tv Trending Business Bloomberg February 10, 2016 9:00pm-10:01pm EST
confirming it is in talks for a $3 billion deal in europe. the brewer has been focusing on asia and needs to expand elsewhere. do follow me on twitter. re ase use that hashtag the well. hong kong stocks taking a tumble and playing catch-up with the rest of the region. how bad is the damage? not quite as bad as we were at the open. >> probably not the selloff that the futures were predicting, but this hong kong hangover after the lunar new year break certainly not great for investors. the hang seng index down 3.8%. one stock has just flipped into the black. generally, quite a lot of selling. there really are a lot of those oil producers. oil prices plunged over the last two trading days, when hong kong has been closed. still playing very much catch-up
to what we have seen in global equities. japan down by about 8% over the last couple of days. for nationaltoday foundation day. a little bit of a breather for japanese investors. materials off by 6%. weaker commodity prices not helping out that space. oil and gas also plunging heavily, down by 6%. let's look at some of the hong kong energy producers. sinoc ball while almost 7%. petro china coming under a lot of pressure. looking at how oil is faring today, down 2% in asian trade. so falling below that $27 a barrel mark. yesterday, the crude price in asian trade down almost 2%. let's see how some of the other
markets in the region are faring. the selloff is generally continuing. malaysia in the red, as is new zealand. the korean market getting hit hard as well. it has had a three-day limit our break. and we -- lunar break. and we had a nuclear launch over the weekend. a lot of weakness coming through from another -- a number of other companies. in australia, a little bit of a pickup. entering into bear market territory. rio tinto in focus ahead of its earnings later today. the selloff continuing in hong kong trade in the early session. the hang seng off by almost 4%. quandary formiliar hong kong investors. steve is here with more on this. being a lot of maalox taken for traders in hong kong. rishaad: maalox?
stomacht is kind of a thing. china, there is always that concern. you have heard of that country. basically, all of this was stirring the pot of the sentiment in the hong kong market. bring the chart over so we can see it. we can see that the shares for hong kong and chinese shares --ded in new york were also these are what is trading right now. there we go. eight shares. rishaad: you were talking about the exchange rate. stephen: we predicted this would happen because the hong kong market was closed last three days. etf's in new york were trading, so we could see -- rishaad: what was going on with
those etf's? stephen: the declines have piled up and they have fallen about 2%-two .5% on friday. -- 2.5% on friday. the large cap china etf was down about 2.2%. rishaad: there we go. stephen: this is the last couple of weeks. the white line is the hang seng index and the sharp, downward spike on the right is that index catching up with the etf that was already trading lower over the previous recessions. we can look at the chinese shares traded in hong kong. same story. those are a little bit more oversold. do you think that investor confidence has been little bit? we had protests in the northern part of hong kong. stephen: it does not help.
i mean, roll the video. we have the video of the riot. an isolated event. it did not spill over to the next day. we have some traders and economists say the hong kong right may not -- riot may not be such a horrible thing, but it is an example of what problems can arise if growth cannot be maintained. if the markets were sour before and there are more unsettled feelings, this could definitely weigh on them a bit. rishaad: thank you very much. i am going to look at japan now. the country is doggedly pursuing all efforts to revise inflation. we had a surprise move by the central bank to move to negative interest rates in an effort to get prices up. the soaring yen is not helping. there could be intervention ahead. shery ahn has been looking at this. shery: the prospects of currency
intervention is becoming more and more real. the yen is currently at the strongest level since the aggressive easing by the boj in october of 2014. this is a real problem for japan. it threatened to derail the bank's entire scheme. now hsbc is saying that the prospect of the boj's stepping in directly to sell yen or cutting interest rates is a risk and the market have to remain mindful of that intervention. we have morgan stanley bank of america talking about this. they say that authorities are likely to limit themselves to sounding off warnings to investors instead of an actual currency intervention. the yen surge has caught many by surprise. morgan stanley made the right call, predicting the yen would climb this year. they failed to predict how much it would advance. 150 saw a climb to almost
per. -- 100 15 per dollar and now it is around 112. the boj adopting negative interest rates did weaken the yen, but only briefly. a boj intervention would be big news. japan has not bought or sold currency to effectively yen -- since 2011.e yen in such anyou do environment? morgan stanley has not ended -- it is advising traders to switch to positions that would benefit from the euro strengthening against the dollar. rishaad: thank you very much for that. let's get over to haidi right now. reserveone, the federal naturally catching people's eye.
