tv Trending Business Bloomberg June 1, 2016 9:00pm-10:01pm EDT
♪ it is thursday, the second of june. i am rishaad salamat. this is "trending business". ♪ we will be taking you to tokyo, sydney, and kuala lumpur. the strengthening yen weighing on exports, climbing the most in a month. a sales tax rise on the back burner. $50, talk ofnder the deal on capping production. iran says there is nothing in
that for them. demand for private planes has dried up and it has become cheaper to buy from abroad. you think ofhat our top stories. follow me on twitter at #ishaadtv, and use that trendingbusiness. what is the mood like? david: caution at the moment. since u.s. markets reopened, expect trading to be range bound up to the jobs report, which could change the game. japan leading declines at the moment. the biggest one-day drop for shares in tokyo in a month.
unsurprising given the strength in the japanese yen. south korea down a 10th of 1%. higher,ers revised 2.8%. some data out in the next 30 minutes or so. new zealand largely unchanged. just over 2200ng announce in the price of milk coulk. note, singapore with pmi data tonight, expecting 49.70. top optimists. remainthese indices to range bound. caution is the name of the game. have a look at currency.
this spells out risk appetite, dollar-yen, 109.32. we are down further. aussie is doing this, giving back gains. see how the pboc fixes that reference rate. dollar weakness overnight. if they set that weaker, expect people to start speculating. to a leavebe trying short-term pain in the economy. quickly, one group of stocks we're following closely, carmakers in japan. the top three here. announcing it halted production at three of its plants due to a shortage of parts because of an
explosion. let me get you the exact details. at threeroduction of its plants. we were expecting a drop for may, so more than expected for tour oh yada, falling 9.6%. , falling 9.6%. honda dropped 4.8%. of course come the big story is unchanged at the moment, oil prices. we will watch that closely. rishaad: it's the big story of the day. above $49 atrade barrel. opec says they will discuss an output cap in vienna. a deal would signify some unity in the group, but would not
affect production. it is oil minister says unlikely a deal will be struck at all. ideas is tor main have a country code. we can reach agreement for this matter. rishaad: let's get to aaron clark. he joins us now. a lot of mixed signals coming out before this meeting, as ever. yeah, exactly. opec will meet later today in vienna. surprising news developments is saudi arabia seems willing to consider several different proposals. the biggest one would be a production target. opec scratched production targets in december, but this seems like saudi arabia is willing to make amends and get
the group on the same page and make them relevant again. they have a new oil minister coming into the group, so maybe they are trying to get some unity with the potential proposal. we will have to see if everyone is on the same page at the meeting later today. there is distrust between saudi arabia and iran. withwill not play ball what ever saudi arabia comes up with, according to some people. >> right, that is the big question. you saw that earlier this year, members, and non-opec saudi arabia, russia, meeting in oha, and there was a potential deal to freeze production. a lot of countries fighting for that, especially smaller countries.
that has hurt countries like libya and venezuela as well. iran scuttled that deal. they did not want to agree to a production freeze. they are returning to the market after sanctions were lifted and are trying to get their oil production back to where it was prior to sanction several years betweenthere is a gap saudi arabia and iran, and we will have see if they can reach a compromise. for that.hanks a lot let's have a look at some other stories. rosalind: it looks like a slow down at goldman sachs. jobs have been cut in the investment banking division. workerslosses affecting in hong kong, london, and new york, said to come on top of it
annual cull of employees. it is trying to whether a slump in trading and deals. alibaba pay $74 a share to buy back to billion dollars of its own stock from softbank. it is embarking on an asset divestment plan. yesterday, it announced selling a $7.9 billion stake, reducing holdings to 28%. softbank will sell $400 million alibabas to the partnership, and 500 million dollars each to two investment firms. shares have dipped on news that australia's financial regulator will take court action over alleged manipulation.
