth trading day of the year and the sixth session we are seeing weakness. the shanghai composite opening
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lower by 2.4%. it was a little bit of a comeback coming through on friday. a gain of 2% in the main china index. causing speculation that it was driven by state-based intervention. today, we are seeing a number of stocks hitting that 10% daily limit drop. having a look at hong kong also. some heavy falls coming through here to the futures. dem by 2.4% on the hang seng index. that has seen a number of the markets extend their losses as well in the region. taiwan down by 2 -- 2%. singapore down by 1.5%. weakness in korea, the cost be weaker by 1%. the big salt in materials heading australia's share market today. lowest level since july 2013. i want to take you into some of the sectors in hong kong. , everyg seng index sector is in the red. tiedve heard from chow
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they have fallen by about 5%. we are seeing big false in some of those consumer and personal good spaces. their shares coming under pressure. beingational holdings heavily sold off in the early session. elsewhere, there has been week this in a lot of those producing companies. and defense company's under pressure once again in north korea. looking at the currencies. are seeing a big selloff in terms of the equity market. the japanese yen has been a flight to safety. higher for a six session, continuing to strengthen against the greenback. hitting its highest level since august 24th. hitting 117.13. we are seeing significant selling in china coming through
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in the early session. the shanghai composite down by 2%. pulling back a little from the 2.4% drop. i imagine it will be another wild day for investors. rishaad: looking at the china expansion story. it has been a major driver for growth in southeast asia. we are seeing these signs. the region is getting hit by the slowdown taking place. we have a story that singapore is being worst hit. sensitivity index shows that singapore will be the worst hit if it is a worse than expected slowdown in china. for every one percentage point of -- massive when is you have a country that is growing sporadically. >> compared to other southeast asian countries like vietnam and the philippines. they will be hit far less. singapore's exports to china are
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-- shipsbigger share the bigger share of exports to china at of the southeast asian economies. do the rest of the southeast asian countries turn to if they want to get growth back on track? >> two main places they can look, domestic and services. for singapore, the domestic market is small. the government is shifting more and using its position as a financial hub. for other economies like indonesia and malaysia and thailand, they are looking towards boosting domestic consumption and growth. rishaad: other factors in play. there are risks particularly for what is going on in this singaporean economy. it is not just from china. the property market is one of them. >> the property market is on a different cycle. the downturn in prices.
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there are other risks as well, what the fed will do this year. singapore is a small, open economy. these factors are risks as well although the government and the central bank have flagged china as a major resource for singapore. rishaad: let us get you up to speed with other stories. giving a box seat for president obama's final state of the union address. he is one of 23 people invited to join the president. those usually include ort have overcome tragedies what benefit from a policy of initiative but in the president's final year it can also include those who represent the future. uber is lowering prices in 18 american cities to boost business. prices falling 10%. the 20% discount in houston.
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it means drivers will earn less but uber says that will be offset by greater demand. uber may eventually spread reductions to 100 cities. the asahi group is planning an offer for sab miller. the company declined to confirm. the deal could go through next week at $3.4 billion. there are others interested in sab miller's assets. is considering a government led bailout that includes the sale of its lcd -- lcd operation. peter, tell us about this. ." consumer ledthe business that has been struggling for years. now looking for financial support from at least two coup different parties interested in gaining control of its businesses.
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sharp is best known for the consumer electronics products that show up in retail stores like televisions. it's strongest business is making glass panels that go on smart phones and tablets. lcd panels. it has become -- a customer known as apple that is important. sharp is negotiating with at least two different parties. a government backed entity from japan and also foxconn a taiwanese supplier of electronic components to apple also. foxconn is looking at taking full control of the entity as part of any kind of deal, it would be likely that the lcd business would be spun off into a different entity. rishaad: the bid is -- the bidders are lining up. this could be a huge fire sale.