haidi: that is right. we are still parsing the language of what fed shery ahn yellen had toir say. she was making her semiannual address on capitol hill, saying that the recent volatility has tightened financial conditions and could weigh on the economic outlook. she did say that it will not affect fed policy in the long-term. >> the fomc anticipates the economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate. addition, the committee expects that the federal funds rate is likely to remain for some time below the levels that are expected to prevail in the long run. she also does not expect to have to cut rates after hiking them in december and there has not actually been a
correlated drop off when it comes to growth she also expressed the possibility of a negative interest rate and discussed it as a way of stoking economic growth. she said it would definitely require further research. we are in the thick of earnings season. twitter taking a tumble in the after-hours session. the company revealing that user growth stalled in the last quarter itself. twitter reported fourth-quarter share onof $.16 per revenue of about $710 million. they had been looking for about $.12 per share. short.ecast fell wants to make the site more accessible with more mainstream appeal. twitter has so far been unable to attract the wider audience. twitter shares have fallen almost 70% over the past year. investors losing confidence amid the leadership and management
turmoil and stagnant user growth numbers as well. the company has announced it would tweak the way the interface for twitter works, toing users the option activate tweet organization. this is one of a number of controversial changes that will be under consideration. one of them being the tweak character limit to 10,000 characters. australia swinging back to profit in the first half. it has been engaged in a price war with qantas. profit that came from a loss of almost $38 million in the previous. . earnings in its domestic .usiness nearly doubled this on the back of their ability to charge more than 9% more for your average fair.
emergent stopped short of giving specific guidance, but it does expect to return to profit for the full year. says whilexecutive falling oil prices helped to the company to the tune of $21 million, they are focusing more on efficiencies operationally as opposed to hedging. >> what we can see, we're still profitable this financial year. we are now up to 8% and we are confident we will pick up another one or two points in the second half. despite the impressive data released from britain, stocks extending losses now in sydney. more from virgin australia later in the show. we will hear from the ceo there. stocksup next, chinese have taken a double-digit did this year. our next guest says he is still betting on them.
haidi: welcome back. these are the stories making headlines around the world. north korea is facing a wave of actions after launching a long-range rocket last week and authorizingon is new measures and japan has called for a strong response. south korea has closed down the industrial part it runs with the north, a source of prestige. southern companies have started withdrawing staff and supplies and there are reports that northern employees failed to turn up today. southeast asia's biggest annual military exercises are underway, involving more than 13,000 personnel from more than 27 countries. the gold cobra event is taking place in eastern thailand, including forces from the u.s. and china.
the pentagon has toned down the scope of the event following thailand's military coup from two years ago. it now focuses on humanitarian operations rather than board games. nestlé has him sponsorship of international athletics in response to doping and corruption scandals. it has terminated its five-year contract a year early saying it fears more damage after negative publicity surrounding the sport. iaaf says it is talking to nestlé. consideringso ending its late. powered by over 2400 journalists in 150 euros -- bureaus around the world. rishaad: china investors do not have much to celebrate when they come back to their desks after their holiday. 20%main benchmark down
since the start of the year and further pain is expected in the short-term. our next guest remains bullish. he is head of china strategy at at macquariorrent -- securitiese. the eagles are going to leave the monkeys behind in your view. who are the eagles and who are the monkeys? >> we have defined monkeys as companies which are trapped in china's oversupplied message economy. the eagles are the chinese companies which are spreading their wings and are going to build businesses outside of china. as tois a similar format the way the best japanese and korean companies group. saying that ife you are just reliant on china itself, you are in trouble because the chinese economy is not going to be doing great. erwin: that is right. we still have two more tough years ahead of us.
