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tv   Asia Edge  Bloomberg  May 15, 2016 11:00pm-12:01am EDT

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they are valued at $26 billion. doing so much to achieve so little, they have negative rates at the victim japan and the policies do not work. also coming up, cash for trash, the indonesian bank that is giving a new meaning to junk rated finance. i will tell you what we are talking about in a special report. and keeping an eye on the markets, it has been a volatile start to the week. shanghai stocks tracking at a two-month low after the disappointing numbers out of china over the weekend. now the asian market is up 4/10 of 1%. and there is a solid again in the japanese equities. also reports that the japanese government could delay the plans for the biotech increase and that is pushing it out to over
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1% when it went on the lunch break. good things coming out of australia led by the health care stocks and the 10 year bond yield going to a 10 year low. and gains coming through for the u.s. dollar, that is putting pressure on some of those asian market currencies. i will have more on the market, shortly. angie: thank you. uber's story this hour, chinese rival could be considering an ipo as soon as next year. wow. >> this is coming on the heels of them raising more than $1 billion from apple in bringing the total amount of the fundraising to $3 billion and with a valuation of about $26 billion. angie: what does it mean for over -- uber? >> they said that they want to hold off the ipo as long as possible, so that means that didi could raise ahead of them,
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so they are avoiding raising from the same investors at the same time. and there are other services in the pipeline also want to ipo will potentially lyft. and in terms of fundraising, what the sources said, is the reason they have been so aggressive is to prevent uber from taking money from the same pool of investors. this puts a lot of pressure on uber. angie: does this suggest a global strategy for didi, or is it to thwart uber in their own region? angie: any company should have global aspirations. hasf you look at what didi done so far, it is with alliances. they have expanded overseas themselves, so what they are offering for users, for if you go to the u.s. on didi, you can
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use services from lyft. angie: how is the services? what do they can be -- what are they be concerned with in china? >> china is always on the back of their mind, the slowing economy. specifically, when will they make a profit and become profitable and how the business model will be going forward? they said last month that they will be soon profitable, operating income wise. and they are making money, more than -- in more than 200 cities right now in china. angie: good job raising this story. thank you. ipo looking possibly at an in new york. chinese shares have hit a two-month low after a disappointing april. it highlights the challenges for those trying to reform the
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economy, cut capacity and encourage credit. tom joining us from beijing. what is the data telling us? tom: it tells us that some of the main drivers of the economy are calling for a reversal origins -- of fortunes for march, when we had a slew of data. taking a look at this, we track gdp on a month-to-month basis and what we offer april is .9%, ust below -- x .9%, just -- 6.9%, and putting flesh on the bones of this story, we got industrial output at this point a percent from april. -- 6.8%. and the government says that was due in large part from the slowdown in the coal and deal sectors -- deal sectors.
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in retail sales is a big part of the picture. chinese consumers have kept their hands firmly in their pockets, particularly when it came to car sales. they were up 5.1% in april, but will of the 12.3% that we saw in march. and then it was assets -- fixed beents, the lowest it has since 2012. up in-- new home sales, april and that is despite the resurgence we see in place -- restrictions we see in place in cities like shanghai. there are hot property numbers and policymakers trying to rein those in. angie: what can we expect the policymakers? what we are getting from the chinese policymakers is a really makes signal -- mixed signal. one is to try to maintain growth
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and the other is trying to contain the fiscal risk. we heard from them over the weekend, the people's bank of china, saying that they will maintain a proven policy, a supportive policy, but of course you heard last week in the editorial these in the people's daily, a top chinese leader saying that they are cutting overcapacity and cutting debt and cutting too much credit flow. so these are competing messages and bloomberg intelligence does not think -- they think the chances of a rate cut this year are less likely. they also say that the slowdown in credit flow will be marginal and gradual. it's like tapping of the brakes. it is a complex picture as we look at this and investors trying to get their heads around this, particularly when they look at the middle of the year. angie: not surprisingly, the state of china's economy and the
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latest disappointing data has been tough to look at. despite poor numbers, blackrock remains optimistic. >> we would have to expect growth to slow, but i think as you look at the growth profile in china relative to the rest of the world, you still have growth rates well in excess of those in developed markets. if you couple that with the performance agenda, i still think you are in a position where you will find great numbers in the long-term. angie: china looking to shift to a consumer led the economy, but chief economists say it is not up to the challenge yet. >> it is not big enough and it is not growing fast enough, it is contaminated by the old china. and therefore, i think that they will have to go back and look at leverage. no matter what.