the third accused of trying to manipulate the benchmark lending rates. australia financial -- a planeeaper to import that import one locally due to tax policies and china. the man for private jets has dried up because of a lack of incentives. demand for private jets has dried up because of a lack of incentives. rishaad: japan has been infamous for having the world's largest government that. -- debt. that does not seem to be the case anymore. is japan's debt load quietly easing? monetization, the
shuffle of public debt from private hands to the boj alters the picture a bit. these liabilities are still on the balance sheet. consumers are essentially off the hook, and there is a chance that debt could be written off or converted into perpetual zero interest bonds. it does not mean it has to be repaid. how effective is this? this white line, government debt continues to be trudging along, tries the size of gdp, but we are expecting more fiscal stimulus, which could mean the selling of more bonds. boj's debtu see the holding continuing to increase, up to 90% of government bonds are being bought by the central bank. in purple, public borrowing
falling as fast as anywhere. one estimate saying it could be dropping by as much as 15 percentage points of gdp each year. what is the endgame? it could be a suicide policy if you compare it to the u.s. that holdings have remain steady, but the boj has doubled down. the boj a concern that is playing an increased role in finance spending, and by undercutting the credibility of the government and the boj, authorities run the danger of sending borrowing costs soaring. impact japan's credit rating. this could rattle investor confidence and japan's sovereign rating could come under pressure. rishaad: still ahead, the asia talking toutive
rishaad: you are back with "trending business". gets ready to make its decision. investors are not that keen on chinese large caps. this comes on top of showing china focused etf's shorts are high. the chinaking at large cap etf, 50 of the largest companies in china by market value. million, flow of $833
the largest since march 2013. interest at the highest level in two years amid concerns that the chinese economy is facing slowing growth, mounting debt, and industries plagued by overcapacity. the latest numbers show stability, but not much of a substantial improvement. the factory gauge just scraping to avoid falling into contractionary territory. the u.s. had its worst month last month since august. devaluation seems to be fed. running the sai
down by 1.6%. seeingmeantime, we are activity ahead of that fed rate hike. msci says it will reveal its on june 14. it has been considering whether shares.de a it has deferred that twice. it has concerns about how accessible the market is. rishaad: china's windfall operators -- wind power operators have had a boost after
the government said it would set a minimal use. an idea of what this policy is really all about. >> china builds a lot of wind farms and solar projects, more than any country in the world. there is another china story happening this year. the economy is slowing down. it is not consuming all that electricity. much.too you have these wind farms and solar projects in remote regions and an economy slowing down, so a lot of power is being wasted. surely they can sell it to somebody else? >> we estimate almost $3 billion was wasted last year from this curtailment. of this policy is to guarantee a minimum amount of purchase for these operators. in the short-term, it will
benefit wind projects. rishaad: these are the companies likely to benefit? >> yes. they are getting a boost right now because they own the wind farms in china that could be impacted. this policy is being reviewed year on year, so there is a lot of and certainty over the long-term. rishaad: so what is next? there is toolly much power supply in the china coal., wind, solar, the amount of power generating is falling because the economy is slowing down, so the government needs a better policy to balance the amount in the system and build transmission lines to make sure the power gets into the places where people live and the factories are so they will get consumed. rishaad: thank you very much
indeed. stories making headlines around the world. challenge, grab form car-hailing tie up. grab gained access to 200 u.s. cities. lyft can call a car across 30 cities. billionked up a $3.5 backing from the saudi arabian sovereign wealth fund. it is the against investment to date, helping to delay the need to go public. todi arabia has been looking diversify its interest beyond oil. a french navy ship has the tech
and signals from the missing egyptair plane. the flight went down while flying from paris to cairo on may 19, all 66 people killed. the plane sent distress messages before disappearing off the radar, but no mayday from the pilot. some signals mentioned smoke in the cabin. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. i am yvonne man. asia, standard chartered regional ceo and which countries they are targeting. that is coming up on "trending business" next. ♪
banks face a global slowdown. standard chartered is also restructuring. it's southeast asia's ceo says it is still ready to expand in some countries. >> every market has potential. the terms of the retail business, commercial business, but if i were to try to grow every single market, that would not be real. in some cases, i would not have a business model that supports that. thanks in general have been downsizing and downsizing and downsizing. overnight, hsbc is downsizing further. inyou expect to do the same southeast asia or india? commitment toe a cost reduction and are on target.