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what are the differences between these bidders? >> it is interesting -- think jay is a government backed entity that would take a stake in the lcd business that spun out and largely leave the management in place. takeover by the government, the japanese government would probably mean minimal layoffs at the company or fewer layoffs. and also, modest changes. with foxconn, they want full control to do what they want to do with the business, probably combine it with their own operations. you can see a broader restructuring. a foreign entity would get control of the business. at this point, it looks like sharp is leaning towards the government deal which would mean fewer changes at the company. rishaad: the thing is -- are there obstacles to this deal going through? couple ofre a important obstacles. deal is a big
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shareholder in a company called japan display that also makes display panels. if they were to try to acquire control of sharp business, that would raise antitrust concerns in japan and there may be some obstacles to getting that deal them. another big obstacle is the banks that have loaned money to sharp are being asked to convert that debt into equity at the company. they have already done this once before and they are probably not anxious to do it again. they would want reassurance that they are going to be paid back so they could beat kingmakers in any deal that we see. will take a look more at these worries about china. they continue to unsettle the market. the nobel laureate joseph agrees that the country is flowing but says it is not all bad news. china iss happening in
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a slowdown by all accounts. everyone looking at the data seems to be convinced that the growth is slowing down. klinsmann --at at a cataclysmic slowing down. there is no real news. what this does remind us is that market rules matter. the way you structure those market rules can either diminish the volatility or increase the volatility. what we are seeing here in a of some a consequence market rules that were not as well-designed as they could be. >> the circuit breaking. can beuit breakers important but when you have two that are too close, when one say, weggered -- people will see the other get triggered and then they rush to get out of for the second one is triggered and that exacerbates the volatility.
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they picked up one important idea, circuit breakers. not inc. through as deeply as they could have the design of the circuit breaker. general proposition. which is markets need rules but design -- designing the rules is not easy. >> implementation has always been the biggest struggle. what is the biggest threat to the global economy coming from china? are you a bear or a bowl for 2016 from china. r or a bull fora 2016 from china? plan has notear yet been announced. how well they formulate that and
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what they do will make a big difference. there is a big debate going on, the balance between supply side -- demand-side measures. i believe they have to have both. if they push too much on just the supply measures and not enough on the demand measures, then you could see a deeper downturn. what is true all over the world is there is a slowdown in brazil , in emerging markets. the focus just on supply measures does not pick up on what is happening in the global economy. it is not excess capacity that is bringing down brazil. what is going on is a shortfall in global demand, china has immersed itself in the global economy, there are domestic things that are affecting it and exacerbating it but if they do
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not have enough demand-side measures, there could be a deeper downturn. rishaad: up next, one of europe's biggest sports netailers is targeting the asea region. how they plan to target a tough market. ♪
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>> the first word on the stories making headlines around the world. marched inf people hong kong demanding answers to the mystery of a missing bookseller. those people associated with publications criticism -- critical of beijing are thought to have been taken to the mainland. met even though he had sent a private message to his wife asking people to lay off the streets. sri lanka is trying to ease the ethnic tensions that led to the civil war.
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the prime minister called for parliament to be converted into a constitutional assembly to drive the changes. sri lankan forces and the tamil accused ofs are both committing war crimes in the conflict that ended in 2009. the world's biggest lottery jackpot is still up for grabs after nobody matched six numbers over the weekend. jackpotlion is now the and it is only expected to grow ahead of the next draw on wednesday. the odds are more than 292 million to one. new skin and the game in an already crowded asian retail sports marketplace for the -- the chain says it's a philosophy is providing value for products to get more people playing sport but it has also got to make money. for more on what is in their join -- let usce
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join this reporter. >> thank you. welcome. hello from the first flagship in singapore. we are very happy to discover these new customers in singapore. rishaad: you are putting in an e-commerce strategy first there. can you hear me all right? >> yes. our analysis start of the share market in singapore two years ago, them -- developing our e-commerce activity. we are far away from our base in europe so we decided to test our products in singapore on e-commerce. we developed this activity two years ago and thanks to very good figures, we decided to
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in stores. concept you use the concept of walmart? where you pile it high and sell it cheap? >> it is a very good question. the fact is we are a worldwide company. we are an integrated company do our own we design, manufacturing, and retail which means we can maximize our costs and we save and give the saving to the customer. secondly, we take benefit of a very large network in the world. we now have 1012 stores open in the world so we can play on
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volume and reduced prices for the customer. rishaad: that is how you do it. us get to your average singaporean customer. what friends are you seeing in sport right now for the city? trends are you seeing in sport right now for the city? singapore takes advantage of very good weather and infrastructure to play sport. thegovernment encouraged population to practice sports so the trend is amazing especially for outdoor products and fitness products. let us take it to the indonesian customer. how does the indonesian customer differ? i'm sorry, i did not
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understand the question. how is the indonesian customer different to the singaporean customer? each market in south east asia is different. that cambodia is not the same. in singapore, we have quite a metro market. has yetesia, the market to be developed. we are here to build strong relationships for the long-term with our customers. for indonesia, we tried to identify the needs for the customer for the next 15 years. you are going to grow the business in this part of the world. where to next and what concept will you follow?