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they need to push. and that is a key in the breakdown that we have from this weekend, that retail sales, services will make it. consumption services are not big enough yet for the challenge. angie: and the pboc has confirmed that there is no change in their strategy. we talked to a greater china economist about the importance of this. >> the fiscal support has really been increased. and that is really what is behind civilization that we saw in march. we thought, we hopefully he later this year. it is good for them to come out and say, policy has not changed. but what is important for growth is fiscal and has additional benefits. it is more targeted it will alleviate the concern about
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overcapacity sectors. angie: and that is the word on china. we are checking on other stories. group, they are looking at another opposite -- acquisition, this time it is a logistics company had that company. withare looking at is catering company and hotels. up in singapore today. sharesting earnings, fell as much as 23%, the worst performing -- performance since 1974. the company says they will incur a loss of more than $80 million in the first quarter for warranties late to the -- linked to the moment deletion -- minute ovulation -- manipulation of
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data. and nintendo shares going up in tokyo after they said that they will be entering the film business. they are in talks with the companies-- several to make this a reality and then they will invest in the seattle mariners baseball team. they will make their own movies. like a movie with a happy ending, we will go back to the market with juliet. te. not so good with asian currencies today. juliette: yes. this movie will have to play out a bit longer. it is not a very good day for the malaysians. 1% against the dollar. and the korean want dropping -- won dropping. copper, ae also seen little bit higher in the trade,
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but it did have a significant fall and that was in response to the weekend and the data coming through on china. having a look at the market, we have a little bit more of a rebound. we went past the asian index, but every sector is going higher, even the energy, the oil and gas. turnaround ond -- the shanghai, it looks like investors have shrugged off the china data and we have very strong moves coming through in hong kong. worth noting, this is a weaker number coming through with disappointing sales in luxury retail. in malaysia, trading lower. also around southeast asia, looking strong. they are looking at the let's break for the nikke. and the plan on the sales tax and australia looking
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good really led by the health care years -- players. it has been a bit of a volatile start to the week. good to see that things are looking a little more positive. angie: thank you very coming up later -- thank you. coming up later, the latest hacking. a bank and despite disappointing data and weakening signs of ability -- of stability in china, we hear from analysts next.
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♪ angie: 12:14 p.m. in tokyo. headlines from around the world. criticizing land reclamation in the china sea, saying that they have hiked up a military threat. they are looking at the animal assessment that willfully
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distorts the chinese policy, adding that washington is too suspicious. this report handed to congress says that china is weaponize in islands in disputed waters and have control over an area without resorting to conflict. israeli soldiers clashed with protesters marking the day when people were driven from their lands in 1948. the creation of israel and the displacement of palestinians is known as the catastrophe. a march and bethlehem saw tear gas fire as troops tried to stop protesters from coming to a military checkpoint. and a match abandoned because of what is now described as a security training device. -- wereere capacity evacuated. outmb disposal team carried what was a lifelike explosive,
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but was not viable. it has been accidentally left by a private security company. and powered by 2400 journalists in 150 bureaus around the world, this is bloomberg news. angie: we will check back in on the markets. joins ust strategist in the studio, starting the day with really a downgrade of china . it looks like the entire region has come back from that sentiment, why? >> i think that china is stabilizing, the economic clock tells us this. excessess of access -- now, so we are looking from the bottom up. for is kind of the trash cash, which is one of your shows, which is what was said about the central bank, if you keep on stimulating and supporting these companies, you cannot really grow.
