tv Trending Business Bloomberg May 29, 2016 8:00pm-10:01pm EDT
consumer sales in japan showing slight improvement. shinzo abe considering postponing the sales tax rise. 0% growth, this is a beat. >> this is a beat when you are flat numbers on month. ago, we saw an optimistic message on abenomics. g7, he was grim when it came to the global economy, and these retail sales not looking good. we are still in negative territory for on year figures. flat, month figures economist expecting a 6/10
of 1% drop. now slightly back on the downside. more evidence about possibly another stimulus, a postponement in the sales tax hike. haidi: is that the only option remaining? what's going to happen? more people joining in this conversation, and aide saying japan needs to hold off to sustain its recovery. we have no other options, he said. this is after we heard that warning coming out of the prime minister. this is signaling that he is going to be possibly pose putting this tax hike. i hate decline in
revenue that would threaten the goal of abenomics. since then, we have seen the economy seesaw between contraction and growth. is this going to lead to a general election? more likely it will trigger that. this could leading to the parliament being dissolved if it is delayed again. he is rejecting the finance dissolve calls to parliament. haidi: thank you.
keeping an eye on japan retail sales numbers. not great, not terrible. we did have an early indication of gains for tokyo. are they holding onto those gains? japan has opened higher, but let's look at the yen, which is weakening. is its weakest level in a month. still seeing it come under pressure, which is good news for japanese equities, starting this trading week quite strong. one of the best performers, up by over 3%. there have been reports from the 'skkei news that shinzo abe sales tax could be delayed until
2019, likely to give further support to japanese equities. we do have an interesting day ahead for seoul, korea. statements,ere for not just from the fed, but also korea's own interest rate policy. onheard from janet yellen friday that a hike could be appropriate soon. that gave a boost to u.s. equities. australia flat, as is new zealand. we have been watching the crude price rising in asian trade, so good support to energy players in our region today. session, for a ninth one of its longest losing streaks in quite some time, down .5%.
at this stage, looking like we are taking a positive lead from wall street. we have some breaking news crossing the bloomberg. has accepted the resignation of its ceo. it is set to make a separate announcement about secession plans in the hours to come. -- the chairman will continue in his role. they will name william randall rase as co-ceos. the stock this year alone down over 20% after being badly beaten down for the majority of last year as well.
the commodity trading firms has received downgrades by all three major ratings companies. the ceo of noble group has resigned and the resignation has been accepted. there will be a separate announcement about a succession plan. we will be getting you more on that story as the details become available. analysts concerned about the risk of it default chain reaction in china. let's get over to steve and start off the week with a china warning. is what was on the mind of a lot of bankers last week in beijing. potentialpoint to a banking crisis, point to these statistics. fitch warned last week that the nonperforming loans at thanks, outstanding bad performing
thes, could be about 22% by end of this year, quite sizable. are tiedhe bad loans up in wealth management products. wealth management products in china have mushroomed in the last couple of years, tripling in the last three years to 23.5 trillion yuan, that is 3.6 trillion u.s. dollars, the third the size of gdp. serves a purpose for individuals seeking higher returns. it is a key source of funding for banks. so what is happening is there are so few underlying good management wealth
products are co-investing in each other come on top of single if not shaky assets. as the economy and china weakens, those assets we can. sound familiar? this sounds familiar, does that? 2008 in wall street where mortgages pact on top of each other, then it eventually collapse. this is the big concern right now and china, that wealth management products are going to cause a domino effect in the china banking system. hasi: at least the yuan been holding steady. >> goldman sachs says the yuan had a sweet spot when the fed indicated it was positing, and stabilized against the dollar. it weaken against other trading partners, but stabilize against the dollar.
with the fed saying they will hike, the outflows could continue. if the outflows continue and confidence in the yuan continues, it will make it difficult for corporate's in china to pay off dollar-denominated debt, domino effect. haidi: thanks for that, steve. let's check in on some other stories making headlines. china's maker of high-speed money with raise private share sales. ccrc group buying half the placement. crrc was formed last year when beijing merged to state owned train makers. double oversee sales to $15 billion by the end of the decade. exchanges have introduced new rules to restrict trading halts an increase
chances of msci inclusion. theension shutdown half of stock markets during last year's five tree and dollars selloff. msci's that inclusion would depend on changes being implemented so this could not happen again. halts will be cap at three months. coal india missed profit as the men's oversupply and falling prices. income,lion net producing a record amount during the quarter. back on output and delivery. shares have fallen 15% this year. just recapping this story that is just crossing the bloomberg terminal, noble group has accepted the resignation of its ceo. noble group says it will be making a separate announcement about secession plans.
