tv Trending Business Bloomberg March 6, 2016 8:00pm-10:01pm EST
♪ it is monday, the seventh of march. this is "trending business". i am rishaad salamat. ♪ rishaad: right, heading to beijing, melbourne, what we are watching. 6.5%,targeting growth at the lowest in 25 years. they say they can manage the economy. statevernment overhauling owned enterprises. they say it will make policy more effective.
sharp jumping on rumors at changes at the top. the ceo set to resign after the foxconn deal. ,ollow me on twitter @rishaadtv include #trendingbusiness as well. china markets underway. good morning. asian stocks swinging today as investors weigh china's move to cut its economic growth target. afterse stocks falling capping the best three weeks since 2014. the nikkei down, but investors say the recent rally and japanese stocks will stick. off ahead of a rate decision on thursday, another rate decision in new zealand. new zealand stocks currently unchanged.
up, energy -- asx producers leading gains with that rebound and oil. oil just capping the best three-week rally we have seen in , gaining 1.5% per barrel, helped by speculation that a firming u.s. economy and government data showing production is starting to fall. let me take a look at the aussie dollar, falling 3/10 of a percent after climbing in the last few days. andlimbed all last week
defies forecast, rising commodity prices, falling and expectations the central bank will help the and waiting for the rba deputy governor tuesday tomorrow. traders will be looking at that for more clues to where the currency is headed. has ad: china emphatically rejected charges of a hard landing. rule number one would be development. he is aiming for 6.5% growth this year, acknowledging difficult times ahead. this is all over the weekend, get us updated. priority number one is growth and development. atlyst saying this will come the expense of supply-side reforms long promised.
let's get you through the to 7%,, gdp between 6.5% the first range since 1995, showing the difficulty of being able to accurately forecast and meet growth targets. to defend the baseline of 6.5% through 2020. , inflation trending up 1.5%, and most interestingly the fiscal deficit widening, the debt ceiling expanded to record highs. also money expansion high as well. all of this to hit that target. talking about some of the challenges, saying that china is like a ship going through rough waters, but will break through those waves to go the distance. let's take a listen. relaxwill significantly
restrictions on markets such as a electricity, telecommunications, transport, petroleum, natural gas, and public utilities. we will encourage private companies to increase investment in these fields and investment in reforms. in these fields, private companies will enjoy the same treatment of 42 state ones. to stateent afforded ones. haidi: as you can hear, going through some of the ways he wants to make private enterprises more profitable in sectors traditionally dominated by the state, but very little on what we can expect from supply-side reforms, cutting overcapacity, layoffs are in the big picture, up to 6 million
jobs on the line over the next three years in the soe sector, theyo details on how expect to address this, zombie enterprises, structured bankruptcy options, but we did not get a timeline or numbers. the last time that china reforms, 28 million workers lost their jobs. oeer all, a more gentle s reform plan, but and was concerned we did not get any details on that. rishaad: predictions of a hard landing really swatted away, right? yes, that's right. beijing was set to come out responding strongly to a suggesting of a hard landing.
china's top-- economic planner said, don't bet on it. >> we are certainly able to run china's economy within a reasonable range, and we are fully confident about our prospects. can say that china's economy will never suffer a hard landing. those predictions of a hard landing will surely fail. look, hard landing or soft landing, what markets and economists are worried about are that chinaral holes is digging itself into, debt , tryingas growth slows to hit gdp growth target of 6.5%. economists saying leverage continues to rise, china will find itself hitting that target.
they're predicting quite a structural mess by the end of the year. rishaad: right, china's central bank governor saying he supports supply-side reforms as the government reduces fiscal spending, having a look at what he is saying here. >> we are hearing from him. while the premier raises the government's money supply target, also planning a record budget deficit to support short-term growth. the man responsible for containing asset bubbles, containing inflation, says supply-side structural reform can still proceed in such a stimulative fiscal environment that the premier has laid out for the next few years. governor saying that supply-side structural reforms such as overhauling inefficient state owned enterprises and reducing overcapacity will help fiscal policy be more effective. and, if we change the page here, he says that if monetary policy, which is his domain at the pboc,
is done well, that would give more room for supply-side policy. meanwhile, the deputy govern or revealing for the first time the non-dollar assets in a 3.2 trillion dollars worth of foreign exchange reserves and a bid to show more transparency, revealing the stockpile includes andeuro, pound, yen, developing nations, as well as u.s. dollars. he did not reveal the amount of those holdings. that the stockpile is "fully diversified." since 1992nnual drop last year as authorities have defended the yuan. he says china's fx reserves will stay in an "reasonable level." the also set a further decline would not be surprising. rishaad: other things coming out
of china, including the stock market. changes there, and when they will be enacted. having a look at that and the other stories we are following for you this morning. >> china's plan to streamline ipo rules was significant in the address this year by its absence. a rebound for the system of ands was mentioned in 2014 2015, but this year he said china would "move forward with reform a stock markets and increase in the level of the rule of law and development." regulatoryhe commission two years to install a registration-based system for ipo's, ending intervention and pricing and let company ipo's establish themselves. they said it was unlikely to happen in 2016. it follows a volatile year in
which five jillion dollars of market value was wiped out. rumors and speculation continue to swirl around a sharp rescue deal. foxconn denies it will sign a deal this week. exchange, they say both sides are working hard to reach a satisfactory agreement as soon as possible, and no date set to sign an agreement. reported that they could sign a deal as early as march 9. other reports say it could happen as early as today. reports that sharp ceo set to resign over the deal. a sharp spokesman denied the report. sharp's shares opened higher on monday. an iranian businessman sentenced to death after being found guilty of embezzlement. babak zanjani accused of embezzling 2.7 billion dollars
