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tv   First Up With Angie Lau  Bloomberg  June 5, 2016 7:00pm-9:01pm EDT

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♪ transparency, the u.s. says china has made progress, but more can be done. sailing into storming waters, beijing repeats his claim to the south china sea. the philippines steps up cyber security, targeting money launderers and digital criminals. welcome to "first up". i am angie lau in hong kong, stringing on mobile and bloomberg.com.
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retreated on friday from the seven-month high after data showed that u.s. hiring fell to the lowest in him a six years in may. the dow jones industrial and nasdaq also fell. we are counting down to the open in australia and japan. futures in australia looking like this, a slightly higher open. economists are expecting the rba to keep interest rates at 1.75%. , whereet over to japan the latest gdp numbers come out on wednesday. futures trading in chicago pointing to a lower open. 6.72, it is pretty strong against the u.s. dollar ahead of brexit. .wo markets to tell you about u.s. treasury secretary jack lew
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says china is moving in the right direction on the yuan, but needs to improve its monetary policy communication. he spoke to bloomberg in beijing where talks are due to start later today. tom mackenzie is there for us. what exactly did jack lew say? good morning. the u.s. and chinese side will be meeting in a few hours on the outskirts of beijing. it was a wide ranging interview with jacob lew. we talked about the currency issues, market access for u.s. companies coming into china, the reform agenda as well and communication. we delved into a lot of these issues. reform agenda was top four jacob lew in his concerns. one of the top issues they will be racing with their chinese counterparts, overcapacity.
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we know about overcapacity in ,ndustries like steel, imports terrorists have been slapped on those by the u.s. clue fromto get a their chinese counterparts as to whether or not the reform agenda is still on track. to talk abouted clearer communication, something they need to see more of from the pboc after that surprised appreciation in the renminbi last year. thesk jacob lew about renminbi and the role played when it comes to china's exchange rate. take a listen. this is one area where he thinks he has seen positive movement in the last few months and years. take a listen. thee need to make sure that commitment to moving in an orderly way to a market determined exchange rate will
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, as there isolicy up-and-down pressure, and that it not become a one-way policy in the future. i think compared to where we , we just a few years ago have single progress. lew really talking about the currency as a positive, saying that if you look at china's exchange rate mechanism over the last decade that there has been some positive movement, and that it is down to the conversations that happen every year in washington or beijing. look, clearying communication from the likes of the pboc can't be a one-off. it needs to be a continual policy. angie: we learn that last year, didn't we? how much progress the jacob lew see china making on the agenda? this is what was really
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interesting. you sometimes think that would have a clear steer on some of the issues that go on in china, but he has inside. it seems like he has as many questions as answers when it comes to china's reform agenda. he acknowledges that cutting overcapacity in steel and aluminum is a difficult process, but he says it is one that is in china's benefit as well as the global economy and the u.s. economy, and he talked about the pain that may -- the chinese may have to go through. he said the overcapacity is distorting global markets, and this is key. the renminbi is the big focus of the discussions. now it is the question of the reform agenda in china and the question of overcapacity. angie: and whether or not they
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are going to deal with that. tom mackenzie live in china. thank you for that. one of china's top military leaders has reiterated beijing's claim to the south china sea, while also trying to reassure his audience that china can work with other claimants. room.of brass in the what was achieved? lot, except reassertion's of claims by china and other claimants as well, and reassurances trying to reassure. a bitmiral trying to take more of a conciliatory tone. he basically took that conciliatory approach to the rival nations, to the south china sea, which of course is home to $5 trillion in seaborne trade every year, a critical area that is in dispute. he also traded some barbs with the united states. here is what he had to say.
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china advocates a new security outlook featuring inclusive, shared, when-when security operation by all. n security operation by all. here's where he reasserted. china is not out to start trouble, but china will not stand for its sovereign rights to be trampled on. these are the areas that he's talking about, china claims more than 80% of this region. this is not an issue that will go away. this is what the admiral had to say. our policy that we own the south china sea remains the same. china has the wisdom and patience to solve any disputes through peaceful negotiations. we also believe that other
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countries concerned have the same wisdom and patience to walk on the path of peace with china. any country not directly concerned is not allowed to sabotage our path towards peace. ofso you get a good sense the admirals position there. beijing has often use the term as its claims to the south china sea are indisputable. other claimants pegged to different. ok, what is this impending ruling from the hague? >> we are expecting a ruling from the hague on claims by the philippines -- china's claims to an area off the coast of the philippines. a real flashpoint. china has occupied these unoccupied reefs since 2012.
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this ruling expected in a couple of weeks. already the admiral says beijing will not recognize what ever that ruling is because they claim the hague does not have jurisdiction. angie: flashpoint there. thank you for that. you can get more on all the day's top stories at our digital destination, bringing together the best of bloomberg news and new digital content all-in-one address. why thereoomberg.com, is mounting speculation over the -- ahead of india's rate decision tomorrow. why there rebound in oil prices can make you twice -- think twice about ordering dessert. that is bloomberg.com/asia. check it out. the stories making headlines around the world. hasi: south korea's group initial public offering following reports that an executive is being investigated for bribery. for today, andd
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a new date has yet to be set. the inquiry is a setback for an ipo intended to raise $4.8 billion. india will be looking to strengthen ties with the u.s. went prime minister modi meets president obama this week. helped open afghanistan's egg is -- biggestic dam hydroelectric dam. they will make a speech on capitol hill and meet business leaders. china's government may have a bigger problem than slowing growth. a new report suggest the nation's jobless rate may be three times the official estimate. indicatoremployment has tripled to 12.9% over the past four years. the official unemployment rate has hovered near 4%. the official gauge excludes china's more than 270 million
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migrant workers. the world's biggest oil exporter has raised prices on most of his deliveries to asia and the u.s. saudi aramco increased its official selling price by $.30 -- $.35 more than the regional benchmark. saudi arabia has said demand for oil reserves, and crude has rallied 60% over the past four months. the worst is over after two the uae spending cuts, is projecting economic growth to accelerate and is planning projects. the chairman of the department of economic development told bloomberg television that the budget remain strong. , we arewith cuts -- and the economy
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will still grow. the growth rate is in the neighborhood of 5% or 6% in the nonoil sector. haidi: you can see that for interview in bloomberg markets middle east admit day hong kong time, 8:00 a.m. in dubai. news 24 hours a day on bloomberg, powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. it will take more than the world's steepest stock market seller to turn china into a place for bargain hunters. after a 40% plunged, valuations still tower over other markets. is taking a look at the story for us. is it too early to jump back in? yvonne: it may be. the government intervention we
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have seen from the mainland continues to keep stock prices elevated at a time when we do see profit shrinking in china. if you take a look at the biggest risk on these markets, we've heard about investor psychology. know where this herd mentality can go. after a 40% plunge, we have failed to see a boost in sentiment. we are still below that 3000 psychological line in the sand, 2938 is where we stand now. a shares are still quite pricey. you compare the the mystic market to the major markets across the globe -- the domestic market to major markets across the globe, a shares are still three times more expensive. this the ratio is at 59. if you compare that to the u.s. tech shares at the height of the boom, that is still higher.