2017, next year should be better. this year is still another tough year. the best companies in china are realizing that now is the time to look at building businesses internationally. that will also help them in the domestic market as well, where they face strong competition from overseas multinationals. rishaad: it is a tough one because you have to build a global brand. very few chinese companies have been successful at that so far. that is a challenge. we are seeing it on two fronts. one is companies doing it in terms of technology and manufacturing capability. as you mentioned, we have these companies which need to build brands in the international market. there are two avenues. one is the long roads to build your own brand. the other is acquiring, making some smart acquisitions. rishaad: lenovo being the case in point when they bought ibm's laptop business.
was transformational, but it took them a long time to integrate. let's take a look at what is going to stop the rot when it comes to these declines, this bear market we find ourselves in. there are three issues pressing on the market. the first is the continual slowdown in growth in china. the second issue is very confused policy, messaging, the believe in structural reform in china. the third is the currency. particular the h share index, down another 5%. we knew this was going to happen this morning, didn't we? erwin: down to the most extreme levels since 1998, during the asian financial crisis. we are on the brink of something
big and bad or the market is just getting into oversold territory. rishaad: i have the looking at some of the metrics that you use. book value, p/e ratios. everything is looking dirt cheap, isn't it? unusual. is even though we are not a fan of standard enterprise in china, the biggest and best have dividend yields between 8%-10%. things are getting pretty crazy. we think the markets -- the theet is doubling up on bearishness. yes, more downside for the currency at deflationary challenges. there is a tendency to file them on top of one another rather than say, well, if the currency goes down, it will help the domestic economy. we think things are oversold at the moment. rishaad: everybody is looking at half empty right now. maybe we finally get some much-needed structural reforms.
but you have got to be a brave person to take them on. next year is the big year when we get the transition in the central leadership. we have this new generation moving into the top ranks. our assumption is that this is the year they sort out who is going to be taking those seats. as we go through the year, there will be more coherence. there was a lot of coherence last congress, but we should have more coherence around chinese policy direction. rishaad: good to see you. looking in the medium-term and being quite bullish when it comes to chinese equities. coming up, drinks all around. asahi looks to make the largest acquisition in its history. ♪
rishaad: you are watching "trending business." now looking at the japanese brewer asahi. bidding to buy a couple of beer brands in europe. it is struggling with a weakening domestic market. david, you are having a look at the pricey deal. there is a lot of potential with it. david: i guess we have to set this up. let's first go through the bits and pieces of the deal. as one analyst described the , a bitag of $2.9 billion expensive for what it is out to buy.he -- out to oni, and aking perrn
craft brewer. so a bit pricey. just put this into context. $2.9 billion. , a little bit strong, obviously. billion. why is it doing this? a lot of these companies in pay quite a bit of money to diversify that away from japan. it is a slowing market. a good example of that, and let's just look at what we had here. full-year, ¥1.9 trillion. that is the growth we have seen over the last 15 or so years. this bit right here was thanks
to the week japanese yen. trillioness, ¥1.5 comes from inside japan. very small portion. let me just changed my ink. coming from overseas. it is not just asahi. these other japanese beverage makers are looking abroad growth. now let's broaden this out. let's have a look at the industry. what we have seen is either stagnation or a shrinking whose market, orooze beverage market in japan. one example is when you look at the average price deflation in japan. it is almost nonexistent. was a 3% in 1997. we barely made it back in 2014. look at this.
