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tv   Trending Business  Bloomberg  January 24, 2016 8:00pm-10:01pm EST

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rishaad: it is monday the 25th of january. this is "trending business". we are visiting tokyo and singapore this hour. maintaining the momentum from friday. global equities had their
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biggest gain in 3.5 years. the regional benchmark was down nearly 10% so far this year. people are queuing up to talk to china. the goldman sachs president expects devaluation in six months. joining the increasingly crowded field in driverless cars. google and haslett -- tesla have more confidence. the china market is getting underway at the bottom of the outward. and malaysiaiwan are just getting underway. yvonne: looking pretty good so far in the asian markets after weise saw the best game in 3.5 years last week. boosted by mario draghi, ecb president talking a bit about march being a big time for
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expanding stimulus. more central-bank plays this week. up .101%., we are off some of the gains that we saw at the start of the session. rising as much as 1%. oil is a 100 come -- backup, it rebounding and extending the gains on friday after rising 9% or 11 are sent on thursday and friday. legal fight up a percent. fire, is falling 4.3%. airline stocks are falling today. we are seeing taiwan and singapore coming online right now and sings the mother gains -- and singapore.
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datad see japan trade coming out in the last hour. back to black on that trade surplus. a but -- above estimates that do not be cold. imports and exports fell more than expected. the dollar-yen did strengthen on those figures but it has been gyrating all morning. 118.57. we will see what governor kuroda will do this friday. he did not have much to say in davos. little appetite to motivate. takata, almost 14% down. more recalls coming. 500 more million airbags will be replaced. a 10th death attributed to the airbag maker.
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japan tobacco surging 6.7% after that plan for a price increase. world bank of japan governor was at the world economic forum expressing confidence when it comes to china. beijing somefering advice on defending their currency. that is what we asked each other every day particular is -- particularly during a week when we talk about potential decision from the bank of japan. governor kuroda says china should be imposing capital controls to a avoid burning through its stockpile when it comes to foreign reserves. he says it is because of this contradictory situation where the economy is slowing in china so the pboc has to loosen policy
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and that will exacerbate capital outflow and appreciation when it comes to the yuan. when you look at the levels of outflows, serious. for finance says around 700 billion and capital flight last year. these are chinese economies struggling to repay amid depreciation. the stockpile of foreign reserves is dwindling. that brings it down to about 3.3 trillion still. a bloomberg survey suggests that by the end of the year we will see that come down to under the trillion. tot could fall even further 2.6 trillion by the end of the next year. nothing to be sneezed at, something to worry about. goldman sachs group president joining in with a course saying
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china will probably have to devalue at least over the next six months. taking control of this narrative. rather than this ongoing uncertainty and volatility we are seeing in the currency markets. we will take a more detailed look at that story later in the show. we want your opinion. do tweet us your thoughts. mentioning was earlier, japan's economy has returned to surplus with better-than-expected trade data. jodi schneider joins us live to get us through these numbers. a bit of better news for mr. abbe. december, itth of was a surplus, the third one in 2015. good news. the deficit for the year
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narrowed significantly as well by 80%. that is showing the right direction. some we just, particularly china in terms of exports. is anis mostly, it improving picture but not entirely. rishaad: were there any other highlights out there? numbers, the december numbers, we did see the eu number, exports remained up 3.1%. u.s. was down 3.4% and china was down more than a percent. the worrisome issue is china with continuing slowness there and is export numbers. also, the yen has been relatively weak on the world stage and that has been helping the export numbers as the yen strengthens, that does affect the export number and on the import side, imports have been
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cheaper because of oil going down. if oil prices go back up, there is concern on that side. these are good numbers now but there is some reason to not think that they are going to continue in this way particularly with exports in the coming months. rishaad: thank you very much. let us have a look at some of the other stories we are watching including some road bumps on the way for apple. apple,e: first to results due tomorrow should give investors a better indication if its recent share selloff has been weren't it. the shares have taken a beating -- a beating. months% in the last six and that is on concerns that iphone sales are waning. slides --apple stock two 200 $37 billion in the last fiscal year.
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apple is becoming more reliant on its iphones for growth even though it also sells the apple watch, apple tv and apple music. for 66% ofaccounted their revenue last year. from 50% the year before. apple suppliers in asian trade, in taiwan up by 1.3%. japan display up by 1%. short sellers have pushed bets against alibaba to a 14 month high over concerns that the slowdown in china will only get worse. short interest in china's biggest online retailer surged to 7% of shares last week, the highest since november 2014. it is also more than double from lows reached in december. have hovered around 2% since last month.
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alibaba is a bellwether. adrs down by more than 13% since of start -- since the start of this year. in your, shares are down by more than 30% in the last 12 months. alibaba reports third-quarter earnings later this week and they are expecting revenues to .it $5 billion saudi arabia's state owned oil company says it is considering all options when it comes to potential ipo. the biggest crude exporter is considering selling a state in its state owned company, saudi aramco which controls more than a 10th of the oil market. options to take it public includes opening it to international investors although the oil reserves will not themselves be up for sale. saudi arabia has just mckee production high, abandoning out whole -- output limits. ceo claimed fossil
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fuels will account for 80% of energy use by 2030 that none of us would live to see a time when 70% of energy demand is met by another commodity other than oil. rishaad: another story we are tracking. for foreignfrenzy condoms is giving japan a boost. it is an interesting one. coming up, hearing more on the changes, the way that twitters board level works. they are grappling with sliding growth and a parting staff. we are about to enter the year of the monkey. our next guest says it is more likely to be a year of tears -- of bears. find out why. ♪
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rishaad: rick -- returning to
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"trending business". our next guest sees a year of bears. were wrong the program and you were the voice of gloom and doom. and now you say it is the year of the bears. how can you still remain so pessimistic? you don't have to. unfortunately, a facts tell me i have to be on the side of extreme caution. do not look at all of the headlines. the shanghai etc.. it is not really affected by the as if he 500. -- the s&p 500.