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as you see on the chart, higher than most of the major markets, including switzerland, india, and germany, so plenty to be worried about. risk of also this corporate default. that is also spreading. the yen trading near that five-year low. much more gloomy outlook right now. angie: not everyone is concerned about the valuations, right? brokers and analysts still see gains in the shanghai composite. the forecast is for a 13% rally in the next 12 months. what could be the catalyst? they say the downside for some stocks are limited given government intervention. thatis the arm that has $480 billion in that fund to prop the market last summer.
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they still have about $77 billion of mainland equities out there. some say the scale could be even bigger given the cash on the state funds are not public redisclosed. angie: thanks. coming up, after friday's disappointing u.s. jobs number, our next guest says he sees only one rate hike this year. that is next right here on "first up". ♪
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a quick reminder of how the s&pkets closed, retreated from a seven-month high after hiring fell to its lowest level in six years in may. check out the dollar. the greenback dropped the most in six months against the euro. golden saw its biggest advance as the likelihood of a rate rise in june decreased, and mining shares also reacted positively,
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the biggest gainer up almost 10%. let's take a look at the key events driving markets this week. joining us from sydney is the managing director of cap stream capital. shakeks like we can't central-bank action, the fed, and the jobs report on friday. a lot of central banks making decisions today. do you think the impact of the jobs report will flow through to asia? >> i think you're right. payroll number was disappointing. the jobs number was disappointing. the unappointed rate fell to 4.7%, but even the revisions were bad, revised down 59,000 jobs. about 100,000 jobs, compared to 180,000 in the past, so the challenge for the fed is are we at full employment, and does that translate into wage inflation, so therefore should they raise
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rates. the markets are telling you that the quality of the jobs are not very good. unemployment is because people dropped out of the labor force. almost no chance of a rate hike in june. very little chance in july. maybe 25 basis points by the end of the year. angie: does that change the outlook for central-bank action this week? bi, there arer a lot of central banks making decisions this week. >> i don't think it should affect what is happening in domestic economies, but i don't rbi any rate changes on the or rba. monthsly they wait 6-12 and's they cut rates to see what the impact of the rate cuts will be. the bank of new zealand can probably add another 25 basis points. everything we talked about except for the fed, ever central
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bank is either printing more money or trend to lower rates. there is something wrong with this picture, right? central banks are using as much as they can, yet the equity markets over the last 12 months or negative and bond yields have dropped 40-50 basis points, somehow it is not working. angie: you have to connect the dots, right? if the fed will not raise rates, the u.s. dollar will get weaker, which means it will be more expensive for exporters in japan in new zealand as well, which will influence the decision on thursday. >> absolutely right. look at what is happening in japan. they are printing asthma money as they can, and the result simply say that you have a weaker nikkei and a stronger yen. if you cross over to europe and look at what mario draghi is doing, it is the same result, european stocks are down. there, but are not you're right, a stronger currency against the u.s. dollar
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makes it harder for central banks, if anything, they have to ease more. otherwise the markets are addicted to liquidity, and any time you get disappointed, you'd get a selloff in equity markets. angie: do you think this we could be an inflection point for market mood? >> i'm not so sure, because when i look at the markets i think of three different things. policyst thing's fiscal and politics, and that is pretty messy. you have elections in the u.s., australia. you have the u.k. vote on the 23rd of june, so it is hard to imagine any support from the fiscal side. monetaryve to the policy side, everybody is printing as much money as they can and easing rates with little to no effect. the last thing's economic data, and economic data has been mixed at best, so you would assume central banks are a little bit more cautious than they should be, and that's where we are today. angie: all right, if there is
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one big data set coming up this week that will drive markets, what is it? and how are you bracing yourself for it? i think the data set is huge simply because of central bank actions you talked about, which we expect them to be easier. next week is more important because you have the fomc, bank of japan, ecb. i think data out of china is important, cpi, pbi, japan is important as well, so economic data plays a bigger role, but on top of that, you have to worry about central banks. my guess is they will be easier than where they were before, except for the fed, and the fed may not even have a 12 five rate hike this year. -- a 25 basis point this year. angie: more to come on bloomberg television. you are watching "first up". ♪
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angie: welcome back. you're watching "first up". the philippines new finance secretary says the new president will build on economic gains. he has made headlines for his strong language and anti-crime rhetoric, but his finance chief told bloomberg that his record should really assure investors -- should reassure investors. he is making tax reforms it should make for a more equitable system. >> these brackets developed were developed almost 20 years ago, and i guess through the years because of inflation, it has , ande rather an equitable we want to make the taxes to more equitable. the tax brackets, probably the essentials will be much higher than the 500,000 peso cap they have now, so that will involve
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some reduction in revenue. the philippine central bank is also stepping up efforts to fight cyber security and money laundering. ofhilippine bank was part one of the largest heists in modern history when hackers stole $81 million from the bangladesh government account. let's head over to our southeast asia correspondent. what exactly is being done? >> a couple of things will be under scrutiny, and digital currency currently unregulated will be regulated. the philippines is the third largest user of bitcoin transactions. $2 million a month. that is because of the volume of funds sent by filipinos working overseas. from that, there will be tighter scrutiny.