the company says they will be starting as sale process for noble america's energy assets. -basedgroup is singapore commodities trading house, very badly beaten down. is down 20% year to date, downgraded by all three credit ratings agency and hit by the slowdown in commodity prices. still to come, air asia's profit soaring as the carrier looks to spread its wings. we will speak to the ceo, up next. ♪
accused david cameron of breaking promises on immigration. speculation mounting about a leadership challenge after the referendum. boris johnson says david cameron must except that his 2015 election pledge has failed. the new fifa president described his salary as insulting. a leak from a recent meeting says he was offered $2 million a year. german media said he did not accept the proposal. the figure is less than $3 million paid to the last
president. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. air asia finished with its best gain in seven months, surging more than 13% on friday after net income jumped sixfold. the carrier plans to expand its fleet in china. is air asia founder and ceo. you have the tail wind from oil prices. you have a hedging plan for the rest of the year, but what happens after next year? oil is always a temporary painkiller or pain reliever. the oil price being where it is. we are hedged 70% and have
started hedging for next year up to 30%. ever the oil price will be, we are more than comfortable maintaining margins. air asia has been aggressive in cutting capacity to deal with fluctuations in demand. are you ready to expand? has the time come, i should say? yeah, we had a little good of foresight and cut capacity over the last two years. we have minimal capacity for the rest of this year, but our new aircraft comes in in august, and that has an extra succeeds. extra six seats. you are also making headway into the leasing part of the business. how much of value added do you see coming through from that segment? this is something many
analysts have not seen. we own all our own aircraft. we have a very aggressive and story income business. we have set up our own leasing company, asia aviation capital. we have already had an offer from someone to fight it. i think this is a powerful cash generator. there is tremendous value and cash in there. has the china slowdown story played out for you? been strength despite weakness in the currency and people spending less? are they going to these destinations that you cater to? >> in some ways, we are always the beneficiary of the slowdown. and we see up 30%,
no sign of slowdown. people take shorter trips when things slow down and go closer by, so were not seeing any slow down. we continue our expansion into china. we are filling quite bullish on china. on top of that, we believe that us,a is a huge growth for 90% of revenue comes from china. india is only 3%. we believe that india will be the next big growth for us. you have long wanted to consolidate the group into one single airline. how far are you are away from being able to do that? what does such a carrier look like? >> well, the dream is to be like a ryanair or easyjet with one corporate structure. forum, weeconomic
persuaded them to rename it. i think we will make some announcements at that. i've had good meetings with the prime minister's of thailand, indonesia, malaysia, and singapore, so i believe the potential for creating single ownership of airlines is not far away. it requires companies like ours to keep driving it, but i do see some light, and it is exciting times. haidi: do with this. after the break, joining us to continue the conversation on "first up". ♪
that is according to the daily inquirer this morning. they are expecting that deal which has been agreed to in principle worth over $1 billion. an agreement scheduled to be signed on monday morning. pldt german will hold a news conference on monday. pldt saying 50% sales of shares, loans,, one $.1 billion total for that deal. we will get you more details on that story as they emerge.
let's get back to our conversation with asia air founder and ceo. just a quick question about the leasing company. who was it that made the offer? say,m not at liberty to but it was interesting we had not gone to market and someone approached us on it. viable some very assets. haidi: what is the valuation and is an acquisition something that you would consider? >> i think we would. we've had joint ventures. we had an offer in the region of $1 billion, so we are not -- we are management putting in very good management and we have done our first release and have many many offers because our aircraft are
well-maintained. what sort of timeframe would you be thinking about in terms of selling it? easy -- something we have to discuss with the board. want to get all the organizational structure in place, and then we will look at the vesting some and see where we go. haidi: we have been looking at these charts against your peers, head and shoulders above the rest. a number of these peers have gotten to gather, aviation analyst saying that this is a concerted effort to squeeze air asia in this market. what is your response to that? we had never done on the alliance. we are very focused, core in terms of low cost. alliances cost money and add complexity.
i think it is good that people are trying to get together, see the belief and low cost. bit ofel it is a little an act of desperation from some airlines not doing so well, but good luck. we love innovation and competition. issuance the debt front, a $1 million bond at the start of the year, new share issuance. how is the debt management feature looking? very -- paying off short-term debt. there is a share issuance from us. it will raise about one billion ringgit. suchsaid, we have assets as the leasing company that if would pay out a big
dividend. haidi: there has been word about potential new routes, hawaii? is there a time frame? asia x.is air for air asia, we're focused on india and china. they have been showing tremendous growth. the interesting thing is travel has grown. we are connecting the dots at a lower margin. we have been investing of the last 15 years, and now we can connect the dots and add frequency. frequency is what adds to the bottom line and the margin. -- themoment, hawaii alliance we have had with air tremendously.wn
♪ get america's fastest internet. only from xfinity. it is a 30 a.m. in the morning and singapore, and overcast day, half an hour from the open of trading. you're watching "first up". asianp stories this hour, stocks under pressure despite growing confidence that global economy is ready for u.s. rate hike. the dollar rally continues to weaken the yen after janet yellen said it would be appropriate. retreat,pped a two day $49.50. japan's retail sector has considers shinzo abe