from national iranian oil, state run company. this was done during transactions intended to circumvent sanctions. babak zanjani has denied all wrongdoing. the investment occurred around 2012 and during the time that mahmoud attended judd as president. two other people were also sentenced to death for their part in the case. was blacklisted for helping iran even sanctions. whyaad: were looking at investors believe this recent rally and japanese stocks is here to say. have a look at that at asia.berg.com/ speaking exclusively to australia resources and energy minister and whether he sees signs of a turnaround when it comes to commodities. also coming up, keeping tab. requiringmes they are
rishaad: negative interest banks at central banks, is that a good policy? the central banks don't say how long rates will be affected. what is this mean for the global economy? >> this filters through to money market rates, cash systems, and rates. approves is the banks of the negative rate scenario, the new regime that central banks find themselves in. the study confirms that negative rates are transmitted to the market in the same way positive rates are, so the market treats them in the same way, however avoid negative
risks by extending maturities or lending to risk her counterparties. they have been critical of the boj, ecb, and the push towards equitable -- negative rates because it will eat into their profitability. european banking stocks taking a hit and 2016. switzerland has the lowest policy rate. rishaad: the thing is these countries and central banks are trying to engender consumption, so if they are being paid for the privilege of lending to somebody, returns become much ,ess for your average punter and therefore they will not spend as much. that is the negative argument. is that what people are also saying having negative inherent implications? is a question of how it impacts the ordinary person, but also how it impacts
the business world. banks are concerned about profitability, saying it is eating into our numbers. the central banks saying the low rate regime is where we need to be to calibrate policy. the key concern is how long does is go on and how low do rates go. they have said zero has not proved to be a technically binding limit. they can go further, but warned whether transmission mechanisms will continue to operate as in the past and not be subject to digging points. rishaad: thank you very much indeed. >> 9:17 a.m. in hong kong. these are the stories making headlines. and the u.s. starting their annual military exercises amid rising tensions over north korea's nuclear test and rocket launchers. they will run until the end of april. pyongyang has denounced them as ." ngerous war
the survivors and victims of a fairy that capsized in indonesia, sailing from bali to java, not clear what caused it to sink in calm waters. emergency teams say 25 people have been rescued so far. ferry was carrying trucks and cars when it went down. the inventor of e-mail tied at 74. the internet hall of fame inducted him in 2012, saying it fundamentally change the way people can indicate. colleagues say he was a humble and modest man, though not a frequent checker of his own e-mail account. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. a look at singapore as
rishaad: you are watching "trending business". i am rishaad salamat. singapore requiring companies to track their airplanes in response to the still unexplained disappearance of mh 370. thank you for joining us. how will this work? initiallyll work by requiring pilots to call into the airlines every 15 minutes to update their positions. what singapore is signaling is a
move to an automated system, so systems will squawk back to headquarters and updike -- update positions every 15 minutes. rishaad: there is an inherent flaw. 70, clearly the transponder was turned off by somebody. if it was a closed system where they had no ability to have any simply over it, it could overheat according to the faa and induct with severe damage. end up with severe damage. 370,s you mentioned on mh someone turned off the transported -- transponder. they are talking about a system that would be hard to buy press -- bypass, taking away the
element of someone having to deal with it. are not in favor of having pilots call back to base. moving to mandate an automated system, i think that will be the general move with countries around the world to make sure it is a system that can't be bypassed, or if it is, it would trigger some other alarm to let people know something has happened to that tracking system. rishaad: that's the point, isn't it? the faa has set a system like that could cause accidents if it is overheating. any time there is something overheating on an aircraft, that becomes a fire hazard. obviously a concern for regulators, because of fire on board an aircraft can start easily and get out of control quite quickly. we have seen a number of times
where lithium-ion batteries have caused issues. in that sense, they will have to work out a way around this. we either go for trying to mitigate that risk as much as possible and keeping flight tracking, or we try to come up with some other systems where that will be less seven issue. it seems to be the indication that coming up with systems that are less of a fire risk will be the way the industry goes. have ahat we are ready number of automated systems on an aircraft, that fire issue will be overcome easily. rishaad: if we have that system in place, the automated one, would we know where it was and where it ended up, if mh370 was carrying it? >> if that system had been in off, and had been turned
we would still have a good fix where it last was. it would bypass that transponder system and keep broadcasting. we had to rely on shadows with satellite things and mathematics to work out positions. the idea is we would know where it was last reported, and in that sense we would be able to narrow down a search and rescue area. when it came to the air france crash off the coast of brazil, the system that was turned off was working, but still took years to find wreckage. help, help narrow it down, but won't need to instant results. in the event of an aircraft disappearance, it still may take time to find that aircraft. how is singaporean
airlines likely to react to this cost? >> it is a cause they are willing to bear. the industry as a whole has been really willing to step up and play with this. though there will be additional cost to bear, i think the singapore government has worked with airlines on that and they have agreed that it is a practical solution and they will bear the cost and go with that. rishaad: indeed, what about overall, managing the transition to all this? is that likely to be challenging? >> on a global scale, it probably will be. in some places in the asia-pacific, it will be easier. there are countries already moving towards having more sophisticated tracking technologies. ae global go is to end up in place where satellites are able to track it going around the world. that will take some time. for less developed countries, that will be a cause imposed on them, and it will take them longer.