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peaked in june of last year and since then it has dropped 30%. what does that tell you? rishaad: it tells me that america is not doing that well. >> it is a pretty steep bear market. the dow jones transportation average which is all of the stocks that should benefit, peaked in 2014 and has since dropped. this -- all of these are indicators that it might swing backwards again. that see messages and then are not being reflected in the s&p 500. floord: surely there is a if you look at the nikkei 225 or the shanghai composite. 20% down. the nikkei, it from its peak last year. done? these, aren't we
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>> not yet. i am more concerned with the shanghai composite in terms of the global economy. couldanghai composite drop back to 2005 in the world economy will still be where it is. what worries me the most is new york. that is the market where devaluation is still extremely high. there is nothing the federal reserve can do. can you imagine if the new york was to drop, or when it is going to drop 20% what will the federal reserve do? rishaad: what can they do? beheste not there at the of market participants. know if you look at what they said last year. at first it was data dependent and then market dependent and
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then china dependent. when the new york, and no bull market last forever, when it drops 20% it will set off a view shifts -- a vicious cycle of redemption. that is the market that frightens me the most. somethingill it be driven by sentiment? markett look at the post-world war ii because from world war ii until the 1970's are the 1980's, it was inflation on a circular trend. go back to the 19th century where markets dropped not because of recession. they dropped because there was a credit crisis or a commodity bust. all things unrelated to recession. thatad: that teaches us
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the path of least resistance is to the downside. >> yes. rishaad: lower oil prices will help in the longer-term. that sameed me question before and i said no because u.s. does -- consumers are still highly leveraged. they want to improve their balance sheet. they will not spend. good inales have been the last few months. they are using their extra producing power to boost their savings. trendsnotice, the way have unfolded over the last 1224 months, they are unprecedented. oil price plunge. -- consumer spending in the u.s. did not go up. rishaad: we should hopefully find that you are wrong.
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having a look at fundamentals. the storyse are making headlines. at least 28 people have died in the blizzards that have paralyzed much of the eastern united states. many places saw more than three feet of snow. had its biggest snowfall on record. were canceledhows for the first time since superstorm sandy. normal services were expected to resume today after 12,000 flights were canceled over the weekend. a large chunk of metal washed aboard a beach in thailand could be from a plane. there is speculation that it is missing -- that it is from the jets.g have crashed in the southern indian ocean and the piece of wing found has been
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identified as coming from the plane. the and battered chinese minister has apologized for causing trouble for the prime minister. an investigation was underway to claims that he accepted bribes and he would address his future in the government this week. the magazine says he and his aides took more than $100,000 from a construction company over a period of three years. news, 24 hours a day powered by more than 2400 journalists. go to bloomberg news room. rishaad: coming up, shrinking and surplus place. we take a look at some of the challenges facing singapore's robert e sector. ♪
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rishaad: this is "trending business". china's markets are coming online in eight minutes. let us get some indications on how things might be when we have the open. yvonne: looks like we will continue on in the global rally that we have seen this morning after quite a rebound we saw on friday in global docs worldwide. poised to be now 1.3% higher in the open according to hang seng futures here at this time. we saw news from bp oc. -- pboc. 655.57. if you take a look at it on a year on year basis it is strengthening 5.6%.
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we saw quite a rise in the hang ong, rising nearly 3% friday. the a shares also rose 3% on friday. china raising rhetoric about the yen saying -- if you continue to short the yen you are doomed to suffer huge losses. according to radical speculators. reckless speculation that it will face higher trading cost and legal consequences. as we continue to see that we had into the chinese new year holiday as well as the quarter and book closings. a shortage of liquidity. a big challenge coming up or the the boc as we run up to that time. we heard that the monetary authority has told some banks to cancel their repo agreements with interest rates deemed excessive. a higher opening in china markets and hong kong as well. rishaad: we are keeping an eye
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on developers. foreign banks continue to shrink their headcount. barclays did just last week. haslinda: it is looking bad. it has been tough for the office gete or a glut is about to worse. we are looking at foreign banks in singapore is on a 550,000 square feet of access capacity and yet more capacity is being added. a 38 story office building will open this year and who will fill it up and what will the landlords do. as it stands, foreign banks in singapore are firing workers. you talked about barclays as well as deutsche. barclays said it was cutting more than 1000 jobs.
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singapore is unlikely to escape the chop. about a massive miscalculation on the part of property developers, it is the empty feeling. rishaad: the question is, what about these real estate investments, how have they been performing? office glut is not great for reids as you can imagine. if you had invested, you would not be a happy man. you would have lost about 20% of your money. the global average is a loss of about 10%. minas 30%. investors now staying away from reids even though dividend yields look pretty attractive at about 6.5%. they say it is like catching a falling knife.
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says it has the highest percentage of leases due to expire at this year. with a gloomy outlook on this rental market. up next, signs of resilience. we are checking in on china's workforce and how it is faring during the economic slowdown. ♪
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♪ rishaad: a look at our top stories. asian equities extending a global rally. stimulus may be in the pipeline. ,il is also moving higher extending its biggest advance in seven years. ofhave the regional measure volatility climbing to the highest we have seen since september. the governor of the bank of japan has played down the recent market turbulence in the economy
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that gave no hint on when he would expand the record stimulus program this week. china policyat makers should impose capital controls to defend their currency rather than keep earning currency reserves. aftern has strengthened japan posted its first trade surplus in two months in december with exports outstripping imports. exports declined some a percent in value on the year while the imports plunged 18%. japan's trade balance has been negative 49 of the 50 months since the march 2011 earthquake and tsunami. let's take a look at what the open is looking like in shanghai. looking pretty good so far. indicated, starting off green across the board in the asia region on this monday morning as we start the trading week. shanghai composite at .7% up.
