tv Trending Business Bloomberg March 31, 2016 9:00pm-10:01pm EDT
♪ friday, the first of april. this is "trending business". i am rishaad salamat. ♪ we take you to tokyo, .ydni, singapore a new day in the new court, and what a day for stocks, the regional benchmark coming by 8%, a tumultuous quarter for global equities. more evidence of gathering gloom and japan, business sentiment
slumping to the lowest in three years, hitting exporters, undermining corporate profits. anbang pulls its offer for starwood. it leaves it clear for marriott. do follow me on twitter @rishaadtv, use #trendingbusiness. nonmanufacturing pmi data, the manufacturing number. tom mackenzie is our china correspondent. marchprise rise in the purchasing managers index for china, 50.2. the survey had been 49.4. that is what the forecast had been. it follows seven months of contraction for china's manufacturing sector. it will be a positive for the government as well and the pboc.
we heard there was going to be a fiscal stimulus. of thates on the back increase in the services pmi and follows the positive run and chinese stocks. it is not just investors. where seeing impact in the manufacturing sector. -- we are seeing impact in the manufacturing sector. government expecting 1.8 million people may have to be laid off from state owned enterprises. we have seen falling demand as well. that has eased off for the first time in seven months, an increase in the purchasing managers index of chinese manufacturers. rishaad: thank you. we get reaction to all this out of china and hong kong markets as they get set for the trading day.
we get the open proper and half an hour. the opens in singapore, taiwan pay -- taipei, kuala lumpur. as we might have expected, the aussie dollar climbing. this is where we started getting numbers coming through, nonmanufacturing services number, i beat, and the manufacturing number as upbeat as well. the aussie dollar getting a leg at that .7688 handle. is about 5.5% since the start of the year. we do expect the trajectory to continue and china. the australian dollar seen as a close proxy for the state of the chinese economy, if you will. that stronger dollar may in fact seeing thatanalysts
ease given the pressure it is putting on export competitiveness. ,s the reaction on the asx 200 down one quarter of 1%. we are seeing strong losses coming through from the nikkei 225, off by 2%. taiwan,e, losses from the kiwi markets, and the kospi down for a second day. we had that quarter starting off with the were start to year on record for a number of these markets, ending strongly on the back of those elvish comments from the fed, bringing -- those dovish comments from the fed, bringing new life into the rally. kong injuring a bull market, shanghai gaining 12% in the last month alone, so
we will see if this data can be sustaining this sentiment. we are also getting an unofficial take in pmi coming through later. those beats this morning coming through from those larger state owned enterprises, stemming that seven months of contraction. we will be looking at those stocks ahead of that hong kong shanghai open. rishaad: thanks. of gatheringigns gloom in japan today, bins business sentiment falling. let's discuss this with jodie snyder. disappointing to say the least. >> yes. largehows sentiment among manufacturers and corporate
sentiment is weakening in japan. part of this is due to the yen. the yen has strengthened against the dollar, 7%. that raises the price of imported goods and makes it harder to get revenue from abroad, so there is some risk to corporate profits. what we are seeing as a result of that is less investment, less corporate investment in japan, and no wage gains. toyota this month said it was going to pull back its monthly base wage increase, and that is something obviously that primeor kuroda and minister shinzo abe be have been pushing corporations to do, invest in the economy and and wage growth. that is just not happening. whenrns about what happens we see those gdp numbers for the first quarter when they come out later this month in april. the last quarter of 2015, a
contraction, so another since prime minister of a came back to office. all eyes on the bank of japan when they meet later this month, the last weekend april -- week in april. they expect further easing given the concerning data, including the survey this morning. rishaad: thanks. i look at those weaker than anticipated numbers coming out of tokyo. right, we will have more on that. j.p. morgan having a look at what this data means a bit later as we start of a new fiscal year in japan. tweet us your thoughts @rishaadtv, include #trendingbusiness. here are some other stories we are watching today.