i cannot even raise my prices. it points to fierce competition or a shrinking market. the only way you would be able to widen your revenues is if you cut costs. topline growth is not there. that is the big story. we talk about the stock slump. the reason that is important is because the group of stocks, , haveaverage stocks really outperformed. that is a relative term, obviously. this is because of this flurry , which signals expectations that this asahi deal, if and when it does go through, will not be the last deal. give you a good example, that is enterprise value or earnings. that is where we are for the beverage makers. that is about an 18% premium, which does not happen naturally or statistically. some things are brewing, if you will, in this industry. rishaad: up next, the hedge fund
rishaad: look at our top stories. asia-pacific stocks on the way down, joining the first day of selling. investors register their first onction to this week's slide global equity markets. oil extending its losses. sayingir janet yellen that while further rate hikes may be delayed by the turmoil on the markets, she will not abandon the program. she said that the recent volatility has tightened financial conditions and could
weigh on the economic outlook. seen a sharpt yet growth either globally in the united states, but we recognize that global market developments bear close watching. strengtheningen further, reaching levels not seen since the boj surprise monetary easing in late 2014. the biggest advances against the mexican peso, the south african dollar.d the u.s. hsbc says there is growing risk that japanese policymakers will intervene directly in the fx market. not having a trading day today because of foundation day, a public holiday. hong kong stocks suffering after the lunar new year break.
>> not such a happy for hong kong investors. hong kong stocks have had their worst start to the lunar new year since 1994. we are seeing stocks tumbling to three-year lows after the three-daybreak. the hang seng index down by 3.9%. still only one stock in that index in the black. a lot of these energy companies are coming under pressure. we will be talking about the slump that we have seen in crude prices. investors in hong kong and failing out of those energy stocks he we also heard from the hong kong financial services secretary. the market remains volatile in hong kong. he is confident that the dollar peg has helped hong kong stocks. the hang seng coming back for
its first they since the lunar new year break. following the launch from the north over the weekend, we have seen some good gains coming through in a lot of defense companies. elsewhere, significant selling pressure as investors play catch up to what we had seen in global equities, particularly japan, which is closed today but has fallen 7% this week jakarta just turning positive. the australian share market up as well after entering their market territory yesterday. andrally, not looking great hong kong stocks are very much under pressure. looking at crude oil, extending the losses, trading near $27 a barrel on renewed signs that the global glut will persist. harples is with me. saying that the bottom of the target is $20. ben: nobody knows where the
bottom is at the moment. they are really picking numbers. rishaad: of course. they would be making a fortune. is not gettingk any better. people are gathering in london at the moment. they forecast that prices are going to be low for the next decade. week thato said this the first half, he is very bearish on that. and the numbers, we have just seen more companies reporting the bad news. husky energy cutting more jobs. numbersith the u.s. last night, a slight decline in the crude stockpiles. that can be correlated with the dropping imports. it may start rising again from next week. at the moment, it is being seen as a tale of two halves.
morgan stanley last week , sayinged that idea that the rebalancing might not come until 2017. >> it stayed high for so long. , they are all really feeling the pinch. benefits, -- if anybody benefits, it is the consumer. ben: we have spoken about the refiners being great benefits of cheap prices. at the moment, they are pumping out so many products -- diesel and all of that sort of stuff -- that they may flood the market this year and crimp the margins for the other refiners in india and south korea. it looks like that market is going to get tougher. they are turning one glut into another glut.
one section of the oil community that may be benefiting is traders. we are moving to the point where contango is becoming a good player. you buy crude and then you sell it for a high price. when immediate delivery is cheaper than one in the future. absolutely. on thursday, we have seen it come to about $11. $24.blew out to about if you own a tanker, you might be in for some profit. thank you. a look at the prospects for oil. chinae been talking about . an unprecedented financial meltdown. it is a dire forecast. whoomes from a forecaster
managed to call the subprime crisis. kyle bass not mincing his words. >> he found that human capital management -- again, they started selling mortgages ahead of the subprime crisis. said that he has sold out a lot of his riskier assets in the last half year or so in the run-up to what he says is going to be a tumultuous 18 months ahead. let's look at some of the bullet points. he is saying china's banking system may see losses of more than four times the u.s. subprime crisis should china's banking system lose about 10% of assets due to nonperforming loans. the banks would see about $3.5 trillion in equity vanish.