we are on track to achieve what we said at the start of the year. having said that, most of our restructuring through people or businesses are largely embedded in the business now. we are also investing. digital,vesting in wealth, and systems. we have a cost challenge we must deliver on. at the same time, we are investing in markets and technology. perspective, we are reshaping the business in many ways. that is how we see ourselves. expectsn stanley nonperforming loans to increase in china. given the slow down in southeast asia, do expect the same? >> in all markets, we have made sure that what needs to be
recognize is nonperforming loans needing to be cut. our own sense is that while the environment is tough, it is pretty visible to us that what we will have is nominal growth rate led nonperforming loans. marketlike i said, the has not settled. the external environment is tough. standard chartered there, south asia's chief executive talking to bloomberg. other news, germany exploring ways to block a chinese takeover of a robot maker. early in sinking -- seeking other buyers. china's biggest maker of home sharence offered $128 per
, valuing it at more than $5 billion. u.s. regulators set to approve the biggest beer merger ever. they could clear the deal this month. restrictions will be placed on ownership of distributors. it would sell brands in the u.s. and europe. says u.s. chains are a possible target along with expansion in southeast asia. says it is hoping to increase overseas shops to 1000 by early next year. right, coming up, willing to spend, japanese consumer habits
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a look at our top stories, asia-pacific stocks on course for a second day of declines ahead of the opec meeting and a monthly u.s. jobs report. the decision to postpone april scheduled sales tax rise, and whether that decision will herald a turnaround for shares. oils trading at $49 a barrel. opec delegates discussing it cap today in vienna. a deal would signify unity, but
won't affect production. softbank, alibaba paying 74 dollars is share to buy back its own stock. it will be sending $400 million in shares to the alibaba partnership, and $500 million each to two state investment firms. news out of australia, retail sales on the way up, less than economists estimated. the way out, 1% from a year ago. aussie dollar trading around $.73. adjusted retail sales month on month up to 10 sub 1%. aussie --deficit, 1.6
billion aussie dollars, i should say. these are the figures coming through for april. by 1%.s on the way up we have the shanghai and hong kong open. we will get these graphics up. aussie dollar, we have been following that all morning. we are coming off a strong today rally. largely and change. no big surprise. of could make an argument medium risk profile to those numbers. i never than expected trade deficit. er than expected trade deficit. you have some of these big stocks pulling down the index. off two days a
fairly impressive growth numbers. you have the aussie 10-year bond yield a 2.26. we just did a survey two weeks back before the data came out. in the june,te 2.38%, so we are expecting yields to come up from the current levels. we will see how this changes the outlook for the rba given the data has been stronger. down,0, financials here in a be down for a sixth trading session. were looking at materials on the back of this tech line. let's split the charts and have a look at what is happening in chinese markets. 227 is your seven-day rate.
this has behaved itself for the most part. we had a story yesterday. we are entering june, which is seedn't we typically liquidity tighten up on the chinese mainland market great . the pboc strengthening the -- ng by the most since equity markets, shanghai and the other inch marks on the mainland down to the small caps index. marginal gains at the open. let me look at what is happening in hong kong.
really reflecting what is happening across the broader markets in asia. we are watching a chinese ipo. pop, $24 was the ipo price, searching by the daily limit there. not a bad day. , indeed, taking a look at japanese stocks on the way down after the prime minister spoke about a new stimulus package, but declined to offer details. to revive ailing slumbering economy, but there are signs that japanese consumers are breaking the pessimism gripping the country. is says the doom and gloom overdone then? there is a tendency to look at japan and think of it as an asian version of greece.
