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tv   Trending Business  Bloomberg  June 14, 2016 9:00pm-10:01pm EDT

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♪ it is wednesday, the 15th of june. this is "trending business". .nd i am rishaad salamat ♪ we will be taking you to singapore, sydney, kuala lumpur, and taipei. brexit concerns adding to anticipation about central-bank meetings. polls suggesting britain will leave the european union next week. the bookies don't agree. virgin australian, selling stock
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29% below closing price. , whileles have expanded militants have disrupted production in nigeria. they are considering peace talks. do follow me on twitter at @rishaadtv, please use #trendingbusiness as well. include decision not to a-shares in about 30 minutes from now. malaysia, taiwan, giving their verdict as well. noninclusion is oh top story. -- our top story. investors are now looking ahead, what will happen over the next , a seriesthe fed, boj
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of data points coming out of asia, most important of which will be a fresh set of trade numbers, new credit numbers come excuse me. that said, the kleins for a declinesaight day -- for a fifth straight day, extending losses on wall street. losses deepening on very thin volume. various metrics of implied volatility continuing to creep up. vix is up for a third straight day. a lot of that has to do with a huge pop on monday. caution, a three-week low, currencies, strong dollar,
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stronger japanese yen, aussie dollar near session low, and bond yields either at or very near all-time lows. this has been so far one of the top trade so far this week, long on sovereign bonds. have a look at the japanese 10 year, -17. german 10 year, zero. aussie 10 year, 205. if you look at the five-year, germany is very much in the negative. you have to ask what is going on here, don't you, david? says domestic equities are being denied into the msci benchmark, the third time this has happened. this is a real blow to china's ambitions to become a truly global market, right? >> third time, unlucky.
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china's ambitions to get a seat at the table have been ramping really pushing for this am talking up internationalization of the currency as well as capital markets. the msci cited three things and its deferral, saying acceptability remains an issue. we had a conference call with the global head of research at msci, and he said the shenzhen-hong kong connect will be a positive thing. not all investors would or could use the stock connect. essentiallyy, talking about the effectiveness of the changes, reforms put through in february which change the way investors can move money in and out on a daily basis, but they said we need more time for these reforms to play out to see how effective they are.
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international investors need more time to work with regulators. at mscis some feedback saying that we put through our request applications for the quota some time ago and still have not received them yet, so there is some concern that the transmission or efficacy of the rules have come into question. there's also the issue of redemption of funds, repatriation, some indexes saying that to honor these redemption requirements, it is not clear how they can get money in or out or how effectively they can do that out of china, which is a key tenant when it comes to a functional, reliable market. preventionention the of these widespread trading halts. last year, they were trying to with 70% ofeding stocks halted, so they were saying you need to basically prevent a situation where a ceo goes on holiday and a stock is
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suspended for a week. investors were very vocal on this issue to msci. finally, the third thing were these vague approval restrictions on financial products, which suggest that any institutional investors that have indices leaked -- link to s, if they want to introduce a product, it could require approval. says we don't rule out the possibility of going off cycle. you may not need to wait until june 2017 should very positive developments happen before them. investors a lot of developments would have to happen before then. i want to go through some of the other markets.
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pakistan has been reclassified as an emerging market from frontier status. peru will be reclassified as a frontier market. korea won't be reviewed for developed market status. rishaad: thank you very much indeed. we will have a more detailed look at that msci decision later in the show. do give us your feedback. tweet me on @rishaadtv, and include #trendingbusiness as well. a day when we saw u.s. stocks in the doldrums, one stock did very well, yahoo! we have a look at the reasons why and some other ones making headlines. yes, yahoo! shares of 2.5% in
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the u.s. session. three private equity groups are in the final round of bidding for the company. international,nt and they are joined by at&t, ver izon. once the core internet business and other properties. yahoo! atem are vying $4 billion to $6 billion. yahoo! shares did gain ground in a downbeat u.s. market tuesday, and they are up over 12% year to date, so in line with this movement. australia's shares being sold off and austria as it prepares an issue to pay down debt.