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financial institutions will have to run regular checks on their customers at all times. the thing is this, the regulations are there already. it is the oversight and fulfillment of those policies which are in question here. on top of that, the central bank is mulling over a proposal to allow land dealing on the black market, and the philippines finally taking action. what is important is implantation. angie: can the philippine central bank push through and implement those changes that are so important? >> that remains to be seen. it is making the right moves. it will expand its cyber security unit, have a separate surveillance team to come up with cyber security policies, monitor cyber threats, and ensure that institutions can manage their on cyber security issues. live for us in singapore. coming up, if china is the
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province ist how a adapting to china's
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♪ >> it is 9:30 in sydney. we are watching the aussie what itolding on to achieved on friday following a week u.s. nonfarm fuel report. away from thetes opening of trading there as well as in japan. ."u are watching "first up china is moving in the right direction on the yuan. he spoke exclusively to bloomberg in beijing. he says the pboc action caused
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an unnecessary nervousness. reiterated its claim on the south china sea. addressing a meeting of defense , they struckgapore a more conciliatory tone. he also warned countries to keep their criticisms to themselves. the philippine central bank is stepping up cyber security and demanding more scrutiny toward off money laundering. manila has been in the spotlight after siphoning $80 million off the bangladesh account. most of it has disappeared. will alsol bank regulate digital currencies
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including bitcoin. powered by over 400 journalists and 150 bureaus around the world, this is bloomberg news. -- check in on the markets in asia pacific. futures in australia are looking like this waiting to a higher open. check out the aussie dollar at 73 u.s. cents. trading intures chicago, pointing to a lower open. why one of reason six bought 60. it seems that negative rates are getting the job half done in japan with banks cutting government bond holdings in almost three years. we have haidi lun with the story. that is not asserting the full story. the other half of the story is that these banks are
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simply warding the proceeds. bank holdings of japanese governments have jumped 5% in april. it is now up to 87 $1 billion. that is the fastest exchange since 2013. it is just a couple of months since the program began in 2013. these local, big city banks. these are the largest holders. they actually dropped by even more, close to 9%. as most japanese yields have been getting crushed below zero. it is how this longer-term will affect abc. the gb holdings have been plummeted by some 40% since that program began. bankntrast, the central now holds about a third of the public debt.
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the question is what are banks doing with all of this spare cash? if you want to bring this up, it will be one of the top stories and in stunning clarity. the effect has not been what the bmg -- boj intended. it is simply passing the cash in these reserves. they can still do at mostly 0%. not a criticism of it going into negative rates. all of this is still attracting a positive rate. aboutection which is only 10-¥30 trillion is when the negative interest rate takes hold. and thaticro balance is what is growing the most.
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all of this is happening for a few reasons. we are talking about the mindset and how hard it is. the sign negative rates is how bad the economy is going. they would rather sit on their cash piles and go out and invest instead. angie? angie: the risk is still there in the hunt for yield #haidi: this desperate search for yield, they are looking for a search for any kind of yield. that still leaves them vulnerable for these potential spikes in interest rates. japanw that the bank of for thisasted the boj last week. the whole negative rates is counterintuitive. it did not work.
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in 2003.e that happen 10 years and japan, they are and theelding money bottom line is that we have maturing bonds sitting at the of japan. they can only take on so many risk assets. there is no one to lend because there is no demand. angie: thanks, heidi. let's take a look at some of the events we are tracking for you. tuesday is interest rate decision day in australia. see len stevens taking the cut. castrate is at a record low. it is better than expected since the first quarter. they see the rba holding for now. legendaryso sees footballer palais putting up men
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-- memorabilia for auction. chinese buyers will be above -- among the bidders. raise $7is expected to million. on wednesday we are going to get key data on two of asia's biggest economies. they think china's may experts dropped 7% from the year earlier. that is partly due to sluggish demand in japan. economist we have spoken to expects to see expansion. on thursday, finance officials from asia and europe will gather in mongolia for the latest round of talks. they are expected to function -- focus on ways to boost growth and strengthen financial regulations and combat money laundering.
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a busy week. products adding more in china. the company has missed its overall long-term sales targets. we have to ross chin looking into the company. they have launched 67 products. this is where business sell directly to consumers. formula. milk this is what nestle is pursuing and overall it has missed its long-term sales targets. if you the greater china region, $7 billionased
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fueled by e-commerce and that section has actually doubled. he said that nestle's e-commerce has a triple digit growth -- growth rate. but they did say is that they are playing catch-up. and it has the push deep discounts. angie: slowing economies elsewhere are making it tougher nestle. they're finding it very difficult to increase because of the other economies. they are trying to decrease the reliance on packaged foods. they're looking at nutrition areas as well to see if they can try and move away from packaged
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foods. itss under pressure to drop long-term sloth -- growth goal. the sales have now resumed. angie: thank you for that. but stick a look at what else we are following for you on bloomberg. they are getting series on improving its balance sheet. to raise $10 further millions from other shares. the money will be used to tackle debt. groupe retail giant, this is expected to announce that it is buying italian football club interim elan. for ampany has scheduled soccer related announcement.