battleticipant in this for starwood drops out. >> that's right. it looks like the door is wide open for marriott international to take over starwood hotels. a competing offer from a group gf rivals led by china's anban insurance has been pulled. cashmade at nonbinding offer of 82 dollars $.75 a share, making the deal worth $40 billion. the consortium decided to not go ahead due to market considerations, according to a statement. the washington post is reporting the main reason is price. the chairman saying that anbang walked away because it is savvy with price discipline. starwood shareholders will meet on april 8 two vote on the offer.
annual lossfirst since 2009, the net loss for the chinese equipment maker was $1.6 billion compared to its net income of more than $400 million a year earlier. revenue plunge 71%. auditors have expressed doubts about the ability to stay in business. shares surge less year before being suspended from trading in may after they drop 47% on a single day. we are expecting the latest payroll numbers from the u.s. later, and the forecast is for 200,000 new jobs created in march. even a blockbuster reading is unlikely to prompt the fed to hike rates after janet yellen indicated a willingness to let heat up ae economy little bit before taking action. it also shows how the labor market is being affected by the drag on the economy, the weakness in global demand.
more than 240,000 jobs created in february, shifting the focus to signs that an acceleration in wages is underway. 24 japan airlines serving tokyo has been canceled after a system failure, 3200 passengers traveling to and from the airport have been affected. the system maintaining aircraft weight and central gravity shutdown at 7:48 a.m. japan time according to a spokesman. thear no timeframe for system to be fixed, and they expect the lays with international and domestic flights. website,right, on the indonesian at 16 fighter jets in the south china sea. that is on bloomberg.com/asia. gamblehead, the brexit and the impact on global financial markets. , chief chinat
rishaad: a decent surprise set of china, manufacturing expanding. we dig a bit deeper into this with the chief china economist. you probably feel vindicated. >> two weeks ago in a quarterly report, we upgraded china's gdp. on a quarter on quarter basis, we look for improvement. 6.2% is my full-year forecast. the upgrade happened in the second quarter. rishaad: is that because rings
have bottomed and we are in proving -- because things have bottomed and we are improving. seee continue to significant headwinds to chinese growth this year and next year, but in the near term we see the government clearly setting stabilizing growth as a priority. policyth fiscal more proactive and accommodative. we have been a serving leading indicators, all showing signs of improvement. this includes the housing market , property stocks turning positive for the first time in a year. workinge excavators hours -- rishaad: there are statistics about excavators and how long they work for? >> yes, we are tracking this closely for 3-4 years.
rishaad: that would you more about the infrastructure spend, won't it? >> the major drivers for stabilization is the property market activity, second would be leading of the support to infrastructure investment. this is the indicator we want to look for from a cyclical perspective. manyad: it's amazing how different types of indicators are used to find out what is going on in china. they look at satellite imagery even. >> yes, over all you want to have a comprehensive view of the various indicators. official indicators also give you the direction of the change, the level of change. there are several leading , microlevel indicators, corporate data, , also postingits
positive growth. then it goes to what nominal gdp is, does it not? economy isverall improving and your inflation , it willto some extent be higher this year versus last year. weeks, what went track closely is the near-term inflation risk. we have the cpi inflation rising to a 20 month high in february, and likely rising further in march. rishaad: didn't people put that down to seasonal factors because of the chinese new year? >> you are right read food prices are the main driver -- you are right. food prices are the main driver.
the cycle has returned, even though this will be contained, but in the near term we see the price rising further, and that will make the pboc more inclined to hold its policy rate cuts in the second quarter. rishaad: with the data today, you think it is confirming your thesis that the worst is over with? >> in the near term, that for the second half of the year we continue to look for growth to be moderate. rishaad: thank you very much indeed. now to the stories making headlines around the world. 21 people killed when an overpass collapsed in al qaeda. the roadway fell in -- collapsed in calcutta. others may be buried in the rubble. contract for the overpass was signed in 2007, and the work was several years behind schedule.
officials say the private constructor and previous communist administration -- the prime minister is stepping up his campaign, stepping down as chairman from advisory roles to state developmental authorities and chancellor of diversities. he leads a movement demanding the resignation before elections in two years. a giant refrigeration system has been switched on at the devastated fukushima nuclear icet to create a nice -- an wall to contain water. it will form the wall over several months. some experts question whether the $300 million ice wall will work and for how long?