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at airline will sell stock $.21 apiece, a 29% discount to tuesday's close. shareholders including singapore airline, new zealand, all expected to take up the offer. the carrier has generated negative returns and for the oft five years with net debt $4.5 billion. for rights that this issue is part of a plan to pay down debt, generating free cash flow ending in june 2019. the malaysian prime minister has denied abuse of power in his defense against allegations of corruption. he is trying to dismiss a lawsuit by a former premier which accuses him of misuse of office and interference in official investigations into the
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troubled state fund 1mdb. he was cleared after more than $68 million appeared in his personal account. a big story to watch there. rishaad: the u.k. chancellor of the exchequer ones leaving the european union would mean higher taxes to clog a blackhole from reduced rate of investment. 41%support brexit against to remain. going into the bloomberg, it does tell you quite a lot, doesn't it? rosalind: it does. , it isople in the u.k. thought britain would stay in the european union, but polls are starting to change that and has politicians in the remain cap struggling to turn around the campaign to stay within the european union. represents the
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mottled probability of a vote to leave. it takes the polling average with analysis of the key likely accuracy of paul's and data to project a probability distribution of outcomes, and it takes into account the changes in and the volatility of public opinion in the run-up. they have a particular focus on referendums relating to the eu. you will see that just a month before the actual vote, here we go, may 24, it hit an all-time low, where obviously at that time, most people polled, along with all the other factors they put into this index, they thought there were low chances of leaving the european union, but polls coming out over the weekend have jumped up and the likelihood of leaving suddenly soared. if we take a look also just for fun at one other thing, we can
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, oh, no, i will try again. average probability to remain implied by betting odds. it is based on bookmakers quotes, and you can see that sharply dropping away in the last few days. morning, theis chances of a brexit were at 32.6%. now it is at 38%. that has increased in the last couple of hours. the j.p. morgan currency volatility index showing a strong correlation with that number crunch index, really taking a leap in the last couple of days. swings in g7 exchange rates are high since 2011.
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afterg is exhilarating polls showing more britons favor a brexit. investors don't like uncertainty. the fed and the boj eating this week. politicians are really scrambling to avoid leaving the european union. you can get all these charts and more in the bloomberg. coming up later on the program, alibaba forecasting 50% growth. we're looking at what is behind that optimism and whether or not this misplaced. management, ish end site to the uncertainty? ♪
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rishaad: another setback to open
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the china equity market as a-shares will not be added. was it a surprise that they were not included? >> we never assumed it was a done deal, but it was a mild disappointment. having said that, the obstacles or final hurdles, i think all of them can be overcome. ofernately, it is a matter timing, so with that off cycle possibility of inclusion -- it turns out that the msci has a and off if they do cycle move, it happens in november, so it could still happen. rishaad: what further steps do
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they need to take now in order for msci to change their minds about this? looking at the main hurdles, i can understand and empathize with some of the demands of international investors. for example, 20% monthly repatriation of money. if you want to pull an entire position out, it would take you five months to do so. i can understand they are not quite happy with it. be a flood ofll new products to make this investable, but maybe cover some approvals for all of these products, i can also understand why investors from the international side demand it. right, does this in any way change the way you look at what is going on in this part of the world in terms of strategy come investment decisions, and what you recommend to your clients? it doesn't really change
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it. i think in fairness we should markets toa-share show some weakness. we did see a pickup in the last , openon the ftse positions for example. also, the shanghai connect was more intensely used, so probably in anticipation of inclusion, so some of it might unwind. it does not really affect the numbers or longer-term the outlook for inclusion, so on the a-share, which we should see as a stock pickers market, probably a short-term impact, yes. on a-shares, we are actually overweight. mainesn't change our thesis here. we are seeing this working out, that the cash flows are starting to improve. this is evident, even though not many people look at it, but admittedly we are still waiting for this to show up in the reported earnings and are still confident it will happen over the next quarter.
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come we serendipitously had some breaking news coming through. the people's bank of china have beyond six the yuan, against the dollar, the first time they have done that since 2011. i know you are not a fx specials, but what message is that sending out? >> it doesn't surprise me. ,specially versus the not just in china, to be honest, so we do expect the fed goes ahead in september with the next the hike, so it does make dollar on the margins of bit more attractive than other currencies, especially with those with looser policies in china. i would not see it as a particularly alarming sign. a bit more softness in store, even from here yet.
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rishaad: so it fits into your thinking as well. we just talked about msci, one thing preventing event risk. boj, bank of england, of course the federal reserve is well, and brings it. -- and brexit. , doeshese known unknowns it make you want to run for the hills? to maket's starting markets cheaper as some people exited their positions. i can understand, especially in brexite of rags it -- of , there is potential fallout you don't want to be exposed to, but to the brexit topic self, there are two to sing scenarios. cash two distinct scenarios. two distinct scenarios.