rishaad: a look at our top stories. china rejecting fears of a hard landing, leaders out lining the next five-year plan, 6.5% growth this year, the slowest paced and -- pace in 25 years. beijing still has the tools to maintain a reasonable growth. china central bank governor voiced his support for the plan to overhaul state owned enterprises. y-side reform
will help to be more effective. pboc monetary policy will provide room to tackle issues overcapacity. sharp shares jumping as the cheek of executive -- as reports that the chief executive will resign after the foxconn deal. sharp denied the reports. on saturday, sharp said no final date set, but both sides working hard to reach agreement. have the start of a new trading week right here in hong kong and shanghai. the big topic seems to be china's move to cut its growth target. the shanghai composite saw gain. up -- a we are waiting for china's fx reserve data, and listing the
fall is expected to have slowed, $3.1 trillion in february thanks to stabilization in the yuan and better sentiment on the currency and valuations as well. with china cutting its growth target, currencies in asia of countries that depend on china feeling the pressure. kiwi dollar and aussie dollar falling today. traders are keeping an eye on that to see where the aussie dollar could head from here. as china comes online, keep an i stocks. 1.3%,nk of china rising one approval by the hong kong exchange two spinoff aviation.
car sales in february up 15% year on year. hai seeing upward momentum after being fined by the taiwan stock exchange for being late in reporting that buyout of japanese -- rishaad: china rejecting fears of a hard landing as leaders outlined their targets for the latest five-year plan. china aims at 6.5% growth this year. let's get to beijing. china is sticking to its guns on growth. remaining sorisks ambitious? 6.5% growth target is ,lightly down from 2015
targeting 7%. they have gone for a range, 6.5% to 7%, as opposed to a fixed target. the risk is this is an extremely , and there is a lot of skepticism in the market about where china's real growth late -- rate lies. a lot of people putting growth below 6.5%. the risk is that if you set in a acious target -- set and vicious target, you open up a credibility gap between official numbers and where the market sees growth to be. six and a half percent -- 6.5% is the lowest in their range. how will they get there? >> it will be a story about stimulus. we have monetary policy doing more. we have fiscal policy doing
more, hire public spending. what he said over the weekend is that we can expect more on both fronts. moneyc. rish and in supply growth, meaning an acceleration in bank lending. -- an excel a ration -- acceleration in money supply growth, meaning an excel ration -- acceleration in bank lending. right, well, what does that all mean when it comes to the reform agenda? the real challenge on reform, the big risk which a lot of people in the market see, is the deleveraging, bank lending accelerating, that means more borrowing, less growth.
the story in 2016 is that will continue, the government is exquisitely targeting more rapid expansion of lending and slower gdp growth, so the deleveraging camp has been kicking the can down the road. rishaad: thank you very much. state owned enterprises loading on overseas loans, moody's warns ballooning debt is training finances. such $50 billion in -- whatg for so gentle is this china deal? tell us about the problems that china has with its state owned enterprises. >> it is the largest offshore loan that a chinese company has ever taken to fund overseas acquisition. this year we have seen a lot of
companies taking on debt to a fund overseas acquisitions. also, beijing enterprises taking on 1.4 billion euros. in fact, china state owned enterprises, amounts this year, including the pipeline, have exceeded last year. rishaad: are there alarm bells going off at the moment? moody's downgrading the outlook for the country last week. 38 of these state owned enterprises downgraded. >> moody's highlighted the height that level among esso ease -- state owned enterprises. risk ofd the leverage further economic slowdown, because more money will be used to fund debt instead of growth.
some of the state owned are not paying close attention to their balance sheets, according to a bba economist, meaning more risk down the road. rishaad: you hear of these ,ombie state owned enterprises was there anything out of this weekend meeting dealing with that? the chinese government has been talking about zombie reforms since december, and it reiterated its commitment for reform, saying it will cut steel and coal overcapacity, and will deal with sound the companies actively and prudently. of most importance according to economists. some saying the progress will be slow because of the risk for social instability. rishaad: we will move to other stories we are following. company suspended in hong kong, u.s. authorities imposing restrictions on the
company. that itrt alleges violated u.s. export controls on iran, buying components and technology from u.s. suppliers, which would be effected by the export restrictions. sears down almost 20% for zte. a chairman says opportunities overseas as the mining industry undergoes structural change. he says he is in touch with the world's leading miners and says the chinese government will look at foreign assets despite china looking to lower its dependence on outside resources. bought glencore's project in peru in 2014. very few signs of abating, now at a 25 year low. we saw home sales plunge 70% in february. having a look at all this.