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we also saw the hang seng coming back with a vengeance. quite a rebound on friday as well as we see these global stocks rising the most in 3.5 years. started things off better after a horrible start in 2016. the asx 200, the aussie stocks, leading gains. taiwan stocks, up 1.7% right now. here innued optimism the morning. so far, so good. we did see the japan trade balance came out a couple of hours ago. back to a surplus. that is because they saw exports and imports fell more than expected. rise, halting yen that two-day slide. let's take a look at some of the
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sectors in the shanghai composite where we are seeing some of these gains so far. health care seeing a big move in the japan and china markets this morning. , oilnd gas, obviously advancing again, extending the big gains that we saw on friday, up about 1.7%. a sick materials up 1.2%. up 1.2%.materials the shanghai composite, just above the 2934 mark right now. ubsid see a view from saying that the slump in chinese 14% tohas still about go. and that the eventual rebound will be vigorous. george magnus expects the shanghai composite may stop it slide at 2500 and the gauge fell to a one-year low last week. still a ways to go.
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may not touch the bottom yet, but a lot closer be -- closer. rishaad: china is said to be considering larger cuts as part of an intensified effort to reduce industrial overcapacity. a look at what the officials are pledging. we have been waiting for things like this to happen for a while now. >> don't tell me. show me. they have made a number of pledges before. on the government website, they put out a statement from the state council meeting that they held on friday that the premier was chairing. they acknowledged that they cut about 90 million tons of steel production capacity over the last few years. they say they are going to plan to cut between 100-150 million tons again over no timeframe. they say they will strictly control steel capacity increases
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halt new coal mine approvals. it goes back to the cheaper fuel, coal, for the power needs. big,teel, these are state-owned enterprises. interest inested the state-owned enterprises, and you have jobs, jobs, and jobs be rishaad: something that the leadership has really talked about. paramount.eation is they have got to keep the people happy. that is the point here. how do you cut to all this capacity and make sure the jobs are being soaked up? 13 million new jobs were created last year. the government target was 10 million. it was better than expected.
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the services industry taking up a lot of these new jobs for the first time last year. again, there are a lot of headwinds. momentum is slowing. there was a very interesting report recently saying gdp needs to be 6.7% growth in order to create those 10 million new jobs this year. china international capital corp. also says if you plan to reduce production by 30% in the old industries like steel and coal that have the most overcapacity, you are going to lose 3 million jobs in the economy. these are the headwinds that are coming. muchad: thank you very indeed. we will have more on the jobs position when it comes to china. despite the slowdown, we have been seeing employment numbers seem to have held up strongly. 13 million new jobs last year, exceeding the government target
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of 10 million. this might be seen as another sign that things are not as bad as others have suggested in the markets. >> there seems to be a gap between what the markets are telling us and what the real people are doing. the unemployment rate actually down. so improving five point -- 5. 01%. services are the big driver. it takes more people to serve coffee than it does to make the mug that the coffee is served in. this helps the employment picture. we also have population aging. that reduces dynamism in the economy, but it also puts people out of the jobs market at a time of slowing economic growth. maybe this population aging is actually helping. put that together and that means consumption is holding up. that was the big problem last year. rishaad: you mentioned that is
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last year. we just heard what steve was talking about with these new initiatives. could this year be pretty bleak? >> there are always the headwinds and the risks. not only is there the prospect , but the will be cut governments call them zombie companies, some of these. many of the new jobs that were created last year are not the quality jobs they were hoping for. there were some lower pay jobs and that means wage growth is starting to go up a little bit. that does raise questions. how much gumption is there here? how much determination in this policy given the amount of joblessness that could be created? >> it is a tough balance. there is a lot of overcapacity in these industries.
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there have to be cut. some of these companies have to be pulled down and jobs are going to go. this has happened before in china. there was enough strength in other areas of the economy to absorb that. that is the big question this year, how to juggle the need to cut this overcapacity without letting unemployment go higher. rishaad: thank you very much. let's have a look at some of the other stories we are following for you today. china emerging as a big winner commodities slumped. they may have saved about $460 billion thanks to the resource route. the falling price of oil and other commodities pushing down raw material prices and giving them room to ease monetary policy.
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withountry also struggling it islowing economy and not bad news for everybody. it is optimistic at the world economic world in davos. the government is making the decisions that it needs to make. >> i think the chinese government are making the moves that they need to make in light of the complexities and the transition they are going through. we have diversified our business geographically and across customer segments. my view is it is a huge economy and whether it is growing 2%, 3%, 6%, it is a great opportunity for us and we will stay in it for the long run. rishaad: the state of its chipmaking business is still in the air. pointed to the
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president and chief executive, saying the company has no choice but to move forward. the shiva says it has to make a decision. shares are down over 4% on the news. it seems there is about to be another shakeup in the senior ranks at twitter. the question is, we have these senior executives. some of them, will they jump or push? apparently, the product head has been interviewing for other jobs. a lot of speculation that he has been interviewing for new jobs for quite some time. his name hasy -- been floated around as leaving twitter. a state of executives will be will addbut twitter two new board members as early as this week. the new york times is suggesting that one of these board members
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could be a high-profile media personality. there has been speculation that tom brady could be that board member. i'm not sure if they are just tweets circulating or if that is true. jack dorsey needs to turn this company around the -- around. they were talking about increasing tweets from 140 characters to longer. the share price of twitter has lost half its value over the past 12 months. they really do need to turn this company around. we are hearing that we are going to see a lot of the executives -- two newwto new board members. jack dorsey has a lot of his hands -- on his hands. thisad: with reaction to from their own social media.