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tried to adapt in each country our concept. the main concept is a big flagship. like this one. where we can gather 95,000 products at the same place. that is the main concern. afterwards, we must adapt this concept to the local locations. in singapore, we are looking into shopping malls and other smaller concepts. each time, we want to respect our vision. each time we propose 50 sports under the same roof. rishaad: great talking to you. thank you. up next, we will be finding out
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why a hollywood actor is being mocked online for his regret meeting with inventory is mexican drug lord. "trending business" returns in a couple of minutes. ♪
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rishaad: let us have a look at what is going on on social media. what is trending? after mr. els chapo's arrest in mexico. he was recaptured. the second time he has escaped prison which is embarrassing for officials. the interview that sean penn anducted with el chapo is now field day for many people on the internet. in awas while he was jungle somewhere. it is raising questions of journalistic ethics. questions of why he secretly met
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with the drug lord. and also whose men had approval had approval over the article before it was published. social media is going to town on this one. seane article, he told penn about his childhood, his thoughts on the drug trade and his part in it. workdid sean penn start to dea?r the that is what one person said. this is not the first interview that sean penn has done that was controversial. he did it -- he did one with hugo chavez back in the day. under fire here. the was a big scoop for magazine but the white house really criticizing it. we also saw on the flipside, some reports saying that sean penn actually count police
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tracked down the drug lord during his escape. possible extradition to the u.s. as well. criticism about that coming through also. jokes abouta lot of the golden globes as well. let us see about the markets. another down day for hong kong and shanghai. 26 minutes of trading. hang seng in hong kong. 500 points down now. substantially below that is substantial -- is psychologically important. also feelingosite the heat. 1.5% down. let us look further afield. australia. asx 200 levels are down also. taipei, a quick snapshot there.
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we do have a korean market in taiex, just over 7700. there we go. singapore, down as well. talking about the stocks extended the route. we have economic data waiting further on investor sentiment. details ahead. ♪
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rishaad: we will be live in tokyo, shanghai and mumbai. we are looking at the markets starting a new trading week. risk aversion from china.
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vanke is tumbling again. beijing looking for stability fixing the yuan, little change from friday. a previous cuts. fears of a currency war. do follow me on twitter. here is my handle. equities down. in china. mixed inflation news not helping things along. juliet is having a look at these moves. what is the damage is so far? juliette: not a great day for the six trading day of the year and we are seeing docs in the red for the six session. the shanghai composite has come off of early losses. now currently down by 1.2%. still though on track for its lowest close that we have seen since september.