what is behind the slump? >> were seeing a slowdown across the board. we have an economic slowdown, and estimates of analysts am a property analysts -- analyst, property analysts, sing prices go down 30% this year. rishaad: there are a lot of measures to really -- reverse that. top officials and hong kong say they will not be stepping into ease any of the property curves. so what you have is the public saying, why should i be buying now when prices will be lower one year down the road. rishaad: that is the inflation market -- argument. are there any parts of the market and immune to this? >> we are seeing office property going really well. chinese companies come in and buy at record, ever grand cayman came inr -- ever grand
last year to buy office space at record prices. clearly that sector seems to be immune to a slowdown. residential, it was sold in two hours? us about the ultraluxury side of things. >> even though it was so quickly, it sold at a price lower than expected. analysts had expected the property to sell at one billion hong kong dollars or more, and it sold for 830 million, so we are ceiling -- seeing these are not tipping the records they have had in past years. maybe i would argue there is some paying top dollar for a
what has been the major fact you are in the past is across the resources and energy spaces, the increase in supply. eventually demand will increase and meet up with supply, and that is the result of what we , moreeing in the region urbanization, greater population growth, more people in the middle crass. when you talk about the chinese economy, for example, 6.8% growth in 2015 is equivalent to -- china about continues to grow strongly, albeit off a bigger base. and you look at india, 300 million people without access to ofctricity, and hundreds millions of people moving from the regions into the cities. india will be a key source of increase in demand, as well as
other countries in southeast asia like vietnam, the philippines, indonesia, so we are upbeat. lavead: how much do you this at the doorstep of some of these big mining conglomerates? ore, have a look at iron production has been ramped up, creating a supply glut, forcing prices down. theseunny sort of way, mining companies have been cutting their own noses to spite their face. >> these are free markets. so we have not sought to intervene in the operation of those markets. you're right. there has been a massive increase in the supply capacity of iron ore. australia is producing three times as much iron or today as it was a decade ago. this is a result of greater investment. when we saw higher prices, we encouraged investment, but also
automation and productivity. tintoies like bhp and rio are at the forefront of innovation in this sector. they are remotely running trains and drilling equipment and trucks from a perth headquarters, 1500 kilometers away. these are amazing advancements in innovation, which are boosting production, supply capacity. rishaad: what are you going to do about it all? that is the thing. >> we will allow the market to operate its self. timeore is now about $52 a coming off lows at $40. that is a long way from $180 a ton, where was, but supply was increased as a result of dramatic investments, which was a product of the
industrialization in china. continues tohich move up steadily, we'll catch up with supply, and the will put upward pressure on prices as opposed to what we have seen come a which is downward pressure on prices. rishaad: that's just the thing, isn't it, you are in stasis generally speaking until you see a price recovery. look, australia continues to benefit strongly, even when prices are low. of course, not as much as we did when iron ore was $180 a time and oil was $140 a barrel. australian producers are highly to iront when it comes ore, three quarters of our production is in the bottom half of the global cost curve. we are heavily automated. the australian dollar will continue to attract investment in our country. while many people are negative
about the space, i is a minister look at the australian market see it as a glass half-full. i am overall positive about the future. ok, well, there are certain aspects, lng for instance. the thing is that with the weaker dollar and the plunge in the price of oil that in is not happening, is it. what can you as a government do to encourage it? >> that is a good question. that we have seen massive investment in australia in the lng space, $200 billion worth of investment and production capacity between 2003-2014. this means australia will as the largest
lng exporter by 2020, a significant achievement. we are focused on the next wave of demand, and how do we attract that level of investment in new infrastructure. the way to do that is to reduce the cost of doing business in australia, and that's their labor market flexibility, deregulation, cutting the red tape, improvements to our taxation system, more infrastructure rollouts supported by the government. these are issues on the table here and australia, and having just attended an event in houston, where america achieved its first export of lng from louisiana to brazil, but austria must day ahead of the game if we are going to continue to attract investment and be the world's largest lng transporter. rishaad: an election year, and you have this budget coming up. well, i guess people in an
election, you always want a few handouts, don't you? ith the deficit where it is, suppose the goodie bag is pretty empty. what are you going to do? >> we are not about to provide handouts, and we are conscious arehe deficit situation we in. at the same time, australia does not have the levels -- debt levels that other countries have, but we are focused on ,abor market flexibility focusing on innovation, and the prime minister himself has announced a whole suite of new policies. a $50 billion infrastructure rollout, continued deregulation, and investment in skills and training, science and engineering, ensuring we have the workforce we need for the 21st century. youaad: minister, thank
very much indeed for that. >> it is 9:50 a.m. in hong kong. these are the stories making headlines. the man who found the first debris from the malaysia airlines flight on reunion island has discovered more from the plane. a 40 centimeters square of metal while running on the beach last week. he says it was almost at the exact spot where he found the boeing 777 part last july. it is said to look similar, smaller, but no barnacles. found iniece of debris mozambique has been sent to australia for analysis. a woman's body found in an elevator in a chinese city a month after power supply was cut by maintenance crew. district officials say the repair team cut electricity on january 30, but didn't return to fix the elevator until march 1. they say the 43-year-old woman lives alone in the building and
is thought to have starved to death. several people have been arrested and accused of involuntary manslaughter. a second man linked to a hong kong publisher critical of china has returned to the city. he has said to have met police and asked them to drop inquiries into his disappearance. he went missing in october and declined to provide details about what happened. another man returned to hong kong on friday, they and three others linked to the publisher under investigation by the chinese authorities. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. break,: after the diamonds will always retain their sparkle, but the industry is a bit tarnished. we have a special report from the hong kong jewelry show. ♪
morning in tokyo. the nikkei to 25 off by one quarter of 1%. also looking at what is going on in sydney, asx 200 there. on the up by 1%. mining companies helping to pace that advance today. singapore looking like this. we started trading 26 minutes ago. this is what we have right now. reaction coming through from the national people's congress in beijing. with twohe thumbs-up thirds of 1% gain so far. some ofve a look at those stories we will watch for you and asia through the next few days. china's latest trade did on tuesday, economists expecting a surplus of $50 billion for february, exports falling 14% from a year ago.