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>> one user has been tweeting quite significantly. we have a look at some of the reactions. people have been saying that everything on twitter happens on twitter. seeing this big slump coming through in the share price when it is such a breaking news tool? they have been saying it is officially a train wreck, but jack dorsey is overhauling the twitter leadership. twitter could actually run itself. just keep the service up, do not over monetize it. a little bit of friendly advice. rishaad: up next, people queuing up to give china advice about their currency. that includes devaluation. we are discussing that and more in two minutes. ♪
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>> the stories making headlines ndhe world. the vietnamese communist party has decided to give it general secretary a new term. he is seen as a conservative and his reappointment signals a possible move away from the reforms. to thepushed for changes trade sector and is prepared to stand up to china. the missing hong kong bookseller says she saw him on saturday. hong kong police say he told them that she told them her husband is healthy. she did not give them his exact whereabouts. he is the fifth missing person link to a book store that sells literature critical of china's leaders. thousands of people rallied in malaysia to reject the transpacific partnership.
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lawmakers will debate the trade agreement in the country. says it willt increase competitiveness and open up markets for malaysian i was -- exports. for global news 24 hours a day powered by 2400 journalists, from the bloomberg news room. rishaad: let's have a look at the economic week ahead. the chief economist and managing partner of complete intelligence. thank you for joining us. let's start with the bank of japan. all sorts of them is to grapple with at the moment. are they going to be widening the stimulus program that they have in place? surely they are just throwing good money after bad. >> they have going to have to do something dramatic. it was a cheap thrill in the early days and it is
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deteriorating now. look at the wage data from november, the most recent. wages fell by .4%. you are having a minor cpi impact, but overall inflation will be down in september as well. there are real concerns about how long abenomics will last and how long mr. abe's administration will last. we have had talked of wage rises for japanese workers were almost the last two years. there has been no impact by japanese industries. rishaad: aren't they barking up the wrong tree? of people are chasing the inflation target. it is not going to have -- to happen in the environment we have. perhaps we should be a little bit more imaginative. tony: i think they can and should be more imaginative.
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the japaneseade to people and the 2% inflation target with the expectation that rising wages would follow, purchasing power is really falling in japan, which is a big problem. given the domestic issues in japan, to have the japanese government speaking about the chinese currency and capital control is a bit rich considering japan devalued their own currency by 35% over the last few years. rishaad: the rapid depreciation we saw in the yen as well as the data out today. the thing is, it should be a surplus given the plunge in energy prices. it should be, but the disappointing part of that is the exports. we have seen the boost it was supposed to give to exports. you have seen that start to deteriorate as well. again, the market has gotten accustomed to the yen at the
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current levels. with the depreciation we have seen, it is problematic for japanese industries because there is the expectation that you will have the yen at 120 or so. we're looking for the boj to push for a devalued yen in the 130 range. will it be successful? it is questionable. but they will have another push to devalue. while they have plenty of bullets, they are not necessarily using them. rishaad: let's move to china and take a look at depreciation of the currency there and the fact saying theykuroda should have capital controls. is this a form of benign neglect or a managed depreciation that the pboc is undertaking? pboc is tryinghe
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to take a slow approach to this. when you look at their currency reserves and talk about $3 trillion, it sounds huge. they only have 16% of that in reserves. when you look at a number of the southeast asian countries during the asian financial crisis, they had about 20%. there are concerns going on about whether china can continue to defend its currency given the current environment. is, it ishe point just a question of if they are pushing against a string or if they do have the firepower. in the short-term, they have the firepower. the question is, do they want to waste it or allow the currency to depreciate at the rate that it needs to to meet the market expectations? with that, if that is the approach that they take, capital flight, they will have to put in
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capital controls or else you will see massive capital flight. dynamics ina lot of the chinese environment. it has to happen over the next month or two to decide some of these things. i don't think the slowly approach is going to work if the pboc has a two or three-year plan for the currency. rishaad: gdp numbers expected this week. 6% is what you have down here. it is one of the few bright slots -- bright spots for you. tony: that is right. philippines is looking really good. we are looking at major rises in their tech export. services are up about 10%. philippines is looking good. i think there are still some structural issues. , things areear term very positive.
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they are one of the bright spots in asia, which is encouraging. it is news that the region badly needs. rishaad: thank you for that. tony nash joining us from singapore. , we have a look at its plans. that is next. ♪
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rishaad: this is "trending business," coming to you live from hong kong, streaming on bloomberg.com, as well as your mobile device. of self the forefront driving vehicles. it is a crowded field, however. expecting electric cars to drive across the u.s. in as few
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as two years time from now. what is baidu doing here? >> they are hoping to put these cars in 10 china cities within three years. this year, they want to have people try them out in a closed environment. the senior vice president is saying that, in the last three months, he has been working with china's leading electric system. to install the this is a software package that incorporates technologies for driving, observing the environment, and decision-making. he says he is confident that china will be able to lead in the area of intelligent cars. take a look at what he says. >> chinese carmakers started making cars 100 years after others. with electric cars, intelligent cars, the core technology shifts from the engine to artificial intelligence and that is an area where china is very close to the
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u.s. that gives china the chance to catch up and take leadership. shery: at the core of their efforts, baidu's auto brain system. rishaad: what can driverless cars do at the moment? shery: we have seen significant advances. .esla, google, gm google has tested self driving cars more than 2 million miles. tesla is saying they will have people riding in these cars from l.a. to new york within two years. boston consulting group sees the future of cars like this. next year, we have had -- we will have self parking cars. by 2025, we will helpfully autonomous vehicles. coming up in the next hour of the program, to cut the have fresh worries. takata have fresh worries.
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we will head to tokyo and have the details on that. advancing equities, but we are still down on the month. this is "trending business." ♪
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25thad: it is monday, the of january. i am rishaad salamat and this is "trending business." this is a look at what we are watching. stocks extending friday's rally when global equities have the biggest gain in 3.5 years. takata, a massive loser after its 10th death linked to faulty airbags in america. they say the recall will expand and take in millions more cars.