forfficult year ahead lenders due to negative interest rates. impact -- examine the impact of policy before going ahead next year. negative rates will reduce profitability between 8% and 15%. the is the reaction at moment, banks moving to the downside in tokyo. daniel loebn by could be a test case on japanese governance reforms. companies to appoint independent directors and provide justification to shareholders. seven & i's board is set to discuss it in the next week or so. over were concerns raised
suzuki's health on the possibility his son may succeed him. timeonic having a rough come down the most in two months. the company warned profits will slump in the next fiscal year. saying operating income will fall 8.5% to $3.3 billion. away attempting to move from consumer electronics and plans to spend $9 billion. panasonic says profit will rebound by 2018. will be ableumers to choose their power provider for the first time as of today. it is part of an opening up of the utilities market, more than 250 companies approved to sell power. stephen joins us now. tell us what is happening today. now that the first day of the
fiscal year, the market in japan is fully open. that means households can choose their a lick for city provider -- the first time here it choose their own electricity provider for the first time. the biggest being tokyo electric power company. the tokyo area, you could only by your power from tokyo electric. that are 250 companies households and small businesses can buy their electricity from. there are companies that will be bundling electricity packages along with cell phone packages and internet packages provide discounts for consumers. oil refiners in japan who are providing discounts at the pump if you buy their electricity. tv shoppinge networks that will be allowed you to buy a electricity from them and use points towards
buying products that range from apple's to alcohol. it is definitely a change in the market. for consumers, for the 10 regional power utilities. rishaad: what is the role then of the power exchange? >> right, so now that the market , a lot moren retailers, those who sell electricity to consumers, will be using the japan electric power exchange, which is japan's power exchange. other liberalized markets, if you look at the nordic market in northern europe, they have their exchange. 90% of the electricity consumed in the nordic market is traded on that exchange. so japan likewise -- right now it's only 1.5 percent, but in the future it may rise considerably, so utilities that have power generation will be able to sell their power to the
exchange, and retailers like softbank with little or no power plants or generation capacity will be able to buy from the exchange and sell it to the consumers. some exchange is the marketplace for electricity to be sold. the important things about the market is you need to increase the volume much more, so right now it is 1.5% on japan's exchange rate they are hoping to get to a higher percentage. let's see if that happens. rishaad: thanks a lot. joining us there from tokyo. ,ne more story out of japan japan airlines, something that came to light in the next hour or so. cancels 24nes domestic and international flights after a system failure. more than 3000 passengers traveling were affected. the airline saying the system that maintains aircraft weight and center of gravity shut down
thank you. ordering chinese food is a very predictable experience. i order b14. i get b14. no surprises. buying business internet, on the other hand, can be a roller coaster white knuckle thrill ride. you're promised one speed. but do you consistently get it? you do with comcast business. it's reliable. just like kung pao fish.
thank you, ping. reliably fast internet starts at $59.95 a month. comcast business. built for business. rishaad: a look at our top stories. china seeing as a surprise jump in manufacturing activity. 50.2,i for march rose to signaling an expansion. china's widethat raging stimulus is kicking in. the services pmi expanding to 53.8 last month. stocks lower in tokyo. sentiment among large manufacturing's falling to a three-year low, confidence at
six in march. that would suggest investment and wages growth will remain tepid. starwood hotels taking a hit in the aftermarket trade. g insurance walks away from its proposed takeover, starwood reconfirming its commitment to marriott. various market considerations in pulling that bid. sense oft's get a what's going on market wise. hong kong was higher. aidi.s h lower forare opening shanghai in the first few minutes of trading. we did have chinese companies listed in hong kong entering a bull market, extending gains
from february 12 lows by 20%. still, a tepid start to the quarter regionally. losses from tokyo, nikkei 225 down over 2%. were not seeing much of an upside boost when it comes to the better than expected print out of the china pmi numbers coming through. by 2/10 of 1%.wn the aussie dollar getting a leg up after that data. a quick look at some of the movers we are tracking today. for agbank. upside
quite a bit of movement in the listings for the agricultural bank of china. revenuesu, and gaming coming through, extending losses in the hong kong simitian -- session. up one commercial about looking to take it private. i look at the reaction in terms of the fx space. the aussie dollar putting on 5.5% today. leg up comingthat through from the china pmi numbers. we had that non-manufacturing services number come through, we did see that surge, but still trading strong. something for the reserve bank to worry about in terms of the
resurgence of that strong aussie dollar. rishaad: getting back to that top story. the aussie dollar's reaction, a recovery in china manufacturing. , this came out of left field, didn't it? >> a rare piece of positive news. it might indicate some stability in china's economy. hold your horses. we have the unofficial figures in 15 minutes. >> you would not want to overstate it. for a number of months, economists have been looking for signs of traction. differentll the methods the government has taken to get money into the economy? in march, the government made it clear that there will not be a hard landing. we will hit this growth target of 6.5%. rishaad: of course we are.