cathay pacific posted for your expectingednesday, the airlines net income to rise to 712 million dollars, a significant increase from 405 million a year ago. a lot of that will be down to the price of crude oil falling as much as it has. the bank of korea announcing an interest rate decision on thursday. economists seeing the bank cutting the rates by 25 basis points, interest rates at 1.25% after that meeting on thursday. also when we expect myanmar to announce three potential presidential candidates, also seeing if aung san suu kyi is among them. on friday, central bank of china governor gives a news conference on the sidelines of that nbc meeting -- meeting. his comments last year triggered 53% in theet, subsequent three months.
rishaad: it is monday, the seventh of march. i am rishaad salamat. you are watching "trending business". ♪ rishaad: we are heading to beijing, tokyo, and sydney. this is a look at what we are watching. up,-pacific markets on the japan inning it's best run since and touchingex distance of being in a bull market. hong kong facing tech violating trade
sanctions on iran, shares down 20% this year. china forecasted slows growth for a quarter of a century, its new five-year plan, officials roll out a hard landing, can manage the economy. let me know what you do think of our top stories on twitter t hastagtv, and use that #trendingbusiness. markets are moving and and positive terrain. one of the things investors are weighing in on, that cut by china on its growth target, but also seeing them look at that surge in u.s. hiring for clues on where central banks will go from here. chinese stocks gaining for a fifth consecutive day, the longest winning streak and five months.
a bit of a different story for japan, down for tense of a percent after capping their last three-weeks since 2014. feeling the25 downward pressure, but analysts saying that rally is here to stay and will stick. south korea gaining 2/10 of 1%, a rate decision coming up. also a rate decision and thursday -- on thursday from new zealand. gaining 1%, now at the highest level in more than two months. we are seeing some downward pressure on the australian dollar. s thatt, of currencie trade with china, feeling downward pressure. and kiwie dollar
dollar falling. reservexpecting the fx data from china today. see ats saying we might reserves slowing, stimulation for the yuan. emphaticallya's rejected fears of a hard landing. they have outlined targets in their latest five-year plan. they will & for 6.5% growth this will set a target of 6.5% growth this year. what is going on? 6.5% to 7% is that target, many economists saying too high if china was to push
ahead with supply-side reforms. 3%, also tough given that inflation is 1.5%. more interestingly, the fiscal forcit blown out to account more lending, more barring, in order to hit the growth target. about thesetalking supply-side reforms, and also how he plans to get private enterprises to be more profitable, industries more traditionally restricted to state-owned enterprises. >> we will reap lacks -- we will relax restrictions, remove hidden berries, encourage private companies to increase investment, and participate in reforms. private companies will enjoy the same treatment afforded to state owned companies, verification,
approval, taxing, and liability. the premier did talk about dealing with zombie companies by debt restructuring, mergers, consolidation, but in very broad brush strokes. we did not get details about how the implementation would go, how many layoffs. up to 6 million workers could be laid off over the next three years in the state sector. we did not get any details or timing, so a little worrisome for some economists looking for more concrete efforts for beijing to address overcapacity issues, particularly steel and coal. the other side of the story is debt, and his convention of the money supply and fiscal deficit, the debt ceiling raise, adding
to the debt to gdp ratio. continuing to grow higher and higher. the finance minister saying china's government debt is 40% of gdp, relatively low compared to others. rishaad: just going to leave their. we have technical difficulties. some other stories we are watching. here is the roundup. rosalind: rumors and speculation swirling around the sharp rescue deal. foxconnnt company of denies. they say both sides are working hard to reach a satisfactory agreement as soon as possible,
and no date set to sign the agreement. as earlyd sign a deal as march 9, according to reports. there are reports that the sharp ceo will resign over the deal. that resignation is linked to the bed. a sharp spokesman yesterday denied the report. zte is suspended a hong kong after u.s. authorities set to impose restrictions on the company for allegedly violating sanctions on iran. the restrictions will be effective from tuesday and suppliers to apply for a license before shipping. commercet refers to a department notice stating applications would generally be denied. data shows zte buys from u.s. companies. makersone of the biggest of smartphones and networking
gear and the world. $50 billion in financing for his loans forn offshore maker, chemsticides china. offshore loans for chinese companies have topped 36 billion dollars this year, outstripping $23 billion for 2015. moody's downgraded its outlook for china last week. markets,back to the topix has cap's best three weeks. it was within touching distance of a bull market. is there a feeling the worst is over with? wasn't that far down given
the volatility we have had in 2016. >> there is a growing sense of the worst being over. we have to bear in mind how far japanese stocks fell this year. after the pboj interest rate announcement, it fell further. the banks have been doing well recently. also, globally shares have been doing better as well. data,anufacturing, jobs economic data, looking stronger, giving investors a bit more confidence, but also we have the idea of stimulus in japan. what's interesting this time around is how japanese stocks have been moving. the public's pension fund will be having their first full year of potential losses under the of a administration, a difficult
thing for abe to deal with. there is speculation about how stimulushave to boost and hinting at different fiscal policies to try to boost the market and make results look at her at the end of the year, which ends at the end of the month. rishaad: thank you very much, indeed. joining us there from tokyo. we've also taken an in-depth look at retail sales plunging 70%. it is on bloomberg.com/asia. still ahead, and exclusive interview with the lincoln din executive.inke all that and more. ♪
npc has been told growth will be averted, but do they agree? we have been gauging the fuse in beijing -- engaging the views in beijing. china's national people's congress behind me, some 3000 delegates gathered from top officials to representatives from the military, as well as cultural spheres, minority groups as well, descending on the nations capital to discuss the next five-year plan. we spoke to some of the delegates to see what they hope to achieve. >> i hope china can build a
byern prosperous society 2020. i hope are people can live happily. work should solidify our while maintaining reform and opening up, it hearing to the four cup brands of put by the comprehensivesur put forward by the party. were looking to see how supply-side reforms will be carried out. i hope hong kong can make use of its advantages in caring out the 13th five-year plan. i hope to take this message back to hong kong. i really want to know how my hometown can take advantage of the policies under the 13th i've your plan. says oneour next guest thing is absent from the five-year plan she joins us now and talks about china policy and risk.