little that is a overdone. have a look at some of the big japanese companies exposed. ota's unit sales are up 22%. asahi a buying some of these beer units in europe. salesdomestic beverage are up 4.7%. down 8.7%,s unit is so there is a tendency to underestimate the japanese consumer. rishaad: what is there to like about this over although? though?all like you look at things
the msci consumer discretionary index, the japanese stocks are at a valuation of 11 times forward pe. ifre is an opportunity there you think there is some better prospects for japanese consumers. japan, thees in index hit a record high in september last year. as a lot ofweak people think there are some great opportunities there. absolutely. there is this constant underestimation taking place of what is going on in japan, and underestimation of the consumer to. what you think this is going on? i think one factor is there clearly is a demographic effect. the population is declining. that is a headwind for retail sales. there is also the fact that one of the effects of abenomics has been reducing the value of the
yen. make your japan sales look weaker because the yen is weaker. time, i think we should not overplay the pessimism. a shrugs been a bit of of the shoulders at yeerday's announcement, but look at the last sales tax rise in 2014. japan tracks the willingness of households to spend money on durable goods. that sales tax rise in 2014 delivered a bigger blow to consumer confidence on durable goods as the fukushima earthquake and the 2008 financial crisis. the fact that this has been put off is a significant event. when you consider the japanese household is up in savings on negative rates, i don't think you should downplay the possibly the japanese consumers will go out shopping again.
rishaad: great talking to you. we will check on some other stories. bhp and its brazilian parter presenting its case on the joint venture. the mine has been closed since november. it is the biggest local employer. the mayor is supporting the campaign to allow it to resume operation. free to seek new buyers for its mobile business after another deal was blocked by the eu. it won't be bound by an exclusive cause. it was to last until the end of this month. they are hoping to sell a minority stake in the british carrier. it was blocked by regulators on competition and pricing concerns in britain and italy. a filing saying the companies
expect to cut costs by $500 million a year within three years of merging. shareholders set to vote on the merger next. on world economic forum aussie on asean continues. we are keeping that theme going. airasia said it will do vest a leasing unit, but when. is joining us for the first time since becoming ceo four years ago. good to have you with us. the leasing unit, it has been said it will do vest at some
point. when? a lot ofe received offers an interest. we don't have a timeline right now. we are still evaluating and will let you know. >> does it make sense to sell it off? >> it has value itself, which would be fantastic in addition to what we have. i would imagine that at some point when we spin it off, the value created would be fantastic. there area says issues with operations in philippines and indonesia with issues. you said you will clean those up. what is that entail? >> we are trying to make it more efficient.
we want to make sure we have the most profitable, and the least profitable, we terminate them. when the dust settles and that is done and dusted, to what extent will that contribute to your profit? >> i think it will contribute quite significantly. >> what is significantly? we feel that huge potential and we are working towards that. >> it is a very competitive states. we saw a recent purchase of $11 billion of aircraft, 200 aircraft. do you see them eating into your market share? >> i don't think so. it is certainly another competition, but the region is
big enough to facilitate many low-cost carriers. at six and her million as a population base, a geographically conducive to air travel, and you have a middle income with the highest growth in the world, so i think there is room. we've built a network of more is a100 destinations, that barrier to entry for anybody who tries to compete with us, but i think competition is good. >> there has already been consolidation. we heard about the alliance of the eight carriers trying to , so theyith airasia are feeling the competition. >> the fact that they are field the pain that they have to find
different ways of collaborating, as a group, airasia is very strong. it is difficult for any airline to compete with us individually. even then, they would not be with what wete have established since 2002. >> thank you. we will leave it there. rishaad: thanks. , does thell ahead sales tax back down exposed the truth about the fragility of the economy? we will discuss that and more when "trending business" returns. ♪
and these are the stories making headlines around the world. as the wage growth government pushed ahead with its strategy of boosting incomes and consumption to cover reliance on heavy industry. increased 10.1% last year to nationalcording to the bureau of statistics. it does not cover the 190 million people who are self-employed or work at private inner prizes. north korea has sent a senior envoy to beijing amid a downturn in relations. ties have been strained since kim jong-un on to power. beijing has supported tougher sanctions. close off the to norse limited access to the financial system to prevent it from using banks to launder money. the former thailand prime minister has appeared in public
two years after being toppled in a bloodless coup. with banned from politics tylan facing in august referendum on a new constitution that would allow a nonelected prime minister and appointed senate and give unprecedented powers to the constitutional court. tohas been made illegal advocate for or against the new constitution. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. i am yvonne man. rishaad: joining us from sydney withlet's start things off australian data this morning, retail sales and trade numbers. they are showing the economy is firming up, i suppose. good morning. the gdp number yesterday was pretty good, driven by exports.