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trouble on twitter. executives leaving. the board getting a shakeup and shares losing half of their value in a year. let us know what you think about all the stories on twitter. the asian trading day getting underway. from youe a look at it as the equity session goes. yvonne: we are seeing jakarta coming online to join the party, .6% right now. the shanghai composite seeing a rise of .9%. the hang seng leading the gains in the regional benchmark, 1.8%. japan's stocks heading for the biggest two-day gain since november of 2014, about .7% right now.
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we have seen a sharp bali at overall, we are seeing green across the board. asx 200 up about 1.3%. oil continuing today from -- on monday. china oil producers falling as well. up 4%.hina china is output in considering cutting production. we are seeing those firms rally today. up 1.5%.nergy in the china market, if i could ,ring up the shanghai composite
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market partners says that the china-led stocks slump that has taken most global markets with them may prove to be a boon for investors in japan and it is no longer china that is the sexy market. ion that central banks will be giving markets a boost. mario draghi was the first to trigger this. than we have janet yellen and hiroki kuroda later on friday. the markets have been stressing on a good note -- starting on a good note on this monday morning. rishaad: oil has been hovering around $32 a barrel today. investors buying back some record bearish bets. crude still down by more than 10% this year. markets are loaded with oversupply. here is haidi.
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difference two days makes. the biggest two-they rally in more than evan years. as you said, they are on the move again this morning. 1.5%.s gaining glioma let's talk about the catalyst for this. we had hedge funds jumping on these lowest prices that we have seen since 2003 to close out bearish bets. oil still down more than 10% we started the year. analysts say prices going under $30 a barrel exceeded wildest expectations. at some stage, you have got to take a profit. that is what we are seeing. we also have the proposal of output quotas from opec. the number of oil rigs drilling in the u.s. fell by five. is it enough to meaningfully reversed what we have seen in
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the oil patch. the fundamentals have not really changed. on top of that, iran is increasing crude output i 500 thousand barrels a day to take advantage of the sanctions being lifted. that is expected to exacerbate problems on the supply side. to threeuld take up years to normalize. he does not see a speedy rebound as being likely. michael mccarthy says the long-term downtrend remains in place and the market needs to remain cautious. we heard from the international energy agency saying something that is even more dire, saying that global oil markets could drown in oversupply. we will have a more detailed look at that story later on in the show. do send us your father -- your thoughts. let's have a look at some of the other stories we are watching
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for you. more speculation surrounding the future of aramco in saudi arabia. >> we are speaking with saudi arabia's state-own oil companies and it says it is considering all options when it comes to a potential ipo. they are considering selling a stake in aramco, which controls more than a 10th of the global oil market. options to take it public include opening the company up to international investors. keep arabia has chosen to production high, abandoning limits to defend market share ahead of price. ceo said fossil fuels will account for 80% of energy by 2030 but nonetheless will live to see a time when less than 70% of demand is met by a commodity other than oil. apple results due tomorrow should give investors a better
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indication if the recent selloff has been warranted. shares have taken a beating since apple's last earning report in october. apple's stock slide has left analysts questioning if they can boost their sales. apple is becoming more reliant on iphone for its growth even though it sells the apple watch, apple tv, and apple music. the iphone accounted for 66% of the revenue last year. that is up about 50% from three years ago. we were looking at some of those apple suppliers as well. they all seem to be higher in taiwan. display up by 3.6% ahead of the results tomorrow. short sellers have pushed bets against alibaba to a 14-mile
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high over concerns that the slowdown in china will only get worse. short interest in china's biggest online retailer surged to 7.5% of shares outstanding. that is the highest since november of 2014, according to bloomberg data. it is also more than double for most in september. bearish breath -- bearish bets have risen asm well. mainland stocks entered a bear market. in new york, shares are down over 30% over the past 12 months. alibaba reports third-quarter earnings later this week. analysts are expecting revenue to hit $5 million -- $5 billion. akata is trading near a seven-year low in tokyo. it has tumbled the most in three months off the back of u.s. regulators saying that millions
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more airbags might need to be replaced. the bad news continues for this company. shery: it seems so. u.s. regulators saying that tak ata faces another to recall. the decision was announced following another death linked to the devices. the shares defined as much as 10% this morning, the lowest intraday price since march of 2009, and the second-biggest drop on the topix. they aren't with a rival airbag maker, trying to ensure a stable supply of parts. biggestvoters, takata's supplier, was invited to watch meetings in which they would address their future business plan. they could see support from automakers as reached -- recall costs swell. nakamura declined to comment on how many other automakers were
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in but it. -- were involved. of a driver and a ford ranger pickup is likely to renew concerns about their viability. rishaad: we are looking at white gold appears to be back in fashion. not for the reasons you may think. coming up later on the show, party politics. we are going to be live in hanoi , plus, the outlook on asia-pacific property. ♪
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rishaad: you are back with "trending business." singapore says prime office rent is set to fall even more. southeast asia correspondent
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is in the city. everyone wants to know where the bottom is. it is not as though things might get better. there is a lot of supply coming in. >> absolutely. hard to talk about a bottom when capacity is being added to the glut in the property space. foreign banks in singapore are sitting on 550,000 square feet of excess capacity. year, a 38-story office building will open. that begs the question, who will fill it up? banks are firing. they are shrinking, everyone from deutsche to barclays to ubs. barclays expects to cut at least 1000 jobs. asia will be hit. singapore will be hit. it is no surprise that singapore's office rental index has posted its biggest drop since 2009. office buildings keep popping up despite overcapacity. about these real
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estate investment trusts? i am assuming they have also taken a hit. >> you are right. investors would have lost money if they made bets on capital or commercial. 30%es are between 20% and versus an average loss of 10% elsewhere in the world. what is interesting is this -- dividend yields. they look attractive at 6.5%. yet few people are biting. they say it is like catching a falling knife. suggest they have the most percentage of leases expiring this year. slowing growth, a weaker currency, and now a lackluster property market. ouch. rishaad: let's find out the degree of ouch.