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one is a benign scenario, but you can never rule out that there is more hostility happening in the process does not start rolling, then economically speaking, the follow-up will be bigger, but i think investors need to differentiate between the scenarios. it is more than one scenario, even if a brexit happens. rishaad: great talking to you. ubs wealth management. have a fantastic day. some stories making headlines around the world. hillary clinton has opened up a double-digit lead over donald 49% ton a new poll, 37% among 750 likely voters. more than five of those said they could never vote for donald trump. 45% say donald trump to 41%
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clinton. china is taking more time to review its $43 billion takeover. the companies have resubmitted their deals to the government. the panel can recommend the transaction be blocked if it poses a threat to national security. april, they said the deal was on track and should close by the end of the year. the chairman of south korea's apologized after allegations of bribery, embezzlement, and slush funds. he said he is sorry for the investigation. also says the issues threatening more global deals after its hotel unit was forced to shelve the world's biggest ipo this year. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news.
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up next, msci deciding china's markets are not ready for inclusion in their global gauges. how will the chinese markets react? we have a look at pre-market moves. ♪
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back to that breaking news out of the central bank in beijing. fixing.g the yuan they do it every day around this time. this is the first time it is being done to this level, six against the europea u.s. dollar. are also watching these things as china opens up. david is all over this. david: absolutely. can we just get up the two currencies we have?
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i want to see that side-by-side. 6.60 was the first time since 2011 for the yuan fixing. you are looking at dollar it too may being 6.59 in recent weeks. this decision from msci not to s nudging thate beyond 6.60. perhaps that's why we are seeing a weaker fix there. onshore spot, 6.5970. some other breaking lines here. you could call it the china response. we are looking at the csrc, the commercial decision, they respected, to support that decision, it won't affect capital market reform.
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we are looking at declines in the futures market in hong kong and when the mainland markets open up in a few minutes. rishaad: it is the market open in shanghai. hong kong also coming on stream. the open is coming up. ♪
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♪ rishaad: a look at our top stories, asian stocks declining as the prospects of britain leaving the european union adds to worries ahead of central bank meetings. gold strengthening, while yields on german bonds fell below zero as investors flock to save haven assets. chinese stocks set for losses after being denied entry into the msci benchmark indices.
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msci citing a need for improvement in market accessibility in addition to other concerns. any a-share index --t does not include a-share china says that any market that does not include a-shares is incomplete. contender polling more strongly on his ability to combat terrorism threats at home and abroad. markets, thehe open in shanghai and hong kong. >> 1% decline each. also down by 1%. chinese indices leading declines at the moment. , you need aanation high z score for both.
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technically speaking, were not pushing towards outlier status, but not beyond two at the moment. opening levels of the moment, senghai composite, hang are both south. these other lines that have come across the bloomberg, coming csrc, securities regulator on the chinese mainland, you could call it a response to this decision. we are looking at a few things. first, they support the decision not to include a-shares at the moment. they are describing it as a commercial decision. affect reform in china's capital markets, but equally they are saying that any international index without a-shares with reason is incomplete.
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obviously the core of the matter, we will talk more about this in a moment, it's not so much really about an international index being incomplete, it's about going in and taking your money out. that is an ongoing process. can we get the currencies board up? we are now looking at dollar rate, 6.6the onshore zero, the highest level going back to january 2011, the weakest level for the renminbi. dollar, pushing five years now. ,ou can't just look at this
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these things don't happen in a vacuum. ofhave certainly seen a lot dollar strength that has pushed both of these exchange rates up 2, 6 .5 8, 6 .59. i should also mention up put these losses into context. were looking at equities as well across the asia-pacific, fairly subdued session for a fifth straight day, voids light, and 24 hours from now we get the fed. two is six hours, the boj decision, so a lot of risk out there. thank you, david. let's get more on this msci move, or the lack of it, on chinese equities. third time unlucky here. >> yes, absolutely. and said that they would not be adding china to its global emerging markets index. rishaad: what does this actually mean for the markets in china,
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if anything really, they came out and said they supported it here. >> yes, it's nice to see everyone getting along, right? look at several metrics, especially compared to the same companies in hong kong, a lot of people can make the argument that they are still overvalued. in terms of seeing any kind of the klein's result, we see the markets down about 1% today, there are still fundamentals and different sentiments at play within the domestic market right now. they have gone down this reform process to some extent, but these obstacles to remain. what are they, i suppose? >> access and control is the way to look at it. china's government does want to be part of the international financial community.