delaying next year's sales tax rise. figures do underscore continued weakness in japanese private consumption. consumption is a key part of abenomics. of noble group has quit the company. the company has accepted his resignation with code ceos succeeding him. ceos succeeding him. there have been questions talking the firm during the commodities crunch. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. japanese stocks closing in on highest levels and about a month as the yen weakens. that has boosted the outlook for
exporters. juliet has been watching the markets for us. what can we expect? of china'sall part market to get the a included in global benchmark indexes. the halt will be capped at three months for major assets are restructures, and one month for private placement. suggesting ares loss of a third of 1%. that would follow through most of the region what we are seeing in early trade apart from japan. the delay of the sales tax giving a good boost of japanese equities there. the nikkei up by .5%. we aret of the region,
not following that positive lead from wall street on friday. janet yellen indicating we could see another rate hike soon, saying it could be appropriate and would give quite a good boost to u.s. equities. the bestets have weekly gain since february, but we have not follow that, and i could be due to the fact that the u.s. and u.k. markets are closed on monday for memorial day. bullard, korea, james and the bank of korea's lee talking this morning, some downward pressure coming through from some of those export stocks in korea. haventinue to see the won its fx there. australia mining stocks weighing on the asx 200. on the londongher exchange on friday, but quite a bit of weakness coming through from those big mining players. the crude price giving support
to energy players. up by 4/10 of 1%, $49.53. have a look at the gold price, particularly in australia. 1%, itswn six tens of ninth session of losses. a long streak of losses for that safe haven gold. the japanese yen also coming under pressure, so investors seem to be putting money into more risky assets. .5%.ollar-yen down by that is now at its weakest level in a month, so getting a boost to japanese equities. haidi: recapping that earlier news that broke, change at the top of noble group. the ceo has quit. his resignation has been excepted. let's get over to singapore and
our southeast asian correspondent. noble never far from the headlines what is happening? development, the resignation of the ceo. no details have been given. it did say for now that there will be co-ceos. the chairman will continue in his role. noble says he moved the company profile andlight in a majorvotal role deal. it also said he has been instrumental in securing the recently announced refinancing in giving the group a stable base from which to develop. it has been tough for the company. interview, this is what he
had to say. take a listen. >> the markets are difficult. to sit here with confidence and say the worst is behind us is not realistic. our jobs are to come in every day, do her job, focus on the business, and deliver results. in the end, the market and our investors will judge us by those results. has been challenging. separately, the company says it will shortly be starting a sale process for noble america's energy solutions, saying the transaction will generate cash proceeds and profits. noble has had a turbulent rear. it is asia's largest commodity trader. protecteen forced to the integrity of its accounting from critics. stock fell sick he 5% last year, prompting its removal from the blue-chip index. noble has been trying to recover
in 2016 after posting its first annual loss in almost two decades. the company's credit rating has been cut by moody's, and fitch has it on negative watch. news, so much negative commodities crunch. does it look any better for noble group? >> the clarity isn't there. noble says it has successfully burnedloans, but it has through almost $500 million of cash and operations. investors are whirring about its difficulty generating cash sustainably. the company says supply is jittery about extending credit because they did not know whether or not that noble is able to refinance. keep a watch on noble shares when they start trading in singapore and about 30 minutes.
haidi: we will be watching that story and stock closely. let's get to another one of our top stories, reports from japan saying that prime minister propose of the sales tax hike. is this the only option left on the table for abe? like it is heading in that direction. it is not at a point where we can definitively say it will happen. areuspect that there opposition about the delay sohin the ruling ldp party,
abe will have to get the support before proceeding. there have been reports today that he could meet the head of this ruling coalition partner as early as today. once that meeting takes place, it will be more or less a formality. for that meeting to take place, he would need to make sure that his party members are all backing the decision to postpone it. leave usere does that in terms of other policy ammunition? what else can he do? there have been reports that he is looking to compile a supplementary budget to boost spending. the figure is said to be between 5 trillion and ¥10 trillion. this would help the economy, but -- doj, it how the
is too early to say. , it is too early to say. the general view is that if the hike in the sales tax were to be would not likely impact the expectations of where monetary policy would be going this year, although the expectations could change for 2017. that's when the tax hikes are scheduled to happen. we will be watching the outcome of that meeting closely. that is our tokyo bureau chief joining us there. toyer close choosing thanks for the purchase of monsanto. of the remainder will be raised in term loans. offer as toocted a
low. our sources said funding negotiations are continuing. zoomlion-terex talks in. jury subpoena in an antitrust probe, india's largest seeks documents and communications regarding the sale of generic drugs along with corporate and employee records. sun pharma says it is responding to the subpoena and is not expect any adverse outcome on results. fee incomes to offset lower returns due to negative interest , the policy could erase
the u.n. says more than 700 migrants are feared dead in the mediterranean shipwrecks over the past week with thousands of other saved by coast guard. the number appears to be the worst since april last year has spring weather encourages more people to attempt the crossing. at least 100 people are thought to have drowned when one boat capsized last wednesday. the incident was captured on camera by the italian navy. astronauts have successfully inflated a new room on the international space station. air was pumped into the module over three days, and the crew will wait a week to ensure it is airtight. the room will remain attached for two years. futureign could lead to habitats.
powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. a chinese billionaire has opened up his first theme park. tourism and entertainment of becoming huge and growing industries in china as people spend more on having fun. covering thebeen story for us. mckinsey has- tom been covering the story for us. what is the park like? hoping to attract 10 million visitors every year. spans two kilometers and includes one of the biggest aquariums and china, a cinema complex, retail, and the chairman gave a speech to up aslists and teed this
a battle royale between the western culture and chinese culture to take a listen to what he had to say over the weekend. chinese culture led the world for 2000 years, but for the last 300 years, because of the lack of development and the invasion of foreign ideas, we have lost confidence in our own heritage on foreignnd culture. the rivalrybed between shanghai disney and is park as a tiger being taken on pack ofk of wolves, the wolves being the 15 theme parks he plans to roll out across china. disneyks he can take on with cheaper pricing of tickets. at $30,ets come in versus $55 for shanghai disney.
versust $3.2 billion $5.5 billion, so he is pitching this as a battle he thinks he can win as he tries to carve out this growing part of the chinese economy. haidi: how important is this to china's economy and the rebalancing, if you will? it is always the a growing part and is helping to underpin this shift towards the consumer and services away from manufacturing. it's currently worth six and a 10 billion u.s. dollars. the government expects spending on tourism to triple by 2020, investment and tourism infrastructure is up considerably about 40% last year. you just need to go through some of the sectors that will benefit from this, airlines, cruises. the chinese government wants to expand high-speed rails to
30,000 kilometers in five years. airline passengers are up last year, almost 45%. cruise liners and cruise ships are benefiting. disney wasshanghai met by him. haidi: huge stakes indeed. one of the most famous and recognizable film stars in the asiansays not enough actors when roles in hollywood. must worksian actors harder to generate audience appeal and ticket sales. remember 16 years ago when a crouching tiger, hidden dragon came out. said you should do it in english because no one will go
see the movie because they can't watch the movie and read subtitles. >> the sequel was made in english? >> but for different reasons. if you keep giving the audience what they want, you'll be stuck with the same movies over and over again. also a responsibility on our part, but you also have to treated it like a business. we can't keep making movies that nobody goes to the cinemas to watch. >> do you think that china will relax some of the censorship issues. ? the list is long. playground,are in a you have two play by the rules of the playground. to play here, then
at the moment, they are relaxing a lot, but they are very clear. i have made many movies here before. if they find something disagreeable, they will tell you why and how you can rectify it. if that is the case, it is not hard. >> the issue of the bamboo ceiling has come up again in hollywood. you never had any asians nominated. what i find offensive is racist jokes. is it offensive that scarlett johansson is playing a japanese cyborg? occasion,u are could you should play all the caucasian roles. otherwise, if i can only play malaysian roles, i wouldn't be in the industry at all. i would not like it scarlett
johansson was to play aung san suu kyi. actress, but she's not of the asian origin. >> how do you want to see a change? rottenearly days, tomatoes said you were the --atest action hero or in action heroin of all time. he used to do your own stunts. used to do your on stunts. said you talk about road safety, but look at what you do in your movies. >> somebody said you're doing a kind of harry potter-like film. >> yes, called the east sea odyssey. this is my first chinese film and a long time. -- kicking inny
haidi: welcome to the stock exchange. first trading day of the week. >> i thought the stock would go higher. it is buying back 3.8 million shares for ¥10 billion. tubesufactures electronic , semiconductors, image processors, and is buying back about ¥10 billion. maybe it is range bound ahead of the fed. >> i'm looking at a korean auto-parts maker. there were reports that it might , a $.41 stakeker
owned by nissan. it has fallen to percent -- 2% today. interest than last week. there was speculation that three,t in the model they could start to supply parts for that. everyone is a winner when david is not playing. that is the verdict from the stock exchange. that is it for "first up" today. what is up next? it is the start of the trading day across greater china markets.
janet yellen had a huge market moving impact. how long that lasts for equities. hong kong traders up in arms, fees on the way out. we are looking at the reaction and what they are doing to become more efficient as their fees go up higher than their peers in the rest of the world. guests allpecial under the age of 17. the winners of the young entrepreneur prize. what does it take to become a young entrepreneur?
weakness and private consumption, increasing the the prime that minister will postpone the sales tax rise. , down again, down a ninth session, the longest streak in more than a year. the fed hinting a rate crisis on the way. janet won't name the date just yet. let us know what you think. follow me on twitter @rishaadtv, and include #trendingbusiness. china markets underway in 30 minutes. positivity in new york and europe as well. strong leade that coming through from global markets friday as janet yellen indicated a rate hike is imminent. there is a 30% chance on the bloomberg for a june rate hike. 50-50 for july.
we are seeing gains from taiwan and japan. reportser yen, but also that the planned sales tax may be delayed until 2019. retail sales flat in april. we are seeing a boost from the 6/10 of 1%,y boosting the overall regional index. elsewhere, weakness, singapore down, malaysia off, and korea is of underperformer, down 6/10 1% ahead of the open in china and hong kong. there has been a pullback from some of the mining players in australia weighing on the asx players,ically gold down for a ninth session, the longest losing streak since march 2015. pretty flat in new zealand.