the reported ratio at banks in china is about 1.5%. exactly people are not -- when it is a nonperforming loan, there are many gray areas. >> but the last point, they need to print about $10 trillion worth of yuan to recapitalize the banks. rishaad: what does he say about china avoiding this? what do they need to do? arehen: the problems de-rooted. the economy grew at about 3.6%, not 6.9%. it is widespread weakness in the chinese economy. it is a debt-driven problem as well. he says, "what we are witnessing is the resettling of the largest macro imbalance the world has ever seen." he says it will have profound
implications for the rest of the world. he said that the yuan will not only have a $10 trillion but that china probably needs to devalue its currency by about 30%. ashaad: they have spent fortune already trying to defend it. we are going to check in on some of the other stories we are following or you. united states beating japan and exporting goods to china. first time they have done that since 1982. clown --ea wearing the the crown every year since. japan's 27% slide was enough to drop it for the first time in 33 years. fund saysate-backed it will choose its rescue plan over to -- over foxconn. they say sharp is clearly the better of the two bids.
foxconn is said to have offered more than twice as much. the decision is expected by the end of the month. says he seesn definite signs of a turnaround sprint. japanese wireless customers theirg softbank increase income by 7%. by comparison, sprint has been hemorrhaging cash over the past year. the u.s. carrier increased its profit forecast as much as $8 billion. virgin australia having a rough time, tumbling by the most in three months despite a return to profit. first-half net income coming in at $32 million from a year ago. paul allen sat down with the chief executive and talked to him about the impact of the cheapness of fuel. >> what is important here is to
a third of this improvement was due to fuel. two thirds were driven by the fundamentals of the business. >> some old fuel hedges in the second half >> because fuel hedging winds down. we are expecting to see a similar benefit in the second half. the reason it is a similar benefit and not greater is , these we have to remember back half of last year, oil prices had already come down. , ithe hedging winds down will be compared to the previous, corresponding half. it is like for like. >> so you are confident this >> youis sustainable? never know what is going to happen. from what we can see, we feel confident that we would be profitable this financial year.
now up to 8%, as you have seen. we are still confident. we are going to pick up another one or two points in the second half. pointyou are seeking one $2 billion in savings. can you give us an idea of where they are going to happen? could there be job losses? >> it is all about improving efficiency and things like utilization, better management. indeed, the $1.2 billion that we mentioned, we are confident we are going to exceed that. but we also announced that we have sold five of our planes. the savings that will come from that will be a large total of the $1.2 billion. >> we are seeing qantas deploy more of its fleet back east. are you expecting more competition domestically?
>> competition in this country has always been challenging. the past five years have probably been the most competitive five years. it will always be competitive. if you look at the price of -- fares today, they are lower than they were 15 years ago. pressure is up and it will continue. rishaad: paul allen talking to us. korea hitting its northern neighbor in the pocket. we are headed to seoul after this. ♪
showings in new hampshire. the new jersey governor said he is leaving without an ounce of regret. his performance in new hampshire would shut him out of the next debate and make it tough to raise campaign money. carly fiorina finished seventh in tuesday's primary. taiwanese prosecutors have questioned the developer of a 17-story apartment complex that collapsed or in saturday's earthquake. he and two architects are facing charges of national negligence cans had beenay used to fill part of the buildings, -- concrete framework. more than 90 people are still missing. britain's legendary pinewood .tudios may be going on sale almost every james bond movie has been filmed there, including last year's "spectre," along ceth "star wars: the for
awakens." it is owned by only three investors, preventing it from listing on london's main force -- bourse. powered by over 2400 journalists in 100 50 bureaus around the world, this is bloomberg news. rishaad: south korea has promised a tough response to the north rocket launch over the next week and taking immediate economic action. kaesong complex. let's bring in peter. north korean workers actually did not turn up today. is that right? peter: that is right. most of the workers did not show up, according to local news reports. that is the first reaction we have gotten from north korea as to shutting down the joint
complex. what they will do next remains to be seen. who is going to be more affected by this, southern companies or northern workers desperately in need of employment? peter: there are 54,000 north korean workers in the complex. 120 south korean companies. believe this is going to have a big hit on north korea's pocketbook mainly because more than a billion dollars or half $1 billion has been funneled through their to north korea over the last decade. , the estimate is more than $130 million. some believe that that money has been used to develop the nuclear tests as well as the rocket launch. and that is the reason why south korea said they were shutting down that complex.