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stilleek we had last week having a play in the region. the hang seng market coming under quite a lot of selling pressure, down by 2.4%. we are seeing quite a lot of weight there. the inflation data we saw coming through over the weekend, cpi up by one point 6% -- 1.6%. over slowdown in china having a ripple effect across the rest of the region. jakarta coming online, joining in the selling down by three quarters of 1%. similar to the false we are seeing industrial you with the asx 200 trading at its lowest level since mid july, 2013. i want to show you some of the major players that we are watching in the region and a lot of them are in hong kong because we are seeing the hang seng index underperform in the region at the moment. falling come down by
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almost 6% taking the losses over the last week over 90%. trading has been halted on the market since december. coming through with disappointing quarterly sales today. not surprising knowing the slowdown in china. falling the most in a few months, down by almost 3%. and 10 sent coming under significant pressure. one of the worst performers in the region. the other big story of the day today has been the fact that the the yuan fixing rate little changed. we saw that big move coming through last week when the fixing rate was -- eight days in a row. --the moment, we are still we are still seeing a little bit
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of strength there. holding at 6.5 a. the pboc leaving that reference rate little changed today. rishaad: getting off to a shaky start this year. falling too close to record lows and spurring volatility across the chinese market and global ones as well. looking at the forecast. does this change the narrative? would not think so because after the spectacular tumble that we come the biggest decline. it does not soothe market concerns. in subjecting the yuan to greater market forces, chinese authorities are in danger of losing control over this very tightly managed currency. we are seeing this being reflected in what banks and
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brokerages are doing in terms of slashing their forecast for you on depreciation. they are being revised down. the most bearish: london hedge fund. on the. it is 6 -- omni. it is expecting between 7-7.5. 8-10 against the dollar because the head of strategy says you cannot fight fundamentals with intervention. this is being reflected across other banks. sachs as well. the most accurate forecaster when it comes to the yuan. hsbc and macquarie bank as well. we know the pboc has been intervening in a big way to stem declines in the yuan. treadmill of hell. but the central bank is burning through dollars. take a look at this trajectory.
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this graph shows it all. the china monthly foreign-exchange holdings and the decline in on shore you want. it follows that downward trajectory. coming off of record fx reserves. it's all the biggest monthly declines in december of fx. it begs the question, what does that mean for u.s. treasuries iving -- it does not mean much because state street saying that as china continues to draw down on these reserves, fear over the chinese economic slowdown and changes in the global economy will support buying of u.s. bonds particularly if the fed continues to show strong economic data. the last one was the payroll. managersu.s. money snapping up 42% of u.s. debt at auction. will have more on
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this story in the days to come. today as well. we want your opinion. let us take a look at this report and the nikkei news. sharp is continuing a government led bailout that includes the sale of its lcd operation. what do we know? >> sharp has been struggling for years. the consumer electronics business it is best known for has been struggling in particular in its lcd panel business. these are the glass panels that go on smart phones and tablets. it has been doing better but it needs financial support so it is negotiating with at least two different parties. a government led -- government backed fund from japan and also foxconn, a taiwanese supplier that works with apple as does
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sure. as part of any deal, it is likely we will see sharp lcd business spun off into a separate entity since that is the most valuable unit they have at this point. rishaad: we have bidders lining up to get a piece of this company. what do we know about them? what are the differences among them? foxconn, the taiwanese company would like to take control of the lcd operations in particular. they want to call the shots. that would mean a substantial restructuring, possibly some layoffs and of course a foreign company would end up with control of sharks lcd technology. innovation network corporation a japan, because it is government led entity would be able to take a slower approach. they would be more cautious about laying off workers. typically in japan the government wants to be
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protective of any jobs out there. they would maintain control within japan and also have a more modest impact on the workforce in japan. likeis point, it looks sharp is leaning towards the government deal if they are able to land that. one of the big hurdles is that it already owns a very big state, about a third of japan display which is a competitor in the lcd he it is not clear if they will be able to hold stakes in both companies given antitrust concerns. there would be an antitrust examination of the deal if it goes that routes. rishaad: thank you very much. let us look at some of the other stories. ne looking at some news which is brewing in japan. reports say a sake is planning to make an offer for sab miller labels.
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possibly as soon as next week. the transaction may be worth as billion although a sake says they cannot confirm the report. kkr, samtors include and others.iguel and clear antitrust hurdles in europe. when hundred $4 billion megadeal we have been reporting. japanese companies want to buy abroad to reduce their dependence on a domestic market with a shrinking population. let us talk about singapore listed commodity trader noble taking another nosedive. shares are down close to 6%. the chairman boosting his stake
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in the company that he found it. the stock extending losses after sinking to their lowest level since 2008. he bought 10 million shares on friday for $10 million raising his holding 222%. the stock tumbled last week after s&p joined moody's and cutting its rating to junk over concerns of its liquidity as commodity prices slumped. sunk 60% amid attacks by critics. has rejected those allegations but the stock is having a very big down day today. let us talk about hazlett. could it have a fully self driving car in just 2-3 years. elon musk says he may be slightly optimistic about the timing. he still expects to have an autonomous electric car that can drive itself from los angeles to new york by the end of the decade.