yen, in focus as strength coming through in japanese equities, now at its lowest level in a month. singapore listed noble making headlines with the resignation of its chief executive. what happened? citedtatement from noble that it was time to move on. he was in his position for four years. trading down by 1.6% this morning. co-ceos.e replaced by the founder will continue in his role as chairman of the company. in a statement this morning, role,acknowledged his saying he helped to guide noble
through a challenging time. that he played a pivotal role in the sale of noble agri to a group led by cosco. had beenaid he instrumental in securing the recently announced refinancing. this is crucial in giving noble a stable base from which to develop, but having said all of that, it has been tough for the company. in an interview with me, he had this to say. >> the markets are difficult. to sit here with confidence and say the worst is behind us is not realistic. our jobs are to come in every day, do our job, focus on the business, deliver results, and the market will judge us and our investors will judge us by those results. >> realistic in his assessment there. and a separate note, noble said it will sell the assets for its
american energy unit. noble has had a turbulent year. this is asia's largest commodities trader. it reported its first annual ,oss in almost two decades defend its accounting practices. that leded criticism to a massive selloff of its shares. ,t is down 65% in 2015 alone prompting his removal from singapore's blue chip straight times index. noble has since been trying to recover, the credit rating cut by moody's and fitch. noble this morning trading down by 1.5% this morning. rishaad: we will get more detail emerging out of this. thank you a lot for that. japanese retail sales growth stalling, adding to the case to delay that sales tax increase penciled in for next year.
he also proposed a new stimulus package to give the economy a shot in the arm. flat growth, but not as bad as expected? >> flat growth is considered a beat. sales unchanged in april from the previous month. that is better than the estimate of 0.6% drop. more downside for the on your figures, sales fell 0.8%, better than forecast. that's after figures in march were revised slightly upward. told leaders last week that there was significant risk to the economy. that warning did fall on some deaf ears, but it has fueled abe willon that announce a delay in the levy hike to boost consumption.
the economy has seesawed between growth and contraction, and an they have no options in order to sustain the recovery. reports say the government may hold off until 2019. the move is likely to trigger a general election. they say parliament may have to be dissolved at the sales tax hike is delayed again. unveil also be ready to eight new stimulus package. expect more turbulence until that summer election. rishaad: thank you indeed for that. enterprisete-owned looking to raise money. we have that story and others covering for you today. crrc are onlike track for a share sale. ofy have approved the sale
1.3 9 billion yen a shares. that is a 4.8% discount to the last close. plan toing stakeholders buy six and a 92 million shares, about 50%. the chinese government merged to form or train makers last year. is one of the industries highlighted as part of the nations push to become an industrial nation. companyippines biggest san miguel has agreed to sell its telecom business. the deal is worth $1.5 billion. the buyers each take a 50% stake. they say the deal will allow it to speed up network construction. some radio frequencies will be returned to the government, and
that will allow a third competitor to enter the market. european truck makers are reported to be facing the biggest fine in eu history. the companies are reportedly charged with fixing prices and colluding to delay new emissions control equipment. looking into the activities of the six dominant truck makers from 1997-2011. the fine could be more than what was imposed in 2012. cartels face fines of as much as , whichof global revenue means payments could add up to $11.9 billion. rishaad: coming up later, our first look at china's homegrown answer to disney shanghai. next, j.p. morgan asset managers outlook for asian-pacific markets. ♪
yellen throwing her weight behind the interests of hated rate hike saying it would be "appropriate" in the foreseeable future. she still declined to name the day. we are having a look at how investors digested that. let's take a look at the bloomberg dollars spot, strengthening against all major peers. that when janet yellen made her comments, a spike right up there on friday. she said there was weak growth in the u.s. and relatively weak at the end of last year, but does appear to be picking up. then it isnues,
appropriately for the fed to increase rates over time. see on friday after those comments, the dollar spiked to around the levels where it was on march 25. she had not been expected to comment on policy, and the event was a conversation, so the comments did not come in the form of a speech. let's take a look at what the effect has been on gold. prices, people starting to pile out again. you can see that prices have accelerated the decline in may. ratesospect of higher also making gold less appealing.
york last2.9% in new week. investors were starting to exit janet yellenore yen i spoke. improving growth in the u.s. is adding to the reasons why investors made not be looking so hard for safety. u.s. gdp and the first quarter rose faster than the government had anticipated. janet yellen will speak on june 6 after the monthly u.s. payroll reports on friday, and she may or may not give away more than about possible june rate hike. that's what everyone wants to know. if the rates are increased, it will only be the second time in seven years. look at let's have a
the state of the market. global market strategist at j.p. morgan joins us from melbourne. great to see you. janet ellen, they were hanging on every word from her. what was your take on it all? case of an ongoing stream of data from the u.s. that is improving. we've heard a lot from fed officials on the need to raise rates. janet yellen did cement and did not do anything to resend the idea that rates would go up. next month, july, or later in the year, it's all down to how the data performs. we get nonfarm payrolls in the labor report this week. anything over 160 would be enough to say the economy is improving. the fed would rather see better data come through before they do hike rates.
maybe they don't do it in june. that is because they don't want to be pushed into a position where the data gets worse and suddenly the market is backtracking. internationally, it's becoming more important. we have several event risks in june, not least brexit, the spanish election as well. the international factors, more and more in the fed minutes now. they could be concerned about brexit, what it means to the markets more than anything else. the case forlike the u.k. to remain is stronger than to leave. with europe, there's always going to be some sort of political overlay that factors in. they can't always take that into consideration. they should be concerned with what is happening to the domestic economy and how that is affecting markets.