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that ita has reported is moving closer to buying 60 to .0% of the club s&p is facing heat for keeping the rating at junk. they say its decision to leave indonesia below investment status is disappointing and inexplicable because the country to the long -- lowers debt gdp ratio. s&p has held off saying indonesia needs to cut deficits and fully implement fuel subsidy changes. jaguar land rover is suing yelling motors for copyright breaches and unfair competition. they saved the child link vehicle is a straight copy of .he land rover both have similar parameters.
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that is about a third. now a look at some of the stories making headlines. i'm yvonne man. exclusive with counterparts. find out what is up on the agenda ahead on "first up." ♪
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>> this is a stories making headlines around the world. has takenarmy control. poised to pull to the center of the city of falluja. it is one of the stronghold in iraq. controls less than half of that in the north and west. say thefrom germany airport is being sold to an
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unidentified buyer from china. it owns and 82.5% stake. development are known to have been in joint talks. been invited to a briefing later today. while storms have combated australia's east coast, emergency services received thousands of calls for help as torrential rain and flash flooding brought down trees. homes andeatened dozens of motorists had to be rescued. powered by over 400 journalists and 150 bureaus around the world, this is bloomberg news. i'm haidi lun. the u.s. treasury a toughy says it faces
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balancing act. speaking exclusively in beijing today, jack lew also stressed that china's policy decisions have in missing -- misinterpreted by global markets. sawhat i think the world was something confusing and not well communicated. it gave rise to fears in china's economy that it was in a much weaker place or was perceived by policymakers to be. is not asonomy interconnected to the global financial system as the u.s. or european economy. that will surprise people to hear. what is interconnected is the flows of purchases, imports and exports. a --u are an exporter from an emerging market of raw materials to china and you think evengrowth is dropping
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faster than it is, that has a huge impact on what you think the future looks like. policy the world saw that was by the government here meant to be an oriented exchange rate. towas interpreted as chance drive down r&b. has that been communicating more clearly, it would've settled out. what it underscores is how for china tois become more adaptive at communicating its policy and its andysis because the world markets are hanging on what china thinks it's going to be the next step in the economy. thatve you made suggestion? >> i have had -- had many
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conversations in august about the disruption and markets. i was actually on vacation that week. them to first explain what they had done and when i understood what they perceive their action to be, i immediately said that is not what the world thought. it took them a few days but the deputy governor of their central bank and offered a much more clear explanation that started to help settle things down. he gave a long interview where he explained the views. the thing about communicating government policy is that we knew all too well that it is not something you do once. every day the world is wondering are things the way they were yesterday? are you on a new? it is something that we have to keep asking. haidi: he is speaking
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exclusively to jack lew. look at the study center in sydney. when it comes to do the u.s. and china it is a game of leverage. --haps the u.s. has some lost some of the leverage. china has been communicating that it wanted to say a little bit for the next rate hike. mind isoint to bear in that came outks friday were very dispiriting. it reiterates the point that this has been the most sluggish economic recovery in the eyes states since the great depression. comeback is not as good as clinton's or reagan's.
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the deceleration has been taking place and we are in double-digit 6.7% that indicates it is declining. this also comes at the heat of a presidential election campaign and the three remaining berniential candidates: sanders, hillary clinton and donald trump are talking a tough language with china when it comes to trade issues. haidi: let's parcel this out. china, this iso very important relationship. what is on the agenda when it comes to speaking face-to-face? >> from the american perspective, there will be more rumblings that they have not opened up its markets. not as much as it should have. the chinese finance minister made it clear that the chinese were going to conform to the g-20 reform agenda that was announced a week or so go.
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there were also be rumblings about currency manipulation on both the democratic and republican side. there will be rumblings about foreign policy. jack lew made that point crystal clear. the obama administration has increased levies on certain chinese groups in the course of the last two months. china's growth rate is the big issue. it is coming down to 6.7 percent and maybe even as low as 5%. angie: when you have a weakness on one hand, you have to show force on the other. that is what they are doing on the soft tennessee. -- south china sea. u.n.at comes before the makes a ruling on the conduct of china. the chinese government has been
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building artificial islands and many parts of the south tennessee. this part, that is the heart of the issue. it is more than likely they will rule in favor of the philippines and it is not clear than what the obama administration will do. there is a lot of pressure to increase freedom of navigation operations through that milestone of china's artificial islands. the americans are being who ised by vietnam clamoring to u.s. security guarantees. out 25lippines kicked it years ago. taiwan and malaysia have competing territorial disputes with the chinese. angie: do you think that the chinese will take advantage of this small before the november election?
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bear in mind since october of last year, the united states has had several operations. chinese know that will condemn the american intervention. that is the issue. forceinese have not used to deter the americans. i have had a few skirmishes just month when the third u.s. naval vessel went through the 12 nautical milestone -- mile zone. it hasn't actually led to any major arguments. it could lead to a confrontation and that is the last thing the region needs right now at a time of sluggish growth in america and china. angie: that is the last thing
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anybody wants. thank you so much, live for us in sydney. coming up, we're going to be discussing how it is brewing. that is coming up next here on "first up." ♪
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>> welcome to the stock exchange. herentrepid reporters are to see what stocks we should be keeping an ion. i know you are a fan of acupuncture? >> a cleared my allergies. i am looking at archer, this is a company that survives -- solutions to acupuncture. it is a monday morning. [laughter] it is one of these hard growth, emerging stocks. it is emerging from the
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motherboard to the mainboard and it is also going to raise up to 540 million yen. a light? i'm talking about japan airlines. the interview with the chairman said they are trying to be high up with these travel agencies to view its brand image. that will happen as soon as possible to wind -- win more passengers. the stock is down about 50%. >> i know how you like beer. [laughter] this is on a report from the sunday times. bid for exploring a them. they will be buying other brands as part of its ale that is being sold.
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we are looking at some of the european beers as well. angie: thanks guys.