hitould be a significant for north korea. on the other hand, some analysts that we spoke to believe it is more of a symbolic gesture, a way to punish north korea and that north korea could easily move most of those workers to china. anda has been a key ally has been the ones that have mostly been providing the food and energy imports to north korea. rishaad: last time we talked, there was not any reaction from pyongyang. have we had any word? peter: no. other than not having most of the workers show up. that is the only reaction we have gotten so far. what they will do next remains to be seen. thank you. we are going to take a look at what else is going on in the asia-pacific indonesia making a its economyopen up
as it prepares to announce changes to foreign investment rules. interview, hee said it would help drive gdp growth above 5% this year. >> i am willing to go out on a limb and say that i think we are seeing signs of stabilization. >> what kind of growth? >> i think 5% plus. >> what is the plus? 5.1% seems achievable. is snowballing finally. the government spending were a big boost to growth. shift to other growth engines. >> when you take a look at the investment climate, what is your assessment? we have seen ford, chevron, even harley davidson pulling out of
indonesia. it does not look optimistic. >> that is true. we have fallen behind where we should be with respect to the regulatory regime. investment climate. the important thing is, as of , we made a big effort to have all of us take responsibility for the problems and want to change them. that is the first step. we want to be thoughtful about the reforms and the changes. we do not want to overreact to individual cases. ok,ggregate, we are still even though we have a long way to go. indonesian trade minister speaking exclusively to us. coming up, saying sorry. a billion times over. mark zuckerberg slamming a
suggesting that india would be better off under colonial rule. mark andreessen not only infuriated india, but he managed to cause the facebook boss a degree of more than consternation. talk about this. it is quite serious a thing to be saying. >> pretty offensive. is au say, mark andreessen very prominent venture capitalist in silicon valley. he is on the board of facebook. he is something of a community leader in the tech community in terms of being very active on twitter. he has close to 500,000 twitter followers. rishaad: what did he actually say? haidi: he has been trying to defend the plan to get access to countries like india. rishaad: exactly. i think facebook has the likes of zambia and kenya in this. haidi: twitter users have
accused mark andreessen of saying that facebook is taking a colonial approach when it comes to providing internet to developing countries. in response, he says that anti-colonialism has been a catastrophe for india for decades, so why stop now? that has circled it to what has been a number of apologies. before we came on air, he posted apologies saying that he is a huge admirer of the nation of india and he will leave future commentary on the topics to people with more knowledge and experience and he did not mean to offend and he withdraws it in full. rishaad: let's get to his boss, mark zuckerberg. facebook does not want his support. zuckerberg saying he does not share these views, rejecting these sentiments that mark
andreessen has expressed regarding india. he finds it deeply upsetting and says that they do not represent the way that facebook or he inks at all. we had quite a lot of response from the twitter sphere, ranging from the likes of -- let's try to bring up some of these reactions. questioning this idea of net neutrality and the motivation of the free basics program. others questioning just why tech leaders like him are ignorant about the world to begin with and how many others are still thinking like this in private but not putting it on social media. also got people questioning his role on the board of facebook given that board members should be paid for their judgment and foresight, it was clearly lacking. apologizing to over a
billion people. thank you very much. let's look at what is going on market-wise. no trading in tokyo today. the nikkei closed for the foundation day holiday. seeing some deep losses. not quite as bad as they were at the start of the session. still down 720 points, the hang seng. the hong kong benchmark headed for the worst start to a lunar new year since 1994. the global equity route has deepened. concern over the strength of the world economy. ospi was also- k closed yesterday for the lunar new year. ♪
♪ >> from our studios in new york city, this is "charlie rose." >> king charles the third is a future history play from mike bartlett. charles' abilities as a ruler or quickly challenged by both parliament and his own family. ben brantley calls the play flat out brilliant. the play concludes january 1. tim smith, margo lester, oliver chris, and lydia wilson. i am pleased to have them here