notbriggs a decision might be enough to delay them, but how markets are performing around that. rishaad: let's look at what's in japan. it's looking more likely the sales tax hike will be put on the back corner -- burner, and that something from a welcome by the markets. it was pretty clear rhetoric coming out of the g7 last week there would beat a case to delay that tax rate hike, further easing from the bank of japan. he set the scene for an economy that is not going in the way they hoped. we question whether more easing by the bank of japan would be a strong positive for the market, compared to other central banks, japan is at the end up with the rope in terms of what they can do. any changes from here could have a potential negative market impact.
problems with the japan have not been addressed yet. we look at the rigidity in the labor market, the proms with the demographic will file that have not been addressed, and a needs to be a plan with how they will get their economy growing. any conversations around quantitative easing will not have what the government needs to get inflation back up to its target. that fundamentally takes longer than just a couple of years. sales thistail morning showing flatness. at least they were not declining further. >> yeah, there are two ways to look at japan. you can look at it from the macro perspective and say abenomics has not gained the traction. from the bottom-up up, you would argue the market is cheap, the stronger yen is hurting corporate earnings, but there are some earnings revisions moving into positive territory,
therefore we are a bit more neutral in terms of how we view the japanese market right now, which is relatively cheaply priced compared to other developed markets around the world. rishaad: what about where you are, the central bank of australia, inflation pretty much flat, or should i say lower than anticipated. what is the thinking there? do they cut sooner rather than later? the central bank is always howied about inflation and fast prices are coming down, whether that gets indicted in wage and inflation expectations, and how that effects the economy. ratesa is likely to cut again this year and the second half of the year, potentially one or two rate cuts this year. there is a stronger view from
the banks on that. had private capital expenditure numbers last week which were below expectations. gdp figures this week which will likely show the economy did ok in the quarter, positive sentiment from household consumption, and trade was a boost, but without business investment, we wonder how long that can continue. rishaad: great talking to you. have a good one. coming up, efforts to improve road safety and china, where more people are killed in road accidents than anywhere else in the world. "trending business". ♪
conservative party over brexit. david cameron has been accused of breaking promises on immigration. relations between iran and saudi arabia have worsened with toronto announcing it will boycott the hajj this year. tehran announcing he will boycott the hajj this year. a president described his salary as "insulting." offered $2 million a year. german media said he did not accept the proposal, saying he found it an insult. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. we're looking at what's happening with china.
it is the world's biggest car market and has a woeful safety record. more people die on chinese roads than anywhere else. awareness of basic road safety is, well, a big factor here. >> because so much of china is covered by cctv, we see fatalities,those 260,000 a year, eight times more than the next biggest car market, the united states. there are almost 50,000 additional cars every day on the road, and many of the people have never been driving a car. it is an issue close to the heart of one actress. she is using her celebrity to educate. an emphasis on safety, lags the need. >> you need to implement, and
act, and fine and thin allies. -- penalize. all it takes is a couple of seconds and lives are dramatically and tragically change. i don't care if i sound like i am nagging, but if that is what it takes, that is what we would do. >> this is a common sight. a young man on a scooter driving the wrong way. cars rarely give way to pedestrians, who also make terrible choices themselves. enforcement of law is rare. there are many of these tree lined boulevards. lanes.e is at least nine have put upties barriers to prevent people from doing exactly what i just did. ago, i was years
driving here and i saw with my own eyes a girl get hit by a car and killed in this exact spot. the most important part is people's behavior. schools has in begun, but there is a long road ahead to change bad habits, especially with car seats. >> the parents believe that it is safer to carry the child. father did not start buckling up his daughter and she was three years old. even now, not all the time. >> most of the time we use the car seat, but when the distance is short, we are more relaxed. >> sometimes it is the kids who are easier to convince. seatlike sitting in my car because it helps to protect me. i like the color of the seat. >> saving one child after all is progress. rishaad: another special report
our top a look at stories, japanese shares driving gains in asia on confidence the global economy is ready for a u.s. rate hike. said a rate rise would be appropriate in the coming months. gold on its longest losing streak, but crude snapping a two-day retreat. the retail sector in japan stalled. minister considering delaying next year sales tax until 2019. sales unchanged in april from the previous month, and fell a
10th of 1% on the year. the figures underscore continued weakness in private consumption. group's ceo has quit. -ceos will replace them. shares down 60% in the last year. straight to the start of the trading day in hong kong. shanghai also entering this week's fray, and shanghai is in the red at the moment. >> it certainly is. opening lower by 4/10 of 1% on the a sharemarket. philippines coming online flat. japan has been trying to lift the region higher. of 1%e a gain of six tens in the early session on the nikkei 225.