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last fewover the years, prices jumping, frenzied activity. it seems like we have gone through all of that. no next guest says property investments remain generally strong. he is global head of research at cbr he -- cbre. he is in singapore. thank you for joining us. we heard what she was saying. how bad are things going to get in singapore when it comes to commercial property itself? clearly, you have a commodity like real estate, which takes several years to bring supply online. there is always the potential for short-term dislocation. in singapore, we have quite a lot of supply hitting the market towards the second half of this year. at the moment, we are seeing demand. we do expect rent to weaken
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further in the market. probably the early part of next year before things start to stabilize again. do you have any read when it comes to retail there? nick: at the moment, something of a similar story. more supply has come online during the course of this year. that is coming at a time when the economy has been slowing somewhat. the strength of the dollar means that we are seeing an increase in tourism and expenditure overseas for e-commerce. rent has been moving down somewhat there. , we are seeing a slightly slower picture as well. on the upside, we are seeing growth in logistics. the supply side has been strong. there is some demand coming through that. continue with
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what is going on in hong kong. how far are these two retail markets being hurt like a slowdown in china? the biggest impact that we see across the region is the slowdown in china luxury demand. at the high end, the volume of retail tourism has declined and the american money is being invested in the luxury sector, which is most clearly impacting other parts of the region. i just want to get a sense of -- nick: at the same time -- mind,d: with hong kong in it is geared towards luxury. the fact that the luxury goods not looking further a field does not mean that china has to change itself structurally speaking.
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nick: that is exactly what we have been seeing. there is something of an irony that china was growing too fast and that it was too investment-focused. now the growth is slowing and it is not as investment driven and everyone is screaming about that as well. the economy is growing at 8%. consumption is up quite strongly. that rebalancing is what we have been looking for and is now going on. clearly, there were going to be some not good effects on that. let's keep the hong kong theme going and talk about commercial properties. commercial being hit in the same manager -- manner that singapore is. i get a sense that some of the commercial property is being taken in by chinese investment houses and companies filling the void. nick: that is right.
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hong kong was in a different position. the market has much tighter supply and it is harder to bring online. very little supply coming through in the core areas of the market. the office market, vacancy rates are low particularly in central. demand is still holding up. there is demand for financial services companies and tech companies coming through. strong demand in hong kong. we expect rent to continue to rise. rishaad: let's look at some of the bright spots around the world globally-speaking. it does seem that some of the countries that have done badly in the past are coming back, have they not? indeed.ey are particularly during the financial crisis. certain parts of europe, you know, spain, italy, were hit completely hard.
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also in terms of capital values, markets like madrid, barcelona, and dublin were grabbing the headlines for opposite reasons. they are still below the levels that they were at the height of the previous cycle. we have seen strong performance and we are seeing how it is spreading into the other peripheral markets. in europe him a italy now tracking some interest. investors are looking for that recovery. we are seeing a strong influence of global capital and into the u.s. theaad: in this part of world, what are the bright spots? we have discussed places under pressure. we have. a lot of areas in southeast asia, we are seeing employment growth outsourcing still driving strong demand in india. , the big offshore a
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center is seeing strong demand. from the capital point of view, the tokyo market is attractive. we are likely to continue to see capital flowing. it is in new zealand. rishaad: thank you very much indeed for that. axford in singapore. these are the stories making headlines around the world. at least 28 people have died in the blizzards that have paralyzed much of the eastern united states. places saw three feet of snow while central park in new york had its biggest 20 or-hour snowfall on record. broadway shows were canceled for the first time since superstorm sandy, 2012. airlines are expected to resume service after more than 12,000
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flights were canceled over the weekend. ofhorities say a large chunk metal that washed up on the beach in thailand could be from a plane but are playing down speculation that it is late to the missing malaysia airlines jet. 70 vanished over the gulf of thailand almost two years ago. it is thought to have crashed in the southern indian ocean and a piece of wing has been identified as coming from the plane. economyttled japanese minister has apologized for what he called "calling trouble for shinzo abe." he said an investigation was underway which claimed that he would address his future in the government next week. thand his aides took more $100,000 from a construction company over three years. day powers 24 hours a
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by 2400 journalists and more than 150 bureaus around the world from the global newsroom. , a new: coming up management shakeup to twitter, where the company is losing a spate of top executives. details after this. ♪
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watchingyou are "trending business." i am rishaad salamat. it does seem there is another shakeup as far as the top execs at twitter goes. >> we understand that the product head has been interviewing for some time. a lot of speculation that he is on the way out along with a number of other executives and that twitter is going to hire at least two new board members.
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a twitter investor has been saying that this needs to reflect the diversity of twitter. there should be at least one woman and at least one person of color and that the executives should be people who have paid for twitter stock, not been just handed it. we have seen twitter shares slumped so significantly over the last 12 months. they have lost nearly half of their value. there has been speculation that some of these executives have been dumping stock on the way out. this is a big turnaround for jack dorsey. he has been trying to turn twitter's fortunes around. they came up with this is idea for the fact that we should have longer tweets. katie jacobs stanton, the head of media, a number of big names on the way out. rishaad: of course, this is going to have an impact on the twitter-sphere.