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♪ asie: japan faces a selloff weak u.s. jobs data casts a long shadow. transparency, china has made progress on the yuan. waters, beijing repeats its claim to the south china sea. live into "first up" hong kong and streaming on mobile and bloomberg.com. let's get to it.
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weak payroll data could signal weakness across asian markets. watching all the action as australia and japan come online. to thea great start start of the trading week. of 1.7 percent, the yen surging to a high. data impacting futures, at selloff expected for asian equity markets. new zealand and korea closed today. there are quite a few public holidays this week. data, there is a lot for investors to get through, cpi, ppi coming out of china. the rate decision due from australia on tuesday. rbnzare bmz delivering --
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delivering its rate decision. we are expecting exporters under pressure today due to that surge in the yen. this is due to dollar weakness coming through. a 4% chance of a june rate hike. july has also weekend, money market say it is 50%kely to see more than a chance of a rate hike the fed until december. looking at the crude price, a $48.74, so that should give support to energy players in our region. we have been seeing the gold price in focus as well, a lot of risk off appetite sending investors back into gold. gold started higher than where it left off on friday, up by 4/10 of 1%.
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yen, it hadk at the been surging to that one-month high. itdoes look as though started the trading session a touch weaker 106.67. some weakness coming through in those commodity-based currencies. the aussie dollar off by a third of 1% to 73.43. australia should have opened up a little bit more by now. the asx 200 pretty flat, but losses in japan signaling the theme of what we are expecting from this trading day. you as treasury secretary jack lew says china is moving in the right direction on the yuan, but needs to improve monetary policy communication. he spoke exclusively with bloomberg in beijing. our china correspondent tom mackenzie is there.
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what exactly did he have to say? we had a wide-ranging discussion with jack lew. we previewed the event that takes behind -- place behind me and just under an hour. they are expected to kick off a china, onusn security, strategic issues, and economics. jack lew, we talked with him about market access in china, the access of u.s. companies, more foreign direct investment for those companies looking to get a toehold. theourse the renminbi and market exchange rate policy that the u.s. has been pushing for an the future direction of the skierbi to get a clearer
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on that. take a listen to what jack lew had to say. that we need to make sure the commitment to moving in an orderly way to a more market determined exchange rate will stay a firm policy as there is up and down pressure, and that it not become a one-way policy in the future. i think compared to where we , we just a few years ago have seen real progress. u.s. treasury secretary jack lew there. he also said that communication has improved in china from the pboc, but he called for greater communication, clear communication, more consistent communication. in august, we had that surprised appreciation. he was on the phone with his chinese counterparts as he was
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on vacation asking what was going on. he said to them that you need to communicate better. ,e says that is still a theme but there needs to be more consistency in the pboc. angie: what about reform? how much progress does he think china is making on its reform agenda? the reform agenda is really pushing its way to the top of the list of priorities for the u.s. side here. they say that reform on things state owned enterprises and particularly overcapacity is a thatoncern of theirs, and is a priority in their discussions as they enter into those talks shortly. they are worried critically about overcapacity in steel and aluminum sectors. jack lew is saying that this is is a u.s. issue, this
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global issue, that this overcapacity, this surplus of still and alumina month, is ,istorting global -- aluminum is distorting global markets. they did acknowledged that there would be pain involved. he said another priority would be greater market access for u.s. companies, particularly telecoms, financials, logistics, bindsctors where the u.s. difficulty getting a toehold. of course, the communications issues, so there is a lot to talk about. john kerry will be meeting with their counterparts in just under an hour. angie: thank you for being there for us. coming up, stories making headlines today. india looking to strengthen ties with the u.s. prime minister modi meets president obama this week. it is part of a five nation tour
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that began in afghanistan. modi sealeder bilateral agreements and open a dam in afghanistan. a speech on capitol hill and meet business leaders before finishing in mexico. korea's group has delayed the initial public offering of its hotels unit, saying and ion into one of its executives. a new date has yet to be set. it is part of a bribery investigation. the inquiry is a setback for an ipo intended to raise $4.8 billion. softbank serious about improving its balance sheet by embarking on asset sales. billionn to raise $10 from selling the company's stake
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in alibaba. a further $685 million from offloading shares. the money will pay down debt and should afford more flexibility on future investment. is adding more products to its online offerings in china, betting on e-commerce to bolster a turnaround there. the company missed its overall long-term sales target for four years now. we have a look into this. where is nestlé headed with this plan? rosalind: it will ride on the e-commerce bandwagon. it has rolled out 67 new alibaba'selling on business to consumer platform. they are new to china and not available in stores. they are only available online. the managing director for the greater china region did say that nestlé e-commerce and china
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has triple digit growth rates. it is already more profitable than bricks and mortar. nestlé has missed its long-term sales targets for four years. its recent growth was fueled by recent e-commerce sales, so hopefully china will help them to boost in that region online. angie: looking to china for help, because everybody else is not pulling its weight, at least when it comes to nestlé. a lot of pressure on nestlé. slower growth has meant it is difficult to increase prices. for them to meet long-term sales targets. they had been hoping to reach 5% or 6% growth long-term sales targets, and there is pressure
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on them to try and lower those, but they are resisting it. they are looking at expanding in areas other than packaged goods and trying to reduce reliance on packaged foods. skin health, medical nutrition, and other acquisitions or expansion in those areas to try to diversify away from packaged foods. in the asia region, in africa, in india, there was a recall of noodles last year. it is hoping that can go back on track. angie: thanks for that. guest saysour next u.s. earnings are now the key driver of global stock markets. that is coming up next. ♪
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angie: markets trading in the asia-pacific, let's check the
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markets. south korea close, but nikkei 225 as predicted by futures in chicago is down more than -- almost 1.5% on the stronger yen. market looksequity fractionally higher come of it this is how we start the week in asia. crab.bring in joshua it is all about the fed. it doesn't matter that almost every other central bank is having an action or rate decision this week good that jobs report was a whopping disappointment. offs on thet of one horizon, but it would take the june hike off the table. disappointeday be with that. it may put support under emerging economies. angie: does it reaffirm the global outlook? can often be read
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too much into it. it is still in line with expectations. evidently the fed will back off now,ne, 4%, 5% probability so next to zero. i think janet yellen is speaking this evening. it will be interesting to see how they are going to put their spin on that. well they maintain their hawkish stance? angie: can they now? >> it is a volatile series -- communicated that these data sets are what drives their thinking, so -- >> this is one of those things where they want to break out of that, and that's why i think june has to be off the table. moves of ais around state level to minimum wage or what we saw in switzerland with new minimum amount of income
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irrespective of the job. waye is a change in the that politics and economies are interpreting this going forward. angie: the fx were almost immediate. weaker dollar, stronger yen, are z lookingng to -- rbn to weaken the austrian dollar as well. >> the australian dollar is a great example, going from 70 to 80 270, so very dramatic. investors in equity markets are sidelined a bit by these currency moves. we seem to be stuck in that range for the time being. angie: have you changed your waiting at all, overweight or underweight? we are thinking about what it means from a currency perspective.