further reports that the plan to sales tax could be delayed until 2019. also, a weaker yen helping out stocks in japan. the rest of the region has been selling off today. korea down five tens of 1%. australia off by .25%. this is despite the rally from u.s. equities on friday. janet yellen indicating the likelihood of a rate hike, saying it would be appropriate soon. a 30% chance we could see one in june. a look at some of the movers in the region, noble group all morning, down by 3% at the moment on news of the change at the top. well in tokyo, up over 3%. the price target was raised by 18% thanks to a dividend boost from the automaker. stockresources, one gold
we are watching today, down by 5%. we continue to see people coming -- money coming out of the commodity of golda, down for a ninth straight session, the longest losing streak since march last year. the pboc has weakened the yuan to the lowest level since 2011, weakened by .45% against the dollar. looking at the offshore renminbi , down by 2/10 of 1%. rishaad: we are seeing more warning signs that the chinese banking system has mushroomed to a third of the value of the gdp. other onesting in each what were shaky assets in the first place, we are having a look at what's going on. it's becoming like a house of cards. >> you know what happened in 2008.
the layering of mortgages on top of each other, basically shaky assets at the bottom. there are some drawing comparisons. these are not mortgages. these are wealth management products that are pulling poividual investments -- oling individual investments. the industry has tripled to $3.6 trillion in the last year. three 7.1 trillion yuan years ago. most of these wealth management products take individual deposits and invest them into corporate lawns, stocks, derivatives, but because of the slowing economy and because ,here are so many shaky assets they are starting to cross invest in each other and layering on top of each other, and then it is a domino affect if things start collapsing. people: even a year ago,
were complaining about these wealth management products and saying there is not enough transparency. >> in 2008 in the u.s., the mortgages, they did do the research and could see how fragile it was. rishaad: some people dead. >> right -- rishaad: some people did. >> right. these are not transparent, so that is a huge problem and liability. , keep management products in mind who is vulnerable here. these banks, not just the big state owned banks, they rely on these deposits. goldman?tell me about >> this is another thing that could spur more defaults. goldman sachs first of all says the dollar was
in a sweet spot the fed had more dovish comments. slow down and things were hunky-dory according to goldman. to hike feds starting rates possibly, they see the sweet spot ending. that could spur again another round of outflows, a weakening of the yuan, making corporate's payhina more difficult to dollar debt, and neck and spark more defaults. unhappy news today. rishaad: array of sunshine on this monday morning. thanks a lot for that. let's look at at the stocks in hong kong. they are calling for a review of trading fees, pointing to these high charges which they claim are eating into profits. what exec to are they complaining about here? >> they are called minimum charge. rishaad: which is high?
yeah, two dollars is not really high, but because modern day training since lots of orders to the exchange and small transactions, and when you pay this fee, costs x late. -- escalate. every time you incur these minimum fees. rishaad: it complicates life or brokers and traders, and that escalates the cost as well. >> because basically when you have a client. i charge them commissions. commissions are going down in the competitive world, but costs are higher. some brokers hardly make any money. rishaad: how does this compare to other stock markets and exchanges.
? do they need to review their cost structures? >> the current minimum fee exists since 1993, so trading in the way people how execute has moved miles. rishaad: it is cheaper? >> it is cheaper in theory. that's why people send smaller orders. every time you send small orders, you hit the minimum fee. hong kong is unique. compared to other exchanges, it's the only exchange charging a minimum fee on execution. rishaad: thank you very much indeed. a quick check on some other stories we are covering. , they'vetock exchange introduced new rules to restrict
trading halts designed to -- suspensionss shutting down half the stock market last year during the $5 trillion selloff. msci's inclusion would be dependent on changes implemented. halts will be kept at three months for big asset restructuring. arranging funding for acquisition of monsanto. they will probably raise more than $40 billion in finance, and most of the remainder in term loans. rejected an initial $62 billion offer as too low. funding negotiations are ongoing. talks.crane maker ending the company says it disagrees with the offer price. the decision clears the way for a rival, which had offered to
buy the unit for 1.3 and dollars , the finnish company said it will go ahead with the deal as planned. surging by more than 13%. net income jumping sixfold. talkednder and group ceo and'sively with bloomberg of the carriage has benefited from the oil price plunged and is already hedging for 2017. oil is always a temporary pain reliever. we have to make money at what ever oil price is, but we have sailed the wind. we are hedged at 70%. we have already started hedging next year up to 30%. -- we hit0 ringgit mark, so we areit
comfortable with margins. >> are you saying now you are ready to expand. has the time come? we had a little bit of foresight and cut capacity over the last two years. we have minimal capacity for the rest of this year. in inr new aircraft comes august, and that has a next her six seats, so some capacity growth there. next year, we look to add a few more planes, maybe a-nine planes, and that will get us to a steady-state again. headway intoking the leasing part of the business. how much value added you see coming through from that segment? this is something many analysts have not seen. i have always said we have tremendous asset value because we own all our aircraft. we have a passenger service, and aggressive ancillary business,
and we have now a private equity business. we have set up our own leasing company and have already had an offer to buy it. this is a very powerful cash generator that it some point we will invest in this asset, so there is tremendous value and cash accretion there. >> how does the china slowdown story play out for you? there has been strength despite weakness in the currency, people spending less come are they going to these destinations that you cater to? in some ways, we are always a beneficiary of slowdown. chinese traffic was up 37%. we see no sign of that slow down. tripspeople take shorter and go closer by, but were not seeing any slowdown. we continue our expansion into china.