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those issues with china still remain. be another 12 months before the msci rules again. we will see what happens. rishaad: thank you very much indeed. we will get reaction on social media now. there has been quite a bit of reaction on social media given that there is a very active community of finance twitter as you call it in the twitter universe, and generally there has been a lot of ramping up ahead of this decision. the reaction this morning, a lot of people saying that in csi did the right thing. there has not then enough progress made in terms of china opening up as markets and also putting into place reforms to ensure that the reaction that we saw on the wake of the selloff last year does not happen again, start suspensions, ban on short showing -- selling, etc.. columnist says the
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,sci refuses to include stocks global standards and proving functioning of domestic markets. the idea is with this postponement again, china will be able or be incentivize to put through more reforms to open up the markets more in line with international standards, but that has yet to be seen. let's get over to the next one, other commentary from global investors as well. a professor of economics at peking university hsbc business school says it is worth noting the following. it is a fair point that msci institutional
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investment which would be impacted by the opaqueness of some of these regulations, redemption, you have been going through these issues that need to be sorted out. hadng ahead, we have comments from u.s. investors saying clearly msci knows that china is not ready to sufficiently open up its capital accounts. there was quite a bit of reaction on the chinese social media as well. this was the right decision because our markets are pretty crazy and the msci made the right decision this time around. rishaad: right, let's have a look at some other stories we are covering for you. to india, where a court has offendera proclaimed and ordered banks to seize the mallya, said to oh
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more than $1 billion for his defunct airline, but denies being a willful default or. looking to raise $2 billion in the debt market, seeking a leveraged loan and is working with morgan stanley and barclays. it has more than $11 billion on its balance sheet. it is planning to use $1 billion in china to take on the local rival, didi. sources saying it is planning to combine the component units of various browns to cut costs and boost efficiency, vw. it is said to be considering a portfolio review that may lead to the sale of ducati motorcycles. at's have a quick look virgin australia in sydney, off
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by 12%. paul allen is watching this. investors certainly don't like this. what is it they don't like about this and what do we know about it? paul: well, i will explain. raising six under 26 million dollars of equity, which sounds fantastic until you read how they will do it, a one 41 in title might offer a $.29 per share, a healthy discount on what we are seeing now, so we see shares off by almost 12%. you would be none too pleased if shares atught virgin the start of the year at $.49. virgin has made negative returns for four of the past five years. singapore airlines stake in 26%in will increase to
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after this offer is taken up. so it's all about reducing debt for virgin, the ceo saying that it is time to address that debt issue and deleverage the balance sheet. rishaad: besides the equity issue, virgin looking to cut costs as well. how do they do that? by trimming the size of the fleets. they will be gearing -- getting id some of the prop planes, the planes used on smaller regional routes. this will save around $300 million for virgin australia over the next three years. after funding growth by barring, they want to be cash flow positive by 2019. allen in sydney. going now to malaysia, the prime minister denying abuse of power
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as he fights of the collection from the former premier, the lawsuit accusing him of misusing his position and interfering in investigations into the troubled 1mdb fund. tell us a little bit more about this case. >> back in march, the former prime minister filed a lawsuit saying that he had abused power. he filed his statement of defense this week, saying i did not abuse my power and no i did not interfere into 1mdb. ok.aad: what about this sovereign wealth fund? .6.5 billion from 1mdb what is this all about again? come theyhat this
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expect an agreement signed between the two parties that we saw back in may 2015. they have been saying that 1mdb has defaulted. ok.aad: it seems like this scandal goes on and on. looking like?mage who does this damage the most? fort has been reputational 1mdb and the malaysian government. a does not look good to have state investment company in default on its bonds. they got their interest payments in april and may. rishaad: thank you so much for that.
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and the scandal continues. where speaking to a property website with backing from one of the people behind facebook. ♪
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inhaad: rohit, 940 5 a.m. beijing, stories making headlines around the world maintaining peace and security in disputed waters meeting beijing roundup without a formal statement of prime minister when he said that all looks a profit to the stability in the south china sea and pointed to the philippines should not threaten rations listen and gauging and's are's of its attrition case in the hague. says he has no plans to concede defeat to
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hillary clinton. he has been under pressure to give her a clear run at donald trump. with six weeks to go before the convention, sanders says he will continue to promote his agenda. the dnc says hackers linked to the russian government have gained access to research files on donald trump. called in a cyber security company to investigate the breaches. to russian says groups had infiltrated the network. spokesman for the government denies any involvement there. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. start up in singapore which has a rather ambitious aim to radically change the way real estate deals are done. >> it is a singapore property
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site that is taking main stains head on -- mainstays head on. it is bringing total funding to almost $2 million, so how is it carving out a place for itself in the market? it has to be a great product itself. what can it offer that existing models cannot? the first point is we have a low-cost model for property agents. because of that, 2000 agents are posting exclusively. you can find properties you don't find anywhere else. that is very important. the second thing is where the product comes in.