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what has been going on on the social media platform itself? >> speculation that it could be a high-profile media personality. a little bit of a train wreck coming through. some saint jack dorsey is finally overhauling twitter leadership. have a look at one of the other tweets coming through. -- ng know whoeople will this high-profile media personality is. rishaad: news corp. also. angie: they speculated that news corp. could be moving into twitter. smells like a buyout coming. this person giving some colorful advice to jack dorsey, saying twitter could run itself. and letver monetize it users do what they want. rishaad: thank you very much indeed. how china turned out to
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be somewhat of a winner in the commodity rout. we will tell you watch it -- why. ♪
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♪ rishaad: stocks extend the global rally. materials cubbies are leading the advanced critic chinese steel makers are-- the advance. tiny steelmakers are leading the wa oil is fluctuating, $32 per barrel after the biggest three-day rally in years. there are concerns of brimming u.s. stockpiles and iran's
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return. downturn remains inflated. vehicles are already involved about 23 million -- takata says that it has been invited to a meeting on friday in which they will address their future business plans. in three and an half years when it comes to global equity. the rally has been extended. does it have legs? let's take a look at what is moving on the market. >> either. the rally continues. there. the rally continues. we are paring some of the game that we saw at the start of the session. at 1.7% upscale.
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7%t one point, there was a we do see that this is all going to be dependent on what happens with the central banks, as well as the boj's this week. no chance of a rate hike this continueth the boj, we to see oil rebound. we saw the reversal of the weeker yen. let us talk about some movement. we did talk about this oil, and we are rallying after seeing 9%, 11% rebound on friday. the israeli and miners-- the aus theian miners are rising
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morning. 2/10 of 1%.down those japan export figures came in, falling 8%. the trade surplus is back in black. nicole trade continues to be-- the coal trade continues to be 1% today.ing 1/5 of a lot of investors are weighing which wasven play, widely ignored last year during the greece bailout and paris ter ror attacks. investors are saying this could be back in fashion. it looks like we're already up 1100.
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commodity currencies, we continue to see their sideways. if i can hold us up here on live television, we are seeing the year-to-date, the malaysian ringgit is very much black. weakening after rallying from the most in three months. all eyes on the prime minister's budget revision, after we see the oil exporting nation really get hit hard by the sliding commodities. the ruble also hits the oil drive. we continue to see risk on here today. we will see how things go as we head into the lunch break in tokyo. rishaad: oil is still fluctuating. it had its biggest rally in 7
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years. we've had a drop of about 13% this year. it is a saturated market. aaron clark joins me now. rally?s behind this was it driven by fundamentals? both wti and brent are trading at the same rate right now. they gained about 10% over a two-day period. this is the biggest rally in seven years. what is driving the rally is just this idea that we may have -- crude can gain over the latter part of this year. producers are cutting back on production. the chinese oil company said it
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would cut production for the first time this year since 1999. there's a lot of pain for producers and canadian oil fields, which are expensive to produce. there are signs pointing to the slight recalibration or rebalancing of the oil market in the second half of the year. that is what drove the rally. that is what is making people think about this today. are the analysts sticking to their guns and saying that oil prices fuller to lower and lower in the future? or, are they ripping up those productions for the time being? aaron: some people think it will go higher. we are still quite a bit of the way down from where it was a couple of years ago. the citibank said, last week, the oil may be the trade of the year. they are protecting that crude could arise around 41 dollars per barrel. still way this is down from a couple of years ago.
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it would be a pretty significant increase. rishaad: thanks. we will have a look at the singapore exchange, which is lng futures.sia singapore has been confirmed as an energy trade hub. today,ex was launched and the contracts will be determined by average weekly assessments from producers, consumers, and traders. china, of course, also reaping the benefits of the commodities risesaving about $460 billion per year. this is according to the goldman sachs vice-chairman. kevin hamlin is in beijing right now. where are the savings coming from? kevin: this is normally seen as
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a big negative with places like brazil and south africa and australia hurting, feeling the pain from lower commodity prices. for china, it is a big benefit. most of the savings come from oil. the savings are at $320 billion. others are ranging from coal to metal to even agricultural commodities. the ministry of commerce said the import bill fell from ten commodities alone from oil and soybeans. rishaad: this has to be benefiting some people out there. who? yvonne: everybody, really-- kevin: everybody, really. consumers are benefiting from cuts on heating. temperatures have dropped to -15 in beijing. their benefiting from lower petrol prices.
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companies are benefiting from better raw material. they have been facing pressure from weak demand overseas and home. profits have been suffering. it could've been worse had it not been for a much cheaper commodity price. rishaad: kevin, what about monetary policy as well? has there been any word from a central bank or other regulators? the central bank has more room to ease rates without the risk of igniting inflation. at the same time, lower import helps china generate half $1 billion in surface last year all caps off set-- last year, which has put pressure on the yuan. rishaad: thank you for a much
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could -- thank you very much. kevin from beijing. goldman sachs devalued the yuan. the vice president says the government has no intention of weakening the currency. china will soon have to take action. -- he next six months >> in the next six months, they may have to do something. china takes a multi-decade view. they build up the surplus view. it is undeniably going down. you can see this in the numbers. they may take action in the next two months to deal with it -- to deal with it. i do believe they will devalue the currency. speaking in --
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remainsaid he confident that china is not heading towards a hard landing. think that the has the risk of a hard landing, or anything like that. 67%.rowth is still china is targeting further large-scale cuts. it is part of an intense effort to reduce capacity. what are officials putting? -- pledging? been a number of
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pledges, but this is a new one coming from the premier. by the government website last night, let's bring it up, we can see this is the key point. steel production will be cut further, by another 100 million to 150 million tons, on top of the 90 million already cut in the past two years. controll certainly steel capacity. they will halt new coal mine approvals. we are seeing some the biggest steel companies in china, all up in shanghai. we have helen lau, an analyst at argonaut securities, saying that the targets are not aggressive, but rebalance the steel market. a reduction of up to 150 million tons would increase utilization
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rates. this is about the lowest in more than a decade. rishaad: this does not sit well with the leadership, which is saying the job creation is permanent. -- paramount. this is indicating huge job losses. stephen: job to the big priority.-- jobs are the big priority. they created 13 million new jobs last year, but there are headwinds. services half of the economy for the first time, last year. -- service is half of the economy for the first time last year. will lead state funds to compensate the loss of workforce and dispose of bad assets. read many university had a study recently saying that gdp needs
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to grow at 6.7% at least to meet a target of 10 million new jobs per year. we're down to a target of 6.5% this year. they are on the border. says that reducing production by 30% in some industries that have the worst overcapacity, like steel and coal, could cut up to 3 million jobs. is a reforms come supply-side reforms, they need to make in the current situation. rishaad: let's look at vietnam. it is plotting its next five years. there are losses behind the scenes just in for the top jobs in the communist government. we will be over live in hanoi.