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the zombie companies keep on sucking the energy out of the little guys that want to grow, said this is a huge policy dilemma and i think that is where -- came out last week saying that he wants more structural reform. angie: it is ok? >> it is ok. the people that keep wanting to bash the economy, china is like the whipping boy of the markets, because it either is going to fast, or slowly, or not growing enough, it has too much credit, too little credit, it is like beating up on germany for having a surplus, i do not know the problem. angie: the problem is the turnaround and waiting for the turnaround, but also the retail sales figures, which is supposed to be about the new economy >>. as where the industrial production figures. what we are suggesting is the fall off that one has seen for
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some months, that is beginning to stabilize. we found a bottom and he goes into an l for a wild. the market is very impatient. they constantly want to see something fantastic happen and that is not how economies work. angie: where are you putting your dollars? >> we are putting them into the u.s., cyclicals are very good and will continue to do better because of the stronger retail sales and it will start to come through. the economic clock is telling us there is an excess supply. and it is beginning to diminish. angie: but not the money where your mouth is with china? >> not yet. the l will remain for some time, no point in getting into early. this stabilization has some way to go.
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maybe 3-6 months, so there is no hurry. looking at u.s., consumer staples, and the u.s. and japan, that is where the money will be. and it definitely the u.s. dollar. angie: the u.s. dollar has been perhapstability a floor for chinese stability, even. >> yes. our view is that the banks have been reading the dollar -- rigging the delicate what has been happening is that banks have been pushing the dollar down for some time, currencies down for some time, and they want to push the dollar back up again. before, it was short on the dollar because, how can you have negative interest rates and putting into a currency? at the end of the day, if you are not getting return on the currency, why be in it?
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it does not make sense. my view would be that there is plan that is going on that we are not reading about yet. angie: where are you calling the yen? >> we think it will continue to strengthen, which it has done since 1973. it is important to keep perspective. the foreign currencies tend to go down. you may recall in 1973, the yen was at 400 yen to the dollar. we feel like, we will not give you a number, but we feel that the yen will continue to strengthen, because now with no sales tax, that is very good news for the foreign policy in japan. angie: everybody is pointing at this as a form of intervention, will that happen? >> i think that the japanese,
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they do not want to keep on pouring money into the economy, because this is a cash for track, this is not helping anymore. the stimulus game we have done for the past two years is running its course. this is a beating massively. -- updating massively. angie: thank you. coming up, the bank of japan's years of efforts have failed. has the central bank gone off track with policies? looking at the chart, next.
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♪ angie: welcome back. now to a case of trying so hard to achieve so little. even after a record stimulus program, the bank of japan's inflation target remains elusive and far out of reach indicators -- and indicators suggest that they are running out of steam.
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we take a look at the bloomberg charts. heidi: this year has been about talking how the central bank has run out of steam. it is more apparent in the bank of japan. everything but the kitchen sink, these records to the point where at some point this year there was a question on whether they were running out of bonds to buy. the purchasing package, that was cut into negative rates. not a lot of it was sticking. on your bloomberg. it really shows how this 2% -- it is out of achievement. and white line, fresh food the consumption tax, it really was a big headwinds for achieving inflation in japan. the white line falling into deflationary territory in the
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first couple of months of the year. the bank of japan says, this is really the impact of falling energy prices, oil prices weighing down the inflation. that is kind of accurate. having said that, even stripping out the energy prices, there is still a flat level when it comes to inflation. just above 1%. it is still very far away from the 2% target. and what is worrying, if you look at this going back to the inflation rates, this tells us over the next 10 years the investors do not see much hope for rising prices in japan. intohis is really putting a greater context of what a lot of people have been saying, the bank of japan is going to do so much, but they need to get reforms going. angie: and the market not playing ball.
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happen --s is not they are trading at lower levels since it was extended in 2014. not a lot for stock growth. and the yen going in the wrong direction. a lot of this has been the weaker dollar story that is driving the safe haven demand for the japanese currency. certainly, this goes into my last chart mileages exports declining. -- my last chart, which is exports decline. we are also looking at bank lending slowing as well. for some time, we saw a surge in corporate yields, but that is starting to diverge. angie: thank you. we are looking forward to the afternoon's business in tokyo,
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where we see speculation that japan will be keeping its sales tax delayed. we will get the latest from the reopening, after the break. ♪
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angie: top stories, asian stocks have rebounded from a one-month low, japanese stocks rebound as well. withis despite week data the ppi and soft chinese figures on industrial production and retail sales. shares from shanghai, seoul and sydney have all turned around. in new york,an ipo and that may put the chinese ridesharing service ahead of uber and going public. apple put $1 billion in two didi, and that is $26 billion.