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strain see the all currency moving 13% up and down over a couple of months. from a historical perspective, leave currencies unhedged in markets like asia. people will have to start rethinking that because the volatility is dramatic. angie: ultimately driving sentiment, we have to bring it back to the u.s., earnings is key. the u.s. has been re-rated dramatically over time. it is not extreme, but it is quite full. it means the earnings outlook is important. there is a lot of debate about the impact of buybacks in that economy, and we have seen a 1-4-1 by back. something else needs to push through in the u.s. market. angie: what about the crude oil price? >> i think this is an interesting debate could i think people have had a lot of
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questions about whether it is the u.s. dollar driving the price of oil or whether it is driven by supply. our guess is that we have seen a lot of supply come online, in particular shale. they can be switched on relatively quickly, so oil rebounded, but it feels like it is establishing , selectiveange recounts in shale starting to pick up, so it's becoming more profitable for them to reengage. angie: iran is still in the picture here. thank you for that. the stories making headlines around the world, china's government may have a bigger problem than slowing growth. the nation's jobless rate may be three times the official estimate. the underemployment indicator has tripled to 12.9% over the past four years.
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the official unemployment rate has hovered near 4% during that time. the official gauge excludes both china's 270 million migrant workers. oil exporteriggest has raised prices on most deliveries to asia and the u.s. saudi aramco increase its official selling price by $.35 a barrel to $.60 more than the regional benchmark for sale to asia. saudi arabia has said demand was robust. crude has rallied 60% over the past four months. the philippine central bank is stepping up cyber security, lacing banks and moneychangers under scrutiny. been in the spotlight following the theft of more than $80 million from bangladesh's account in new york. the cash was transferred by a company into gambling halls, and most of it has disappeared. the central bank will also regulate digital currencies.
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hard by over 2400 journalist in 150 bureaus around the world, this is bloomberg news. i am yvonne man. angie: still ahead, jack lew iss china's government moving in the right direction on its currency. details in your fx headlines coming up next. ♪
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welcome back. u.s. treasury secretary jack lew china haves. and made great progress in their currency talks. speaking to students in beijing, he said china's government is moving in the right direction on its currency. the pboc was "not clear in its communication about the currency back in august." let's check in on the dollar index after that disasters payrolls number on friday. being the first
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month instead of july. it is coming back up after falling to a three-month low. at the aussie dollar ahead of tomorrow's rate decision and may job ads, down by 4/10 of 1%. new zealand's market is closed today. the kiwi falling a third of 1%. meets thursday to discuss its cash rate. most expect a quarter of a percent cut in the pound has fallen to a three-week low as most britons favor leaving the european union. the u.k. currency weakened against major peers after a poll found 45% would choose leave. 41% picked remain. more people would choose to leave when they vote on june 23. it spooking some investors.
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is weaker today, down by a 10th of 1%. we did see it surge over the weekend. it is raised almost a month of losses. at the moment, down a 10th of 1%. just getting another quick check on the aussie dollar, falling by 4/10 of 1%, 73.38. the japanese yen did surge to a one-month high, but we are seeing some weakness now. that is about the dollar coming back as we start to digest that payroll number coming through on friday, down 2/10 of 1%. those of the stories driving the markets thisex
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morning. angie: one of china's top military leaders has reasserted its claims to the south china sea. talk covered with a little bit of a velvet glove. >> that's right. he is playing both sides of the coin. he is the ranking admiral in the pla speaking at this defense summit in singapore. that weon the one hand are not out to make trouble, but at the same time, we will not stay away from trouble. we will not be afraid of trouble. again, he is referring to some of the issues with the u.s. and its own military ships in the south china sea. toy sent an aircraft carrier the spratly islands. the philippines making more noise about the scarborough al.u
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it is home to $8 trillion of seaborne trade a year. this is absolutely critical. he says china advocates a new security outlook featuring inclusive, shared and win-w security operations. is other side of the coin that china is not out to stir trouble, but rather china is not scared of trouble. china will not stand for its sovereign rights to be trampled on. let's hear more from the apple. -- the admiral. >> our policy that we own the south china sea remains the same. anda has the wisdom patience to resolve any disputes through peaceful negotiation. we also believe that other countries concern have the same wisdom and patience to walk on the path of keys with china. any country not directly is noted does not --
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allowed to sabotage our path towards peace. wordijing often uses the "indisputable" about its claims there. it is not indisputable because other claimants are disputing it. angie: the hague will come out with the decision. how big of an impact will that have? >> this is particular to the scarborough shoal. they have sent the case to the hague. the ruling is expected within weeks, but beijing has said they will not respect the decision. they say the hague does not have jurisdiction. more than it claims 80% of the south china sea and does have jurisdiction. 3000 acres of land in the past few years in the region. angie: thank you so much for that. up, one province is the most populous and has a tree and dollar gdp that would rank it in
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the world's 20 biggest economies. the first in a series of reports about the challenges ahead as the country rebalance is. ♪
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get america's fastest internet. only from xfinity. angie: 8:30 a.m. in singapore, what a beautiful day. one cloud in the sky. it is a gorgeous day. first trading day of the week, not looking so pretty. half an hour from the open of trading for you are watching "first up". off, theshares selling yen hitting a one-month high. in the u.s. dented prospects of a rate hike. dollar spiked after u.s. employers took on the fewest workers in six years. bond yields hit a record low. claimg has reiterated its to the south china sea and has taken aim at the u.s. for
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sending naval ships through disputed waters. a meeting of defense chiefs in singapore, a chinese admiral struck a more conciliatory tone, but also warned countries outside the region to keep their criticisms to themselves. secretary jack lew says china is moving in the , but direction on the yuan needs to improve monetary policy communications. he spoke exclusively with bloomberg in beijing. insays the pboc's actions the august evaluation confuse the market and caused unnecessary nervousness about the state of the chinese economy. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. group islotte delaying its ipo after a senior executive became caught up in a bribery investigation. we have all the details. this was a big one.