great to see you. you are saying that the one thing missing is capital outflows. >> yes. rishaad: i'm sure there's a lot more missing. one.at is the gaping that is the one the market is focused on. it is not a one-off thing. the dismantling of exchange controls that goes with globalization, china will face this issue. global market forces can no longer be controlled when all these barriers are lifted. there is little mention, just exchange rates being kept stable and reasonable. keep with the to promise of dismantling exchange
, over twoight away years, it's still guesswork. rishaad: they say it's just getting on board with the special rights. >> yes, but renminbi globalization, the ultimate goal , everybody using the renminbi, that cannot be done if you have the exchange controls you have now. they have to face this issue. rishaad: capital is still flowing out though. where the is, even controls have not been totally dismantled, so it is something they have to face. we are not being told how they will face it. rishaad: right, so why? more importantly, why is that money leaving the country? money,cally the smart whether it is domestic money, foreign money, knows that china is about risks.
you want to get as much reward as possible before you come around to the risks. surprised evaluation of the renminbi suddenly triggered a change. -fear axis is shifting. maybe it is time to go easy on the rewards and think about the risks. the money has been moving. at the same time, the worry that the exchange controls might be back just overnight means that childreno have studying in the united states, cannot getvernight i my money out, what will happen to my kid. it is also a self-fulfilling kind of prophecy. that is something that has to be faced. rishaad: in your latest
it's not you saying your money and less it's outside of china. >> yes. overnight policies can change food a lot of things you take for granted may not be the same, so you are only sure of what is happening today. that's how you manage, whether it is family money, corporate money. rishaad: what about this, another. that capital outflows are corporate's dealing with dollar-denominated debt. >> yes, there is that. called ahat might be response to the market environment, so if the dollar is not a strong, it will go the other way. right now what you are facing is an issue of trust. it's more than my strategy today , andnaging dollar debt
best way i can with treasuries. the problem now is that longer-term, can i trust that i will no longer be given the ,ption of taking my money out because i know i will always have the opportunity to bring it back in, so people are opting for the safe solution. rishaad: is this all painting a poor portrait of the state chinese economy? >> only if you already have a very bullish view of the chinese economy. slowing,that growth is the writing has been on the wall for a couple of years now. i think even the policymakers that growth ispt going to slow, but what i do find positive about this region is that they are now willing to be upfront with the problems
instead of saying we can make 7% , some saying we might not make it, 6.5%. they are preparing the nation for pain, for problems, so there won't be sudden shocks, and i think that is positive. rishaad: what is your overall take away from the five-year plan? was it substantially in your substantive in your view? >> they have been formalizing things. the masterly presentation of bad news. that is it, isn't it? thank you for coming in today. >> these other stories making headlines. korea and the u.s. starting annual military exercising amid
rising tensions over north korea rocket launches sanctions. young young has to announce them as dangerous rehearsals for war. state media says fighting will not be confined to the peninsula nor financial -- conventional. sailing from bali to job sank income waters. 25 rescued so far. the boat was carrying trucks and other vehicles when it went down. paid to the inventor of e-mail, dying at the age of 74. in 1971, he devised an application to send messages between computers. the internet hall of fame inducted him in 2012, saying he
fundamentally change the way people communicate. colleagues say he was a humble and modest man, though not a frequent checker of his own e-mail accounts. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. right, going negative, maybe positive. sayook at why economists the decision to take rates below zero seems to be working. ♪
policy, negative rate territory. switzerland at -75 basis points. the concern in the banking sector is that this will eat into profitability. the longer you have negative rates, how low can they go, banks'profitability will be impacted. says negative policy rates are transmitted to money mark rates the same way as positive rates, no real difference in how the markets perceive them. they say that banks seek to avoid negative rates by extending maturities are lending zeroskier counterparties, not the binding lower limit, so they can go further than zero, but there is an inherent risk in that as they look at the global economy and central-bank policy. rishaad: what does this say about the inherent risks of
having such a policy? the risks are the unknown, how long will these rates stay at zero or below? what is the impact to money markets in cash markets? the international settlement unknowntes that it is whether the transmission mechanisms will continue to operate as in the past, subject to tipping points, great uncertainty about individuals and institutions -- to get peopleant spending. that is why do have negative rates. the thing is if you're not getting a return, because that in turn drives money market rates down, people want capital of prescient -- capital appreciation on the cash. that's not going to create inflation, is it? >> that is one of the criticisms, nobody wins. stocks falling in europe this year, reflecting the concerns --
stocks falling precipitously in europe this year, reflecting the concerns. reductionou have the in interest rate margins, making less money, perhaps more consolidation, and they don't want have a situation where banks are too big to fail. they could ultimately lead to consolidation, which could create that scenario they don't want. the banks are not compelled to lend, not support the real economy, profit goes down, regulation increases, the banks have to hold more in reserve to meet capital requirements. rishaad: it is a vicious cycle. >> indeed, and nobody has the right answer. they say banks are doing the right thing. rishaad: for now. who is in and who is out?