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alibaba is also an investor. tourism growth and $11 billion in stimulus have helped thailand's economy grow or than expected. from -- gdp 2% expanded more than 2%. analysts six back to -- there analysts expect weak demand. but in the latest on the markets. juliet is seeing global oil markets to it deficit sooner than goldman sachs had expected. juliette: they do have the crew to price higher. 1.4% in the asian session holding $46.85, the highest levels since november, holding onto x month highs. goldman has been surprised by the oil price.
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andan attacks in nigeria they sustained strong demands. goldman has up to the u.s. crude price for the second half of this year. that is out from $45 estimates back in march. this higher oil price has also helped out stocks in the region. we are seeing a more positive session. japan is back after a lunch break and adding to the morning session, gains up by 1.3%. we do have a weaker yen, but the potential that the planned sales tax increase has boosted sentiment as well. up.australia asx 200 we are seeing good gains from health care and also turnaround on the shanghai market. it is going on lunch break up 0.2% despite the disappointing data out of china. hong kong looking very strong.
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1.3%.ng seng index up a little bit of weight in the southeast asian markets, but generally we are seeing a solid session coming through for the first trading day of the week across asian markets. angie: we are getting a look at how the bank of japan's negative interest rate policy is affecting the country's biggest banks as they post results. we have heard from two of the three big ones, mizuho finance and mitsui. we have more, and it looks like a mixed say. >> look at the policy, not too different from financial. 11% for thet to year, $85 billion. it would be a four-year low, if it does fall to that, but that is still better than what analysts were predicting. they had been saying it would generally be at $5.3 billion net income.
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negative rates will have an impact of three under $68 bution on your earnings, $60 billion,6% to facing the own target. offset aings helped drop in lending income. , for the first time in nine years, they beat analyst estimates. to $6 billion. they missed targets, but that was because he was hit by an impairment loss on indonesian banks. there was also hit by rolling trading and interest income. looking ahead, it doesn't see a rebound for causing a rise in profits, $64 billion. exactdifficult to say the
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impact of this policy. according to the boj, they will wait until the end of the second quarter to see impact. a negative rate policy could in fact what it was aimed to do, get more into the system for the economy. you may actually see banks having an impact on earnings as well as growth. angie: mitsubishi uf j, any difference owner ? >> they are reported as one of the biggest lenders in the industry. they actually have results last month, they look like they had quite a bit of a division for loans to the u.s. energy companies. if that translates to the case in japan, then the nikkei is purporting it is falling, and the impact on energy companies can see an impact on the bank
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itself because those loans have soured in the time. there are reports that the mitsubishi ufj could disclose that to energy companies. angie: that would be a concern for a lot of banks, not just mitsubishi ufj. bangladesh says the interbank messaging system is primarily responsible for the cyber theft of more than $80 million with an account in new york. vietnam has been hacked. we have an analyst from singapore. does swift actually look, and why are they being targeted here? reporter: it is this huge chat room with thousands of banks being part of it. you pay for every message that you sent. every time there is international transaction, one bank has to or if i with another bank. -- verify with another bank. they send it through this
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supposedly safe system called swift. that not only for money remittances but also maybe i received an order for somebody to send $1 billion to the philippines, like bangladesh might have received. and you send a message and say, hey, is this right? but it is not that safe anymore. they are claiming the problem is not with them but with the end .ser being hacked once the system is hacked from whatever end it is, one of the key points of international banking is trust. without trust, how do you do banking, right? angie: yeah, i guess it is like a house and someone else got the key for the front door, but still they got in. how does that affect trust, how does that affect global banking? reporter: that is the thing.
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if all these millions of messages are sent every day, and they allow international transactions to happen, start being questioned, what do you do? just by way of understanding how big this is, in march, we had the biggest number of messages ever since among banks. these were in the billions. last year was a record year for them as well. international settlements showed we had a record year in terms of international payment transactions across various platforms, regardless of which clever is used. ultimately, swift is involved at some point. ,n that comes into question then the international banking could really come to a halt. it is kind of scary, really. angie: what about block chain owner why doesn't swift, what is it doing in his application of block chain technology? reporter: that is the thing.