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tesla released a software upgrade that allows its cars to park themselves. he claims it is better than human drivers on the highway and has low cars can now reverse into a space and parallel park while you stand outside of the vehicle. elon musk calls it a baby step in the development of driverless cars. we have talked about google working on its driverless cars. gm, ford are also pushing in that direction. gm last week reported that it would invest half $1 billion in lyft to develop a network of cars. rishaad: let us tell you what we have coming up. facebook getting a thumbs-up for a controversial for free but limited access. interview exclusive with the group ceo of ubs.
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we are joined live from shanghai by our guest. this is "trending business". ♪
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rishaad: a first word on the stories making headlines around the world. north korean television is showing kim jong-il celebrating last week's nuclear test with senior officials. kim called the test a self-defensive step and that it was the legitimate right of a sovereign state. the united states has called on china to support action against the north. beijing said it had not been told of the weapons test before him. the u.s. is developing a strong response, lying a b-52 over the peninsula. decisionowed seoul's to resume a broadcast over the demilitarized zone.
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they are strengthening forces at the border. tousands of people marched china's liaison office demanding answers to the mystery of a missing bookseller. associated with bookselling and that are critical about the government. he has sent a message to his wife asking people to respect his privacy and stay off the streets. shares in hong kong and china are on the slide again darting a yuaneek with the offshore losing. they are trying to stabilize the reference rate. let us get you back to the ubs greater china conference. steve engel is there with our next exclusive guest. this is the big interview this morning. hello again from the ubs greater
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china fund first. -- greater china conference. we have the ubs group ceo. thank you so much for your time. completed its global restructuring and china is going through its own restructuring. what are your plans for this year which has started off pretty volatile? >> it has started how 2015 and it so quite volatile. -- we have to expect some kind of adjustments for 2016. those are also the good times to plan for the future and that is the reason we are starting to implement our strategic plan in the next five years. we will we are -- double our account in the region and grow our businesses and equities in fixed income, and investment banking across the board. we also plan to expand our
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services, the service companies that are giving outsource functions to our groups. china is a great opportunity like it has been for the last 20 years. steve: doubling the headcount in this part of the world or in china particular? >> china in particular. steve: how many jobs is that? >> 600 people. and we plan to double it in the next five years. steve: how will that be distributed between investment banking and back-office? >> across-the-board. asset management, fixed income, investment backing -- and equities and wealth management most importantly. if you look at the wealth created in the last few years and which will be created in the next decades, this is a great business to be in. steve: still, pretty small in
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china. what is your strategy for wealth management, getting the newly minted millionaires into your portfolio? >> our strategy is really about helping to pay china assets but to help our clients to diversify their investments and it abroad. if you think -- out of the 9 trillion retail deposits in china, only around 1% is invested abroad. you can see how there is a great opportunity for a firm like ours to contribute to the diversification. expansion, isis it safe to say this may be the largest expansion you have done in china since 2006? >> yes. our growth in asia over the last few years has been gradual and in the last 10 years we have been growing a lot.
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it is what we will see in the next few years. strategyat is your with your alliance with the china postal savings bank? it has a large network across , the but mostly in rural poorer part of china. will this be well management, asset management? we are very pleased first of all to be part of this milestone transaction and to be close to such a -- such an institution. the postal bank is a big one but also help our clients to access that want toassets invest and diversify their portfolio. it will be about products but also without advice.