past week, the worst number since april of last year. calm spring weather encourage more people to attempt to cross from north africa to europe. 100 people drowned last wednesday, the incident captured on camera by the italian navy. nasa has successfully inflated a new room on the international space station. week beforel wait a entering to ensure that it is airtight. the experimental room will remain attached for two years, designed to lead to future habitats for future after knots or mars explorers. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. right, let's tell you about the story five minutes ago, china facing looming threats of a default chain reaction.
wealth management products are investing in each other, now were 35% of gdp. let's discuss all of this. thank you for coming in. let's talk about it. explain the problem first of all. it has these at of what happened in 2008. whatat's precisely research is arguing. china is basically facing another mortgage crisis similar to what we had in the united states. i don't agree with her on this point. rishaad: why? you had alls., these bankers slicing and dicing totgages and selling them each other, creating is multi-trillion dollar investment portfolio. china, the investment products are only 10% to 50% of the total that the banks are investing in each other. the fundamental problem are the
underlying investments. i think a lot of it is fueling the property bubble. rishaad: you are just coming at it from a different angle. there is a crisis in china. a lot of people have been saying that for years. whether it will because by banks playing games or excessive investment in zombie properties and companies. i think it is the second one. rishaad: there are these remarkable echoes in the lack of transparency. it's not even possible to have a look at some of these wealth management products. >> that's right. there is a complete lack of transparency. also in other parts of the banking system. 12y went from 6 trillion to trillion renminbi.
we don't know where they are investing with the wealth management products investment between banks are dangerous. where they are going in the fundamental economy is dangerous. then there are investment products that are a wildcard. rishaad: and we have encouragement by the regulator to look at their debt. ceo of one ofhe the biggest bank saying why would i swapped bad debt for bat equities. >> i'm proud of the banks for saying that they don't want to do these deals. the stake council is sitting there in the pboc is sitting there, and they don't have any money. the only place with money are the central banks. naturally they will turn to the guys with the cash. in this case, they are turning to the banks and telling them to do local bond for debt swap, 5 trillion this year. you have another debt for equity for zombie companies. rishaad: where does that leave us? that itene is arguing
will be like the meltdown of the banks with each other. i think the property bubble will collapse and people will start pulling their money out and you will have a lot of on defaults. at that point, the government will be scrambling to give money to those they want to save and let others default. rishaad: will they let that happen? >> they have to at some point. now you are finding gdp is getting slower and slower, arising potential for defaults. they don't have enough cash to support the system. rishaad: this goes to another point of the research you have been doing, contracting the circle of capital. tell me about this. when you look at japan, the ministry of finance try to save all the banks. 10 years later, they are only saving a couple in tokyo. we will see the same thing in china. we have to save for the state-owned banks and some of the big, powerful ones, but
others will just have to fail. money inhave enough the system to recapitalize everybody. rishaad: what you think will be the outcome to all this? there are a lot of people out there who come out with these gloomy reports about what will happen in china, but it never really comes to pass. just to be saying that china is on this treadmill of debt. five years ago, all the banks in hong kong were saying gdp growth in china, 12 percent to 20% by the end of the decade. sub 7%.ow we will probably be below 4%. you will have a rapid decline, and you may even get to negative growth at some point.
you will have a significant downturn in property values. there will be a lot of pain felt by those who are unemployed with flats they can't afford. fact, there is a doubling in the number of demonstrations going on, so we are already seeing some of that. rishaad: great to talk to. coming up, the theme park wars are growing in china, one versus disney with billions at stake. ♪ versus disney with billions at stake. ♪
looking into all of this. what is the park like? have the firepower to take on disney? says so.chairman he relishes competition. his company up from a real estate giant, now chains, filmema studios, and now theme parks. been using some pretty colorful language in his rivalry with disney. seeing this up as a conversation between chinese and western culture. take a listen to what he had to say at the opening. chinese culture led the world for 2000 years. becauselast 300 years, of a lack of development and the invasion of foreign ideas, we have lost confidence in our own heritage and have depended on foreign culture.
wanda city spans two kilometers. it includes everything you would expect at a theme park. he does not understand why shanghai disney had to spend so much on their theme park. he spent around $3.2 billion. $5.5y spent around fou billion. he is planning to expand rapidly across china. this is the first of 15 that he has plans for. has toldhe man who this the to get off his church -- turf. this is an important space in the economy, isn't it? travel and tourism is taking on
more and more importance, isn't it? it is increasingly underpinning the shift from manufacturing to consumption. we know from surveys that spending per person, people are expecting to spend up to 10% more every year. the tourism industry is worth six under $10 billion. the government expects spending and tourism to triple by 2020. last year, investments and tourism infrastructure increased and it employs a lot of people, 28 million people. there are different sectors benefiting from this. growingines are quickly, domestic passenger numbers are growing at a high rate, around 830 million last year. rail and cruise liners increasing. built, ands being
gold is declining for its longest losing streak in more than a year. janet yellen is not naming a date. follow me on twitter. my handle is @rishaad. let's tell you about what is going on. it has been a mixed bag. despite the rally we saw on wall let's have a look at the board. juliette: we are seeing some good gains from japan, and hong kong has turned positive by .1$. -- .1%. we are seeing weakness on the regional