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you pointed out very well, block chain does not -- it is independently verified. once you put it out there, the machine itself verifies the origin. it is much harder to hack is even possible, so that natural response and direction where this international banking transaction banking should go is block chain. so we have been dabbling with it, this inner drive which is the indicative of the block chain, integration. they have been slow in adopting it because they could threaten their business models. the truth is, as they lag behind, that hackers are catching up and jumping ahead. you heard two cases just in one month. cases will multiply very fast unless they adopt more modern technology like block chains for instance. angie: they got to do it and
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fast. thank you so much for that. live for us on the troubles on swift. let's check in on other stories. traditional chinese medicine sen has received a takeover. certain members of the family. they value the company at $185 million. several family shareholders have undertakingssible to accept the offer. they have been trading in singapore since may 10. dalton is considering the sale of a stake in finish gaming companies super cell. the company makes games for mobile phones and is packed with potential buyers based in china. they've value super cell at more than $1 million.
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honda shares are low as takata airbags continue to weigh on this spot of mind. this is $3.2 billion for the year ending in march, flipping the forecast 34%. on the will call, 70 formula the areas -- 74 million vehicles more. the ruby a charge for the program. and a way has opened up for zoom line to buy a cream maker. they have been in advanced talks for the merger with stimulus chroma size, but that was thrown out when zoom was -- zoom lien was thrown out. for is one of the key units $1 billion, paving the way for zoom lien to buy the rest of the company. and the ipo is affecting big-name investors. the aircraft lesser hopes to raise money for the june trading
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day. let's get all the details right reporterthe aerospace who joins us live from beijing. so what is the company plan its ipo now? reporter: i think it is a period of great growth for the company and they are gearing up. it is not very prudent for a company to really just depend on debt instruments to finance this. or make this ipo to help them do that. angie: how hot is the aircraft leasing as a factor here? reporter: right, i spoke to another aircraft leasing coo, and he told me china's going to be the single most important lifters in the
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next five years. that tells you everything you need to know about the air leasing market. a lot of people have jumped in looking to extend including a lot of companies. china is going to be addicted in the next 20 years to overtake the u.s. as the single most watched walk market -- watched market. to say it is hot would be an understatement. a lot of people point to money. it is interesting to see the cornerstone investors who are bested in this ipo for aviation includes billing. -- boeing. the belief of how this market will progress. angie: thank you. the skies over beijing and the rest of china getting crowded as excitement bruise about that phase. -- brews about that. allowing the yen to fall further. we have a group chat.
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12:44 11:44 hong kong, tokyo, and stories making headlines around the world. china says more fraud suspects have admitted trading -- cheating in a malaysia-based phone scam. 32 people are being held after being deported from malaysia last month. china is holding 45 taiwanese deported on the same charges. they have jurisdiction because the victims were mainlanders. taiwan is looking to retrieve stolen money. the incoming president of the philippines says aging must understand the friendly islands are philippine territories and china's presence is illegal. they are due to meet the chinese ambassador today and will not relent on territorial claims. they will rely on defense talks
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with the united states. he will urge lawmakers to reinstate execution by hanging in criminal cases. the world's biggest ocean liner making its maiden journey from france to the english port of southampton. they displace 120,000 miles of water and accommodate 8.5 thousand crew. it has been called a floating pools,th 23 swimming restaurants, and a park. it is also the most expensive cruise ship ever built, costing $1 billion. journalistsver 2400 in more than 150 news bureaus around the world, this is bloomberg news. [laughter] lun andme now are haidi
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an analyst from private capital. >> i don't like people enough to be with 8000 of my closest -- [laughter] angie: but a big majority of that is going to be chinese traveling because apparently they might not be coming into hong kong. they are still traveling. >> they love traveling and they are very open-minded. it is like japanese in the 1970's and americans in the 1950's. angie: is that a good sector to be in? >> it depends on where they are spending. i'm of the view the chinese will mainland chinese will continue money and spending abroad especially with luxury goods, and that is also a great import story for countries who are folding to buy shares of luxury goods, because they are less sensitive to the in demand. nationone money-laundering is another person's capital saving.