on saturday, foxconn said no final date had been set for signing off on the deal, but both sides are working hard to reach agreement. china has rejected fears of a hard landing while setting years, for the next five 6.5 percent growth, the slowest in 25 years. because are unfounded aging still has the tools to maintain reasonable growth. tokyo closing out it's morning session. let's have a look at what else is going on. sherri: there are a couple of things plaguing markets, oil extending gains above $36 a barrel. the numberucers cut of rigs to the lowest in six years. brent is close to $40 a barrel, the longest winning streak since april.
investors not only taking a look at oil. they are also considering china, the npc going on, cutting their growth target. u.s. job numbers better than expected. japan is falling today. we have seen the best three weeks since 2014, falling today. those defense shares are falling with power producers. 3.8%aceuticals rising after a stock split announce. , property developers watch out. the housing minister says china will increase housing supply this year. another official saying the shanghai property market was overheated. gaining today.
rishaad: looking back to our top story, china and fatah clique rejected fears of a hard landing. leaders outlining targets in the latest five-year plan. rule number one will be development, at least 6.5% growth this year. with a look at the main takeaway , what was it this weekend? -- were talking about more stimulus to keep the economy growing. it is her range. normally it is a specific number which they almost always achieved. progress, butme still 6.5% minimum, a hefty growth rate relative to its peers. that's where economists are
saying that you are setting this high or for yourself, actively talking about spending more money, how does your reform story fit into that mix? rishaad: 6.5% growth for the chinese economy is nearly the size of the turkish economy. output was almost the size of the chinese economy last year. take in thehave to latest five-year plan is are you going to fuel the growth through more leverage. back and leverage as a drag on growth. are they going to deliver on the painful supply-side reforms? saying they will put millions of people out of work.
narrative hasthe been bolstered, that they are on this path to rebalancing. rishaad: that's the ultimate question, isn't it? what are people saying? >> if they are preaching this growth and sticking with targets to get 6.5% growth, but not stepping up on the supply side of the economy, concrete, hard, specific terms as to what you will do there. that is a good way of putting it. that is acting as a drug on growth, zombie companies. they are loaded with that. until we see real evidence, we won't know that china is on a path to reform.
economic program. , ministry ofi information in charge of this massive manufacturing upgrading program. the aim is to turn china into a for innovating in china. is xu lin.e we chose rishaad: what do we know about president xi jinping's preferences? a tendency ton not promote from his own power base. with five officials worked president xi jinping before.
that tells you about his promotional style, which might offer some clue. rishaad: what else to expect from this midterm power transition? aswho is going to emerge president xi jinping's's successor? it for he will accept him or will he choose his own person? rishaad: let's have a look at what's going on. xiaomi has no plans to go
public, invited at $45 billion in 2014, a funding round secured more than one billion from investors. saying anexecutive ipo is not on the calendar. it is planning to introduce a high end device. shareholders have voted to oftinue back the chairman the retail conglomerate, holding a meeting over the weekend after an internal this beaut. he was proposing to form a new board of directors, giving himself the role of chief executive. he says he intends to resubmit the proposals of the next shareholder meeting in june. alliance, equities sources saying the japanese banks security division will
provide research on stocks. the london-based company would carry out transactions for clients. japan's biggest lender hoping to lure investors. 'sis is part of the pboj introduction of negative interest rates. that for the big four banks set to arise -- to rise. a lot of publicity here. given australia's expensive housing market, but the concern is over corporate loans. paul: that is right. mining, agricultural, and dairy are the sectors the most aggressive by the survey, which sees the mount of money to reach $5.3 billion, the highest level in eight years. debtdy provisions for bad have been rising around the big four banks, 2.8 billion dollars
combined, a 9.3% increase on 2014. the survey also found that corporate growth is expected to decline among three of the big four banks by 4.5% every year to 2018, and the cost of insuring debt has been rising steadily. despite that rather gloomy picture, shares in all for big banks have been rising steadily today. context, taking a beating over the past 12 months, always loved stocks on the asx 200, so investors seeing this is a good buying opportunity. rishaad: we heard on friday how the financial regulator is on a probe, now extending that to other banks. >> the story broke friday afternoon that the regulator
will take anz to court, finding they manipulated the bank swap bill rate for 44 days between 2010-2012. fightnies it and will the charge. they are gathering phone records and written communications. this case has the attention of a law firm considering whether or not to bring a class action suit as well. the plot aikens on this story. rishaad: thanks. paul allen in sydney. we have to take a break. hard afterock it's missing earning projections. we speak to the ceo of but his damage control plans. "trending business" continues right after this. ♪
>> it is 10:43 a.m. in hong kong. these are the stories making headlines around the world. the man who found the first h370 has discovered more, of 40 centimeters square of metal found on the beach. he says it was almost at the exact spot where he found the piece last july. ands similar, but smaller has no barnacles. another piece of debris found on the coast of mozambique has been sent australia for analysis. a woman's body found in an elevator in a chinese city. it is one month after power supply was cut by maintenance crew, officials say the repair team cup electricity on january 30, but did not return to fix the elevator until march 1. the 43-year-old woman lived
alone in the building and starved to death. several people have been arrested and accused of involuntary manslaughter. a second man linked to a hong kong publisher critical of china has returned to the city. and asked met police them to drop inquiries into his disappearance. he went missing in october, and has declined provide details on what happened. they and three others linked to the publisher have been investigated by chinese authorities. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. linkedin got the year off to a bad start, stock plummeting 40%. jeff weiner spoke with emily chang. i think it was a surprise.