absolutely right. that's what the indications are now. china economists says that is an upgrade. >> she has called it quite well. rishaad: she was ban on. date will only hit that 6.5% target. their total debt level is 40% of gdp. spending money as to the leverages in the economy. they are piling on more debt. that is the issue. >> to an have times as far as the overall economy, a drag on growth. ashaad: this is not signaling turning point is what you are arguing. >> i think the underlying fear is they are not dealing with the structural problems.
even if they hit the growth target and get the economy on track, are they doing enough on the reform side, tackling state-owned enterprises. bad debt at banks are a 10 year high. that is the balancing act. rishaad: thanks a lot for that on the latest pmi data, showing some signs of optimism for the chinese economy, but not the case in japan. more gloominess there in the business community with the latest survey showing business confidence at a three-year low. this is clearly undermining the government's efforts to spur a recovery. juliette: yes, absolutely. these numbers coming in worse than expected. this is a graph of the large manufacturing index. it came in at a reading of six. we were expecting a reading
of eight. the number of pessimists has halved in the first half of the year -- i should say optimists. this december quarter was already subdued, concern about the slowdown in the global economy, growth in china, also stagnated wages as well. well having a as massive impact in terms of how export prices are faring for companies and how the spending conditions are going as well. speaking of spending, this graph shows you the large capital expenditure plans for next quarter. we were expecting they would be --dued, but we have seen
compared to the december quarter, we saw 10.8% growth in spending, so a big drop in the forecast. shows they have concerns about the slowdown in the economy as well. way into the boj's policy meeting at the end of this month. we had industrial production data on wednesday at its lowest pace since the 2011 earthquake. now we have this gloominess among manufacturing companies and spending outlook. it is adding to these concerns that we could see a contraction in the world's third-biggest economy, adding to that gloominess ahead of first quarter gdp numbers. some of the other stories. some customers lined up to reserve teslas new car. a lot of them have not seen it. three, the,000 model
first ever for the mass market, a range of at least 320 kilometers. tesla will unveil the car later today in what has become an increasingly crowded market. mogul jay-z is unhappy with his recent music streaming purchase. the owner's subscriber numbers at the time of the deal. jay-z had touted the service as a response to spotify and apple, but it trails with only 3 million users. some major music stars calling on the u.s. government to crack down on copyright laws. among more than 100 artists and managers have filed up petition. they say some provisions of the law shields services from you to
from liability. y has longindustr argued of places too much of a burden on websites themselves. banks in singapore, moody's cutting their credit rating to negative. the agency pointing to a further weakening of the business environment and economic growth slowdown. we are in singapore. how bad is it? >> it's not looking pretty by the sound of it. moody's says it is concerned about the asset quality, profitability. willys singapore banks have to boost provisions for loan losses, an expectation of rising nonperforming loans. should this happen, banks in a dent inwill see their profits.