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bigi: they could still be a one. we are still waiting to see how this impacts, but certainly had the potential at $4.9 billion to be the world's biggest ipo this year, certainly the largest ever in the korean market. this was all down to hotel lotte , not a name that american investors are familiar with. theys and south korea, but are in the new york palace hotel , the one president obama stayed in. itsof revenue comes through duty-free sales business, which is also the area being focused upon in this bribery probe. what we do know is that prosecutors raided their offices and the offices of one of the chairman's sisters. she is the founding family member targeted in this pro.
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it is alleged that she and other executives took kickbacks. that is according to domestic south korean media. they also know that they have denied this report. hotel lotte has said little, but has not given at date for when the ipo will be renewed. start meeting overseas investors on june 6. that has been pushed back and there has been no new date. that: i could tell you -- they are buying new luggage just to put that stuff in. this ipo is really important. how big of an impact will this have? we are still waiting for the
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real fallout as the bribery probe gets underway. the korean exchange says they are willing to work with lotte to proceed with the ipo in the near term if the company wants to do so. the korean exchange says it should not have a significant impact or seriously hurt the value of the company as long as hotel lotte is not found guilty. this is a company that has been in battle for other reasons as well. it is one of these huge asian thanomerate's with more $85 billion in assets across a variety of different businesses from confectionery to shopping to hotels, and they have had this family feud where they've had siblings attempting multiple challenges to the authority of the current chairman, so these are the sorts of things
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weighing. number ofprice for a its business units have been coming under pressure because of this family dispute. reform,nd also the returning value to shareholders. thank you for that. let's take a look at what else we are following for you. ischinese retail giant expected to announce later today that it is buying into milan. inter milan. they have been moving closer to buying between 60% to 70% of the club. it is expected to be the first step in building a global sport empire. global ratings are facing heat for keeping indonesia's rating at junk. decisiongers say his is disappointing and
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inexpressible because the country has had one of the lowest debt to gdp ratios in asia. s&p has held off, saying indonesia needs to cut deficits and fully implement fuel subsidy changes. land rover is suing for copyright breaches and unfair competition. the carmaker says the vehicle is a copy of the land rover. the models featured similar the chineset vehicle sells for a third of the land rover price. of the uaemember says growth will accelerate next year and is planning to revive stalled projects, including the
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plan to build a branch of the guggenheim museum. the chairman for economic development told bloomberg dhabision that abu remains strong. >> even with cuts and excessive gaps, the economy is strong. the 50% of nonoil sector, the growth rate is in the neighborhood of 5% or 6%, so that is healthy. angie: that was a look at some of the stories making headlines. it will take more than the world's steepest stock market sell of two turned china into a place for bargain hunters. even after a 40% plunge, valuations still tower over other markets. we have yvonne man taking a closer look at the story. is it too early to jump back in? the government
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intervention we have seen coming from china has continued to elevate the stock prices despite the fact that profits are shrinking. firmsai composite dropping 13% in the year. the januaryuding and june plunges, still well below that 3000 psychological line in the sand. upbeatrs not looking too right now. if you compare china's domestic market to the rest of the world, we can see valuations are not cheap, three times more expensive as every other major market worldwide. the median ratio is now 59 on the nation's exchanges, higher than most of this country's see there on your screen. it is higher than u.s. tech shares at the height of the dot com boom. corporate defaults are spreading, the yen trading near a five-year low.