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a business where we sell products. we sell advice. steve: how important is this alliance with china's postal savings? is it going to be a big part of your business going forward? >> it is a big component but we are also pursuing our standalone growth and we see these combinations as complementary. this is nothing new. with respect to what we do on a global basis. we do help other financial institutions to manage their client needs and wealth management. and we also pursue our own positioning. steve: we need to take a quick break. we will be right back at the ubs rater china conference. ♪
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steve: welcome back to the ubs greater china conference in shanghai. our guest is the ubs group ceo. let us talk about the group as a whole, the stock down by about 10 weeks 6%. -- we have had a rocky beginning to the year to the markets. how is that market turmoil going to affect performance? is difficult to forecast a full gear. i am pleased with our stock performance in 2015. we clearly outperformed all of our peers. we have to put things into
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context. is stillrisk aversion an issue. negative rates in switzerland and europe will play a role. we are expecting higher rates in the u.s. which should compensate. overall, it will be a challenging year but strategically we are well-positioned. we achieved all of our targets in terms of building capital and structuring the firm so we are prepared to tackle those challenges. also, exploit -- explore the that thisies volatility creates. steve: what is the key opportunity? >> in times like this, clients are looking for advice. so, stay close to clients and build long-term relationships is very important. as i mentioned, client risk appetite is very low and what we try to do is stay close to all of our clients. steve: regulation is a huge cost.
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what other regulation is still out there for you? thee have to complete migrations in the u.s., the creation of the intermediate holding company and if you look at what we have done in the last 24 months, the biggest milestones have been achieved and completed. in terms of repairing ourselves post generate first 2018 is that we are confident that we have executed. steve: how does the compensation pool look this year? >> they will find out in a few weeks. scenario?optimistic >> i don't like to talk about compensation. our goal is to pay competitively and to pay for performance in a balanced way.
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between the interests of our shareholders and the employees for the long term. steve: dividend growth? policy oficy is a progressive and dividend growth and it is quite clear that we say to our shareholders, we will pay at least 50% of our net profit attributable to shareholders. we have intentions to fulfill our commitments. steve: i really appreciate all of your time. that does it for now from the ubs greater china conference. so much coming up. it is the day when we are seeing further market turmoil or decline in equities. 2.3% down, the hang seng. psychologically blow the level.
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the nikkei, not trading today, it is a public holiday. there we go. looking at singapore next. it could be one of the biggest losers of the slowdown in china. we have that coming up after this stunningly short break. ♪
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rishaad: chinese stocks extending last week's plunge. concerns about the deepness of the slowdown. a similar story across the world . risk investors watching the foreign exchange ratio. ubs says it plans to double
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staff numbers in china. their chief executive tells us staff will be added over the next five years. he expects it to be a challenging year. sharp is considering a government bailout. saying the private innovation fund could eventually combined with japan display. mitsubishi said to be among the lenders. normally, we will look at the japanese lunch break. nonstop pessimism in china. julia: japan being spared a little from this selloff today. , there is quite a lot of risk aversion coming through
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in equity markets. the hang seng down by 2.4%. the hang seng china enterprises index has dropped to a four-year low today. by shanghai market down 1.2%. not quite as bad as the early session. quite a lot of weakness coming .hrough since friday a lot of speculation that that was caused by state intervention. a lot of selling in taiwan and singapore, as well. australian market down 1.8%. this is what the regional index excluding japan looks like. every sector is over. a big drop coming from the oil and gas sector. crude oil falling around the $32 per barrel mark.
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some property developers listed in hong kong, all falling after china developers reported a fall in contract sales in december. yanke has continued that plunge. down 19%. china overseas land falling the most since august 2015. ringgit continues theall 2/10 of 1% against dollar. rish on, that is ahead of industrial production data coming out of: november the today. investors getting out of em currencies. rishaad: the chinese currency getting off to a shaky start this year. following ten-year record lows, sparing only for volatility across global markets.
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guest: what happened last week, you had stocks on the mainland halted for two days. that spooked the whole situation. they have become a little concerned about sparking too much volatility. the s&p index had its worst ever start to a year, falling 1.1% on friday. this has sparked concern. authorities don't want to add to the volatility. that is why they have done it today. rishaad: we are talking about one hedge funds in london talking about a significant drop , this divorce between the offshore market responsible.