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>> the stories making headlines
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around the world. that choipolice say told him her husband is healthy. disappeared from hong kong late lee bo disappeared from hong kong last year. lawmakers are holding special setting of parliament this week to debate the free trade agreement involving the country could deal could damage local companies -- the free trade agreement involving the company. they argued that it could damage local companies. a group plans to roll out a service at 100 indian stations, saying they want it to be a self sustaining service. the have not come up with a revenue model. tech companies are seeing
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facebook cause controversy over free and limited access in india. from the bloomberg news room, i'm haidi lun. rishaad: the theater these communist party is giving a new five your would be the outgoing -- vietnamese communist party is giving a new five-year term to what would be the outgoing prime minister. >> it is very complicated here. there are lots of twists and turns. they're trying to figure out, who will become the next party general? that is the top slots, a very important slot. last week, the party everyone widely assumed, the
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e minister would get that slot. e is seen as a reformist and this would be a way for him to expand political reform. we got is that he not been nominated for that role, and that went to the current general secretary. he leads a more conservative .ing of the comes party but, he managed to get himself nominated to the important central committee. he could get that role. the announcement of the next leader is expected on thursday and will be -- we will be at the edges of our seats for the results. rishaad: does this mean anything for investors? transition,hip
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doesn't present any new opportunities -- does it present any new opportunities? oanh: when it comes to leadership, many foreign investors can and do expect there will be a smooth transition. these leaders are all on the same page, when it comes to the economy. they have an average gdp growth of 7.5% over the next two years. fas would make them the test growing economy in the world. their passing and economic plan, which calls interestingly for equal access to the private sector. unevenow, this is an playing field dominated by big companies. you can see policy changes, which give equal access to the private sector.
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investors will be awaiting the outcome of how that really plays out. leaders have said they are making plans to ratify the transpacific partnership trade pact signed by the u.s., vietnam, and a host of other countries. already, we're seeing investments come in. the matter the outcome, the vietnam economy is on a trajectory. let's go also to geopolitical factors, which is the leadership, which also has to get to grips here. we are talking about this collision at sea involving a vietnamese fishing boat. oanh: that's right. this morning, there were local reports that there was a naval 2 taiwaneseing patrol boats and a few ninnies fishing vessel. on january 6, in an area of the sea that is contested by both vietnam,
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taiwan, china, and a host of other countries. but we hear from the media so far is that the two taiwanese patrol ships rammed a few enemies boat and fired a water cannon at it. it did not seem like there was much in terms of injuries to the actual fishermen. this point, to the very dramatic conflict that is really in the south china sea. the next set of leaders will have to contend with this. rishaad: thank you very much. up, the race for driverless cars. local knowledge is a game changer. at a new plan, coming up.
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it is lowering 2018
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subsidies by 20% and may switch to a california style based system. they're pushing electric vehicles in a solution to pollution. but some are saying carmakers are too dependent on the aid that we are talking about. the warren buffett backed byd would be at a loss of it wasn't for government grante. baidu has an edge in developing driverless vehicles. the chinese committee as a newcomer to a crowded field. google has been on the case in 2009. tesla expects tartarus electric cars to travel across the u.s. in about two years time from now. let's have a look at what baidu is planning. >> they hope to have driverless cars. they want to have them within three years. they developing -- they are systeming an auto-brain
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and have been working for the last three months with pyd, the yd,ctric cars in china -- b the electric cars in china. presidente wang jing says they will have a level playing field with american carmakers. very close toare the u.s., and this will give them a competitive edge. rishaad: what types of advances have you seen? en the a lot, giv number of players in the market. google has only been testing that's already been testing driverless car -- google has already been testing driverless
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cars for about 2 million miles. ford, and a now look at the future of cars. by nextear, we have -- year, we are expecting self parking cars. by 2025, we expect fully autonomous vehicles. china has the advantage, because they know chinese roads better than other automakers. many people who have returned after years of living abroad find that there is no use driving in china. the conditions are chaotic. if you have a robot trained on u.s. roads, it will struggle to adapt to the way the chinese people cross the road did robots are trained -- road. our robots are trained on chinese roads. shery: the new market will be worth $1.5 trillion. rishaad: thank you very much.
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stay tuned for asia edge. angie is going to join me as we recap the big stories of the day so far, including the volatility when it comes to the markets, and the structure of oil. -- the pressure on oil. stay with us.
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♪ rishaad: temperatures have plummeted to the most levels here in hong kong since 1957. this is asia edge. ♪ rishaad: stocks are maintaining as the momentum begins. the regional benchmark is down almost 10%. oil is about $32 out there. day rallyhe biggest 2- in seven years.
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gold -- seeking safety. angie: coming up this hour, negative numbers. millions more recalls, and the akata share prices are near a seven-year low. our company meeting could decide the fate of the company. field inns a crowded autonomous vehicles. they're hoping to beat google and tesla. turn and burden. google is moving executives and shaking up the board. those stories and more on the monday edition of asia edge . yvonne: today, the global rally continues on monday morning.

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