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perhaps the clearest indicator when it comes to the disconnect between the domestic market and the international market is that a share and h share premium. you still see the premium on the is 34% domestic market to the identical counterparts in hong kong. some say we could see of further downside. on the mental's are still poor, and perhaps getting worse. not everyone is concerned about these valuations, right? yvonne: that's right. still seend analysts gains in the shanghai composite in the next 12 months of 13%. , they sayst here there is a prospect of a hong , andshenzhen connect
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mainland shares entering into the msci index as well. sentiment be boosting, not to mention government interventions that could be limited when it comes to the downside. angie: thanks. as china rebalance is from manufacturing to consumption, its provinces are facing big challenges. this week, we are looking at three of them. if china is the factory of the world, guagndong is the engine that powers it. i'll china correspondent tom mackenzie takes a look. is a city with a population equal to london and one some to thousands of factories churning out everything from textiles to toys , but high wages and reduced a
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man have forced many to/capacity or shut up shop completely. shut up shop completely. that garment factory is a packaging factory, and this was at least an electrical parts supplier. this goes all the way down to the end of the road. this area is just a small slice of dongguan. some workers are still clinging onto their jobs, but the future looks bleak. we met with one group that works at a factory making clothing. they did not want to show their faces on camera, some have been harassed by the police for speaking out. their biggest fear now is being left jobless and a province undergoing a painful transition. the boss has not given us a word of explanation. we are worried that if heelys that we will not get everything we are owed. leaves that we will not
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get everything that we are owed. andthey have had their wages/ tell us the taiwanese bosses refusing to tell them if their jobs are safe. joe, aget to weigh compact modern city surrounded by lush hills. officials here are preparing for what they see as the future of the province, automated factory turning out high-tech projects. they are paying factory owners to replace workers with robots, seventh a thousand $500 per machine. -- $7,500 per machine. >> it will help individual company's to be more competitive in the market. cause some will workers to be laid off. workers were replaced with robots last year. it is essential for
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rebalancing, but also poses risks in a province facing risks of rising so stalled tensions. angie: you can see part two of the report tomorrow. saysg up next, jack lew china's actions cause confusion beijingarket, and should communicate better. exclusive interview with the u.s. treasury secretary just ahead on "first up". ♪
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says china faces a tough balancing act as it transitions from manufacturing to a consumer driven economy. today, jacklusively lu stressed that china's policy decisions have been misinterpreted by global markets. >> what i think the world saw
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was something that was confusing. it was not well communicated. to fears that china's economy was in a much weaker place than it actually -- or was be ordered perceived by policymakers to be. asna's economy is not interconnected to the global financial system as the u.s. and european economy. what is interconnected are the flows of her juices, imports and exports. a you are an exporter from developing, emerging market of raw materials to china and you think growth is dropping even faster than it is, that has a huge impact on what you think the future looks like. i think the world saw a policy ,hat was by the government here
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but it was interpreted as an attempt to drive down the r&b because of fears of economic weakness. as that got communicated more clearly, it settled out. underscores is how important it is is one of the two largest economies in the world. china needs to become more adept at communicating its policy path and its analysis of its own economy, because the world markets are hanging on what china thinks is going to be the next up in its economy. >> have you made that case to your chinese counterparts? many conversations of thest, the week disruption and markets. i was on vacation that weekend was on the phone with china for much of my vacation first asking them to explain what they had
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done. when i understood what they perceive their action to be, i immediately said that that is not what the world thought. it took them a few days, but the deputy governor of their central a muchnt out and offered more clear explanation that started to help settle things down. he gave a long interview where he explained the views, that helped. the thing about communicating government policy as we know all too well in the united states is not something you do once. is wondering world are things the way they were there yesterday. are you on a nupathe? path?-- new >> some stories making headlines around the world. they are iraqi army has secured the southern part of falluja.
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special forces supported by coalition airstrikes are poised to push on towards the center of the city. is one of the last strongholds for the militants. they now control less than half that in iraq's second largest city in mosul. reports from germany say frankfurt airport is being sold to a buyer from china. it owns an 82.5% stake in the airport. civil aviation development and others have known to have been in joint talks. media have been invited to a briefing later today. storms have battled -- battered australia's coast, forcing residents to leave their homes. they received thousands of calls for help as torrential rain caused flash flooding.
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ways as high as 13 meters have been recorded. dozens of motorists had to be rescued after ignoring warnings. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. angie: the philippines central bank has committed to boosting efforts against cyber attacks and money laundering. they were involved in one of the largest ice in modern history when hackers stole $81 million from the bangladesh government account. let's go to our southeast asia correspondent lara if -- live. a couple of things will be under greater scrutiny, and digital currencies like it coin are currently unregulated. the philippines is the third largest user of bitcoin transactions, $2 million a month, and that is because of
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funds being sent by filipino workers overseas. apart from that, tighter scrutiny, stricter rules for banks, money managers, financial institutions will have to run regular checks on their customers at all times. the regulations are already in place. it is the oversight for film and of those policies which are in question here. on top of that, they are mulling to allow lessl feeling on the black market, and the philippines taking action. what is important is the implementation. angie: will they implement those changes? can they? that it isg is making the right moves. it will expand its cyber security unit, has a surveillance team to come up with policies, monitor threats, and in sure institutions can
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manage their own issues, greater oversight of dealers. frame and time growing pressure as well. financialpine industry and casinos in the spotlight after that anglo -- bank heist -- that bangladesh bank heist. the money trail has since gone cold. it does need to take action. thanks for that live from singapore. japanese beer company may still be thursday for acquisitions. the details are coming up next on "first up". ♪
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>> welcome to the stock exchange. >> i haven't had a chance to look at this. >> they are one of these high-growth emerging cap stocks. they have announced they are relocating their listing in tokyo and will be proceeding million public share offering. in friday'sained 3%
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session, so giving it all back. it is up 60% over the past year. that divides i.t. solutions for acupuncture clinics. needle.not just the it is the electric pulse. i wasn't too optimistic about my stock. downside.e this was after the nikkei reported they were seeking partnerships. to chairman saying they want have these tieups with travel agencies to boost their brand image. he says to win more passengers, because one of its biggest rivals in japan beat them when it came to caring more passengers overseas. that is the first time that has
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happened. >> if you want to visit japan, it is more expensive now. beer. looking at they have already agreed to by several brands as part of a deal v.th anheuser-busch inbe they are taking what some of these brands because of competition concerns. asahi is looking to buy more. >> let's drink to that. that is the verdict of the stock exchange. .hat is it for us on "first up" having a look at these china
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trade talks. interviewing coming up. looking up regulation and also a donald trump presidency mean for all these deals. in half an hour, the open kong,nghai and hong markets reacting to that number out of the u.s. jobs report, an absolute shocker. we will go through that and more. ♪
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♪ it is monday, the sixth of june. this is "trending business". i am rishaad salamat. ♪ rishaad: right, we will visit beijing in singapore this hour. japanese equities declining the most in a month, casting a long shadow. the week's report in six years sending the dollar plunging. piling the pressure on exporters. progress,s made great but jack lew says last

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