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guest: we asked the imf for a comment on the cap between onshore and offshore. rishaad: they try to change things in order to bring those rates together. guest: they did. the speculation is that the turmoil last week would weaken yuan. , the offshoreme try to narrow the difference. we had a response from the imf say they have noted the spreading they would discuss with the authorities want to do. they do have a grace. . in yuan only enters the sdr october. many people pointing the finger saying, where is the transparency?
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look at china's economic expansion being the driver for growth in southeast asia. that the region is getting hit by the slowdown taking place in china itself. singapore might be the worst hit if there is with the worst that expected slowdown in china. rishaad: why? reporter: for every percentage point that china slows, singapore will be a 1.4 percentage points. it is worse than other southeast asian economies. the five major economies in southeast asia, singapore ships the largest share of their exports to china. rishaad: where can nature for growth -- where can they turn for growth?
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reporter: singapore is relying on services given the global environment. it is a financial. it relies on exports, not the domestic market for services. and thailand, they are trying to build domestic consumption just like china. rishaad: what about the other factors at play? what are the biggest risks this year? for singapore, they are dependent on what the fed does. the interest rate directly affects their interest rate because the central bank controls exchange rate policy, not interest rate policy. also a riskunch is because of the economic transition the government is going through. the labor crunch is impacting services. rishaad: thank you.
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let's have a look at the other stories. there is no disturbance in the wars continuesar to lead the north american box office. record weekend opening in china. 41 $.6 million in the united states and canada over the weekend, a domestic record. it has racked up more than 1.7 million -- $1.7 billion globally so far. it opened in china over the weekend. there. $53 million yahoo!'s plan to spin off its internet business may be .bandoned sources hit the company is considering a sale of the business. board has been pushing
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yahoo! to separate the alibaba assets from the main business without incurring a tax charge. the previously proposed returning alibaba shares to shareholders. medela is one of 23 people invited to join michelle obama the state of the union address. guests usually include those who have over -- overcome tragedies. in his final year, they can also include those that he thinks ought to represent the future. let's get more on global energy markets. considering an ipm. -- in ipo. -- an ipo.
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they were considering a partial sale. these sale plans may have been in the works for years. the plan that is being actively notussed involves necessarily have full share sale, it would involve cigna refining units of the company. the crown jewels is the upstream, the oil fields. especially there in saudi arabia. they are likely to stay private .ith the saudi aramco fold analysts say the downstream unit would be very lucrative to investors because aramco is doing everything from high quality gasoline to low sulfur diesel as they seek to diversify. they make a lot of money doing it. the downstream unit alone
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estimated to be worth tens of billions of dollars. it is a question of how the executives there decide to proceed. rishaad: as they consider their options, it will be a lot of bankers rubbing their hands in glee. who will be the most gleeful? well, an american bank in a british bank., morgan chase, they had a significant presence in saudi arabia. jpmorgan and hsbc are rented that -- are ranked among the top 10 ipo advisors.
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rishaad: thank you. coming up next, we look at them megamerger that is created one of the biggest aircraft leasing firms. we will year from avalon aviation.
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stories from around the world , mexico moves toward extraditing joaquin guzman on to the united states after his recapture. el chapo cumulative authorities last year by escaping prison. the white house has criticized sean penn for his interview with a newspaper
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article. some reports say the actions tracking down. sri lanka wants to drop a new constitution to ease racial tensions. the prime minister called for a parliament to be converted into a constitutional assembly. sri lanka forces and 10 mill tiger rebels are cute -- tamil tigers are accused of for crimes. forrball jackpot still up grabs. the total price is now one $.3 billion. it is only expected to grow before wednesday. the odds on winning are more than 292 million to one. rishaad: last year saw a flurry of aircraft deals.
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worth around at least $16 billion. for $7.6quired avalon billion. avalon's ceo is with me. what is the rationale? and this is the chinese company buying a european one. they are the largest container leasing company in the world. aviation is core to their heritage. fourth-largest airline operator in china. aircraft leasing is now the most important source of financing for aircraft on a global basis. rishaad: why the pressure to merge? was the opportunity to bring their strategic positioning in the aerospace sector.