i think you saw the trade balance figure out now with concerns that we are getting and improving trade balance figure. gross national income, we are selling more for less, producing more and getting it out there, but ultimately earning less money for it. it is a bit of a mixed bag when we talk about the economy. overall, positive. not that bad, globally speaking. rishaad: we saw scott morrison the treasurer, the prime minister as well there, and they're giving hussein bolt a run for his money with how quickly they got to the microphone. .2 on retail sales, not enough to get them excited in front of the cameras.
overall, politically, the government will use whatever good news it can. it is holding its ground, but they are favored to get through. about the way the dollar is behaving? they must the comfortable with this level. >> definitely. at 76, heading towards 80, a month ago, that was a real concern for the reserve bank. if laois in figure gave them a reason to cut rates. is a rate cut expectation for august at the earliest. it mean fort does the reserve bank? they have a noninflationary environment basically. historically, the reserve tens to be moderate in their moves on interest rates, waiting
to see what is happening. much more byuenced the global context, but we are in a low inflationary environment. there is room for the rba to move. i think they will wait to see what happens, and impossibly go again in august. rishaad: china, the slowdown there affecting what happened in australia, the mining side a well-worn story, but is with his getting biggest trading partner? >> to an extent, yes. the political dialogue is all about ideology as it is about the reality of economics, so it is an adjusting time. they have benefited enormously
from the growth of china, and will continue to do so over the medium term. is china convincing is the big question. we saw some reasonable pmi numbers, but i'm not sure there is a lot of conviction about the chinese story. we have to keep an eye on what .appens in china we are not convinced that it is as strong as it would appear. would you stick around with us. we have lots of things to talk about. breaking news, moving off the back of these comments coming from a member of the bank of japan, talking about what is going on with inflation. the 2% inflation target there in japan. that, but heting
yen is strengthening on those comments? abe's comments were inevitable. finally announced they would delay the sales tax hike. more important is the push towards fiscal stimulus. that's not what they want to achieve. they want to see the yen depreciate to help the economy through the export market, so it is a bit of a mixed bag, but a swing towards fiscal policy is a trend we will see more globally rather than just japan. absolutely. we are hearing more and more about this day in and day out, art we? and the noise is getting louder? we have ecb tonight. we don't expect too much. they might just reprice their inflationary expectations, that
that's on the back of lower oil prices. fiscal labor is now needing to be pulled. rishaad: the central bank will have a sigh of relief, won't they? we have the brexit vote coming up. that is probably the biggest event risk, isn't it? >> i think so. i think it impacts the feds thinking. a june rate hike, not a favorite. an impact onit has their decision-making. be july as they are looking to see what happens out of europe. as it gets closer to the event, markets get skittish and people start putting on a few bets.
announcer: from our studios in new york city, this is "charlie rose." charlie: we begin this evening with politics and an open letter to state democrats, governor jerry brown of california endorsed hillary clinton for president ahead of this state primary. donald trump held a news conference to address his pledge donations to veterans groups. >> i have raised a tremendous amount of money, almost $6 billion and more money will come in, i believe, over the next little while. i have raised almost $6 million.