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with a map,is built so you can easily see all the data in terms of the properties aound a station and which is good priced property based on the map. the third thing is how we source listings. we want higher quality listings with more reliable data. agents are incentivized to do a better job. one of your rivals has, with better quality photos. >> the biggest difference is the business model. it is very hard to detach from it, so we don't take money. you can't by the top spot. it is unlike any other product. agents do a better job because they know they can work for the top spot instead of pay for the
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top spot. >> what will be a game changer for you? property guru has 95% of the market. it gets about 16 million hits. we have 300,000 users a month , so significant and growing, thathe real difference is allows us to focus because we operate mainly in singapore, and that last is to focus on innovation. the real game changer comes in mobile and how they can use the mobile device to enrich the experience to make it more efficient. example, can i interact with customers directly without them having to turn up at the property? now we have messaging built into the app. you can see how often the agent is online, whether he has read
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your message. mobile is going to be the game changer. >> you say you are concentrating only in singapore, but you have plans to expand overseas. >> we just started our operations in jakarta four months ago, so we are expanding, but for the last two years, we have been focusing on singapore. >> let's talk about your angel investor. how crucial has he been to your company? has he impacted the company in any way? he is a hands on, great investor, one of those investors who actually get hands-on and try the product and discover bugs or improvement he wants and really show us and talk to us about it, so he is very hands-on and has been a great investor. the real investor is that he sits on boards of other
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companies he invests in, and that allows him to bring the learning from other companies to learn what do they do and how can we apply those learnings, which is an incredible learning journey for us. >> we wish you all the best on your venture. 9.c0 if you want to check it out. rishaad: already have. thank you. the quality of some fake goods is better than the real things. ♪
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thatad: alibaba has proved provided its first financial forecasts and so went public, predicting a rise of 48%.
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aw achievable is it for company which is so huge already by the world's largest e-commerce company? what, it is absolutely achievable. china's economy is slowing down a little bit as we know, but they are very big and have their fingers and a lot of parts of the economy. makes it achievable and remember this is an estimate or a forecast from alibaba that is ahead of what analysts had cancted but the way they get there is they are sitting on buckets of cash. they want growth, they can buy growth. they have done quite a few acquisitions providing topline growth, so if they want to just the numbers and get more topline growth outcome all they have to do is pull out their checkbook, bison companies that can give them growth and they will get whatever number they want to get to. rishaad: jack ma also saying tuesday that alibaba would eat better off focusing on domestic
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expansion rather than overseas. atthat the right way to look things given his stated international priorities? i should say international goals. >> that is a very good point you have raised. they have 400 million users or ,o around the world globally and so that is a big number, and jack ma says that there is another 700 million they can tap in china. they are squeezing out those last few users in role china, not going to be easy. sure they can tap that market if they want to. it is low hanging fruit for jack ma and alibaba, but they want to get to 2 billion users globally, so they have to go outside china. it is an easy move to say let's just focus on the domestic economy and get the areas of growth that are very easily achievable, but it will not be sustainable. andight help them this year next year, but there is southeast asia, india, a lot of other markets globally that they will need to tap at some point.
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if they are going to wait and wait and wait, then they may be missing out on those opportunities overseas. amazon is very aggressive, and are not the only one spirit there are local plays all over the world, if jack ma does not decide to get into those markets quickly himself, someone else will get there before him. of course he can pull out the ,heckbook and by those players but as those players grow and grow, they will get more and more expensive comes of the better thing for jack mott to do is to go into those markets now. rishaad: what about piracy? they say they are working hard getting counterfeits under control. when you make of these recent statements? ma -- how serious are they? rishaad: thank you very much indeed for that.
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a 48% sales growth target from alibaba by the end of march of next year. first funding to the dedicated to ethical investing in australia. that is next. ♪ .
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♪ announcer: from our studios in new york city, this is "charlie rose." charlie: tonight we examine the attack that took place in orlando, florida. 50 people died, including the gunman who was shot by a swat team. 53 more were wounded. it was the deadliest mass shooting in american history. about 2:00 a.m. on sunday, the assailant opened fire inside of a crowded day nightclub. the gunman was a 29-year-old american citizen of african descent.

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