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we were a public company. we are merging the best of east and west. rishaad: what happens next? reporter: we are at number four in the world. we have leased over 410 aircraft. we are already large. the aspiration is to be a top three player which is growing this business from this current base to over $40 billion. rishaad: organic or inorganic? reporter: we want to grow organically. we are alive to opportunities. over the next year, they've will be opportunities for acquisitions. rishaad: the chinese market is likely to grow massively. 20,000 aircraft over the next two decades. how do you see that? guest: it is $1 trillion of aircraft that china needs to
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support its current growth rates . these are conservative estimates. china is under ordered by 750 aircraft. the chinese market is driven by the demographic. in asia, 700 million people in the middle class. that is going to grow to 2.6 billion people. these people fly on aircraft. airlines will want to lease them. rishaad: what is the advantage of leasing? we are very efficient source of capital. residuals.s airlines have matured with their job. their job is to get people on seats. it is not their job to own aircraft. rishaad: they can do that by various ways. guest: most hotel operators do
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not own the buildings. we are an asset financier. rishaad: you have to take the risk on that. guest: absolutely. rishaad: how does this compare to the property market? guest: i like to think of it like an aircraft like real estate with wings. rishaad: real estate is to appreciate. suppliers,also have two people making larger airplanes. he have a very stable supply and a strong demand. the financial equation is very strong. if you look at the adjusted return, they are well into the teens. it is a high-growth sector. rishaad: being a large player, order.e the ability to
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there are two big costs. the most important is the price we pay for aircraft. -- combined by buying power, we will be the largest in the world market. rishaad: tell to me and the order you have right now. you have the new engine option for the airbus. guest: our job is to mirror the demand in the market. we are one of the launch customers for a new twin aisle aircraft. we are looking at the 777x. it is very expensive currently.
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we are trying to figure out the risk reward. about the airbus a-380? .uest: it is a super aircraft they are just not a good investment. value.all about residual the residual value is treated by the number of operators and aircraft sold. it is still a nich aircraft. its a super aircraft. rishaad: thank you. next, india seems to like mark
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zuckerberg's push for free internet in the country. ♪
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rishaad: facebook is battling to bring free internet to india, getting a boost of support. mark zuckerberg's controversial -- let's go to mumbai. reporter: telecom operators it, feeling he will be critical for promoting innovation and also bringing more people online. the pricing promotes differin charges for different websites.
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arguing itpanies are small manufacturing companies on to the supply platform. they will offer differential pricing. in a joint representation, they that the telecom regulatory authority that vodafonelayers -- arguing for this pricing. better! feel look at social media. yvonne: we have been talking and his chapo
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recapture. the biggest headline is this interview with sean payton for rolling stone magazine. this is while he was on the run. this whole drama leading to his has really become like a real-life hollywood drama. actress also assisted in making this interview happened. the white house criticized sean penn for that article saying it violated journalistic ethics. should he have met secretly in a jungle without alerting authorities? is he working for the dea now? apparently they had a seven hour meeting before he agreed to actually be in the article. apparently, the writer made no
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changes. but he had approval. social media saying sean penn should've interviewed the families of people whose lives have been destroyed by el chapo's greed and cruelty. talk about good for intel. they said it was this interview that helped in authority find el chapo. it was also his desire that hist -- his desire to make movie that led to his undoing. rishaad: hong kong and shanghai looking like this. pressure.nder stocks extending what we saw last week. the asf in sydney at levels we
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have not seen since summer 2013. no training in japan today. that is it for this monday edition. "asia edge" is next. angie is coming up.
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edge.": this is "asia a look at our top stories. china's slowdown is getting worse.
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the warning lights are flashing. months g to a record 46 u. remains optimistic. another name coming up on the show. we will hear from joseph stiglitz on why he is not seeing signs of change in china. aramco controls 1/10 of the world's oil and saudi arabia may sell one stake. wars feels the force in china. their record setter has a $53 million opening. those stories and more. keeping an eye on the markets. bad are some of the numbers. the regional index excludi


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