moody's says that leverage remains pretty high. challenginge a delivered in cycle for companies and businesses operating in singapore, but it is not just slower growth you need to worry about. face other headwinds, foreign loan books, the looming risk from exposure to oil and gas borrowers. the exposure to the sector ranges from 13% to 24%, not all gloom. moody's says the three lenders capital loan-loss provisions, plus a very high possibility of government support if and when needed. by the way, the outlook for singapore banks may have been cut, their moody's long time rating is still among the
pentagon's plans to install a ballistic missile defense system in south korea to deter an attack from the north. , $4.8 million in cash handed over in connection with the heist. it was a suitcase filled with notes. the money came from chinese gambling operators. hackers stole exactly $81 million from bangladesh's account. sports, reports from the u.s. say chinese nba star yell -- average 19 points for
the game over his seasons. the official announcement of his entry into the hall of fame is expected to take place this weekend. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. right, just getting to breaking news. the official numbers, chinese pmi manufacturing data. tom has the details. >> 49.7 for the pmi manufacturing index. been 48.3.e had in february, it was at 48, so showing another positive for the manufacturing sector in china. clearly in a contractionary phase, the contracting at a slower pace, so that comes on the back of the official pmi
, but the official pmi is obviously a surprise, positive there as well, and a positive for the services. still in a contractionary phase, but will add some grist to the mill for there's turning more positive on the manufacturing sector. ease any necessary easing on behalf of the bank of china. we also heard from the national people's congress earlier this year that there is more fiscal stimulus that can be applied. they increased the targeted budget deficit in china to 3% this year. 6.5% to 7%for growth this year. manufacturing, there were concerns of overcapacity and layoffs focusing on state owned enterprises and the need to trim back there. the government saying up to 1.8
million jobs maybe lost. this follows on from the positives we have seen in chinese shares of the last 30 days and comes after the downgrade of their outlook for the forecast for china's credit rating at the close of trade yesterday. it has more than one billion customers, bigger than apple and boeing combined, but many have not heard of state grid, a chinese our company with ambitious plans to expand in australia. james, what is this company all about? what is it hoping to achieve globally? interesting company. if you look at the list of the world's largest companies by
revenue, walmart, shell, volkswagen, toyota, and then you have state grid. top 10.nd out among the they are not a household name, but our massive anyway you look at it. they have a workforce that exceeds the population of philadelphia. than one billion customers, one in seven people aross the planet, so this is company that is expanding aggressively overseas, looking at places like australia, europe, south america. they are seeking to diversify their earnings. they are also looking to gain some viable knowledge that they pplyapply that come to a to market reforms in that sector. they also have a long-term
vision to develop a $50 trillion global energy network that would enable of to be transmitted from country to country and across continental boundaries. company -- that sounds like a high in the sky kind of they but it is something are serious about and shows the level of ambition. should people pay attention to state grid outside of china. >> they can play an important role in providing funding to upgrade electricity infrastructure. they can also fill a void. in some places where countries are stretched and where the economy is slowing, this money provides a source of funding
that may not have existed. it becomes an increasingly even whenpartner, and unsuccessful, they can still have an impact. state grid in australia was among the companies that did for a business called trans grid. they lost to another group of .nvestors they agreed to pay about $1 billion more than the assets were previously estimated to be worth. in that sense,it they are bidding up the value of assets, clearly good news for governments. ticks a lotas, of boxes for them. so there are benefits on both sides of the equation. beenad: right, it has
rishaad: right, let's bring you some news out of japan airlines. flights to cancel 46 due to a system failure today. more than 6000 passengers affected. the airline saying the system shutdown, but it has been prepared. the lace do remain. -- delays do remain. the first day of the fiscal year for the country, the first official day of the new school year. tokyo, liveou to
ceremony the welcoming , hiring 1450 graduates this year. that is the president there giving a talk to the new members .f the team totomers lined up for hours sign up for the new model three tesla. there's a lot riding on the $35,000 car. >> the model three is the company's most important vehicle yet. will launch which until next year at the earliest, will be priced for the mass market. with mass-market, comes mass competition. tesla's success to date mean competitors like gm and bmw are working hard to catch up. five years ago, there were only
four electric models in the u.s.. by the end of next year, there are expected to be 60. knows, the either more rivals, the harder it is to make the sale, and the more you have to spend to jazz up the product and this uses up a lot of cast and tesla has already spent a town of it. both competitors have one big edge on tesla, they sell millions of regular cars and trucks. all of which is a problem for investors paying top dollar for tesla shares. at $30 billion, putting it in the top 10 carmakers in the world, but it's sales don't come close to matching other companies. you can't even see them here. at this price, you have to believe tesla can change the global car market and
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