we were not expecting that response. when you look at the core elements of our business, they remain healthy. if you look at north american sales for our recruiter project, same-store sales has remained consistent. still theupdates fastest growing business we have at scale. posted the launch of our reimagined flagship application on mobile, we have seen an exhilaration in engagement on mobile and desktop. the core elements of the business remain healthy. >> analyst went so far to say, sorry, we got it wrong. do you think there is something investors are not standing? >> it is expectations. companies that experience hypergrowth for sustained aniods of time, there is ankle nation to extrapolate those growth rates out for a long time. in the history of every
hypergrowth company, there comes an inflection point where the expectations of analysts or investors start to outstrip the fundamentals of the business. the question is not whether or not that will happen. the question is how companies execute through that. >> there are various thesis as to what linkedin is. they thought you were a fast growth company, but others more like a slow growth company. >> it is all relative. at 30%, mid 20's, that is healthy growth by any measure. >> you gave a rousing speech to employees at an all hands meeting saying that linkedin is a same company, the same team, the same ceo. the personff weiner feel about this? does its thing a little? >> i would not say it's things. there was some surprise. you have to make sure that you
are there for the people, are we able to create value for our customers, and nothing has changed in that regard. we want to make sure our employees are ok, especially those who have not experienced anything like this before. there are those in the leadership team who have gone through similar times. some of the most viable companies in the world have gone through significant corrections, a few of those companies have gone through multiple corrections, and they never lose sight of their long-term mission, vision. it is about continuing to execute, so that's where we want to remain focused. said linkedin is a business card holder at best, the worst a delivery device for spam. it will not defocused us in any way. it is interesting to see those comments now. the company is exact same company at was the day before earnings.
our core product offerings have never been stronger, the best roadmap in seven years of the company, and we see gains in engagement, and that's what it's about, creating value for customers. >> do you think you can rake summary growth? >> that is the objective overtime. as we execute, you want to build in opportunities. >> has this latest situation impacted morale? >> if anything, it brings people closer together. the more you meet these challenges head on and are successful in recognizing that nothing has changed fundamentally, the stronger the team becomes, the stronger we become as a company. talking jeff weiner exclusively to emily chang. remainup, can diamonds the best friend with some much volatility in the markets? we look at that, next. ♪
, just seeing action, .5% higher. some positive reaction coming through when it comes to shanghai and hong kong. that npc taking place. some optimism has evaporated, the hang seng down basically. different,ompletely the man behind the most expensive piece of laundry in the world saying the diamond industry is under as much pressure as any business. valued at $11ra million for victoria's secret. ♪
the diamond and jewelry industry goes through different cycles, impacted by the economy. in the last few years, it has been difficult. it will remain difficult this year. it is the first time we are going through a global slowdown where there is not one market thriving when it comes to jewelry. >> how has the china slowdown affected the industry? >> polarization is happening in the industry, more volatility at a lower price point. the in between is where people are having difficulties. >> how much am i holding now? >> you are holding $13 million in your hand. >> what is the difference between a good long-term investment and one that is not so much? >> you want to go for rare gems. the best possible grade you can get for color,
free of inclusions. mother nature produces many diamonds, but very few are pure. the one next to it has a tent of yellow, and therefore more common. if you want to think about investments in rarity, the higher in color, the more rare in the higher value. lot know that you cater a to middle eastern royalty, but given the plunge and oil, how has their purchasing behavior change? people realize the markets are changing, that oil prices may stay low for a while, therefore people will come back to different asset classes. this is one of the best asset classes you can invest in, why? small, portable, high-value. >> i know that you make these as forional fantasy br
tori secret -- for victoria's secret. who buys these? >> in general, we make them for the beauty and the show. we keep them. the one we made four 2015 is still in our possession. we will keep it in our museum for long-term. rishaad: right, let's have a look at what else we are watching in asia this week. china's latest trade data tuesday, expecting a surplus of $50 billion. exports dropping 14% from a year ago. cathay pacific full-year numbers on wednesday, analysts expecting income to rise to $712 million, a significant increase from $405 million a year ago. of korea out with interest rate decision on thursday. economists see the bank cutting
rates by 25 basis points. thursday, we expect myanmar to name three potential presidential candidates. noteworthy to see if aung san suu kyi is among them. pboc governor due to give a news conference on the sidelines of the npc. trigger ats helped to raging bull market, surging 53% and the subsequent three months. that is it for "trending business". is next.e" ♪
biggest in the quarter of a century co. >> coming up at this hour, positive on negative, the first central bank says below zero rate are working -- rates are working. certainty -- of they have been warned of certainty if it goes any lower. worries about whether the national finances can take the life in thenew diamond business. we are the hong kong international jewish show at this mondays edition of asia edge. stocks in asia are swinging between gains and losses. investors have a few things to rally around, a better u.s. employment scene, and every thing that is happening china as leaders gather for the end. chinese stocks are rising. this is the longest winning streak in five months.