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>> trash. there we go again. sorry. so do you want to continue on china? some more warning signs. this is the way i read it. you call them deep throat, here is this anonymous i with a full-page article. you have to have some clout when you have front page, some clout to do this. no good.nge but the problem right now is the economy being propped up on a credit binge. the only april number that was good was property, home sales up. if you clampdown that credit base, you are going to clamp down a property, the pillars are crumbling. >> it looks very impossible, the impossibility of the young people to buy fax. always looking for middle ways with china, something pragmatic in the middle they don't completely withdraw credit, but they start putting
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in as much as they used to -- stop putting in as much as they used to. so there is excess demand coming to and from china not good for the market. l-shapedck to the stuff going on. there is no recovery, but stuff will keep coming down. they cannot turn off the credit valve because their only real motive of growth and housing will be lost. juliette: but this is unremarkable, the slow grinding, landing, softd landing. how much is it going to build? how much is the capacity continuing to eat away at growth? >> the longer they keep on pumping into much money, the longer the problem will last. it is like an alcoholic that says tomorrow i will stop drinking every day. that is the problem. taking the can down the world -- kicking the can down the road. so the problem to institute
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growth structural reforms to get things moving, and i believe there are pockets of growth. you have to view china as a roadie the session. shenzhen property prices are up 160%, doing very well. shanghainot doing -- doing very well, shenzhen going to l. slow growth continues, but the communist party wants to remain in power. so the key financial stability, keep unemployment, keep it going along, allow people to move where there are on it -- where there are employment opportunities. china is more vast than europe. >> no big bank is coming. haidi: more monitoring than japan, for example? >> like a mausoleum. >> japan can afford not to
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reform because its debt will continue imploding. it does not own -- it does not oh foreigners. that is ethically right. vat or whatever you want to collect, that was a good choice. i was in japan when they went from 3% to 5% and killed consumption. seppuku. i, i was amazed they had the creativity to even think of increasing the sales tax. say, when all this stuff was happening, it kills things off. angie: we have to kill a because we ran out of time. until the next time. >> thank you very much. angie: we have "bloomberg markets middle east coming up at the top of the show, top of the hour, rather.
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and manus is standing by. reporter: we have a cracker of a show. why oh why did moody downgrade this? we have the man who wrote the report, and that is radically important. , moody'sins us sovereign analyst. and what is driving it, what do they think of the uae? why is avenue dobby the backstop -- abu dhabi the backstop? ceo of toth a group equate -- of kuwait. how do you differentiate the region? there are big stocks reporting over the past couple of days. we got property updates from drake and skill. we will drum up some of those themes, and a wonderful story about the rush issue bonds. people will be in the market, bahrain will be in the market along with the emirates bank.
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this rush to issue, what does it mean for the markets, why are they going for gold right now? so we have a very packed show. it is moody's report will be the one really to focus on. back to you. angie: all right, we are going to stay tuned for that. , asiaahead on this show offers the poorest responses to finance. trash for cash. ♪
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angie: welcome back, you are watching "asia edge." cities in eastern indonesia produced 800 tons of rubbish every day, and it ends up any
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landfill site. but there is a plan to get were people access to financial people accessorer to financial services areas reporter: this may be the closest she gets to a financial institution. 200, but nowhave it is 66,000. reporter: some of the poorest people are saved and access to credit. the key currency is principal. it is literally trash. instead of throwing away rubbish and adding to landfill sites like this one, locals can take recyclable items, paper and bankging to trash collection points. it is weighed and given monetary value. customers can open accounts, making deposits of recycled rubbish, and restore funds like a regular bank. they can also borrow cash and pay back trash.
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so far no one has defaulted. economic point of view, this gets results. the project originated from the people. it is managed by the people and the rewards are for the people. reporter: most encounters are women, and they put a little 2000 rupee a week. they tied their families over well waiting for paychecks. crucially it helps support the whole scheme by buying the rubbish at set prices. that means stability for those bringing it in and a boost for the environment quite selling the garbage onto recycling. so a little mess ends up in landfill sites and trash can be turned into a cash and credit account. angie: what a great way to recycle and make it an incentive for the poor. .sing get more on the website
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if you are on learn, search for business 24/7 on bloomberg.com. that is it for us on this edition of "asia edge."
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♪ >> it is sales season, bond auctions lined up across the gulf just as moody's downgrades several sovereigns. >> the bank of turkey under army from owners. >> more signs of a slowdown in china, retail sales. as china's group of car -- uber

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