tv Trending Business Bloomberg July 4, 2016 9:00pm-11:01pm EDT
angie: it is tuesday, the fifth of july. i am angie lau and this is "trending business. we are going to be live in sydney, melbourne, and others this hour. here's what we are watching. stimuluson on more sending gold to levels we have not seen since 2014. we have merger talks. two chinese brokerages are said to be in early discussions. they have $28 billion of assets between them.
sailing into stormy waters. more territorial tension between hanoi and beijing as china launches naval drills. sovereignty their is being violated. you can follow me on twitter. don't forget to include the hashtag trending business. china and hong kong markets get underway in 30 minutes time. singapore, taiwan, and my later have come online. let's go to david. david: we are looking at declines in the early hours of asian trade. it is hard to not figure out what the next catalyst will be that drives equity to the upside. volume is dry. the u.s. was closed overnight. the jobs data is coming out. equity markets, which have enjoyed a five-day run are
having a bit of a blowback right now. the rba trade numbers and retail sales are due out in 30 minute'' time. asia looks like this. down .33%. these are the mining stocks. going the opposite way for obvious reading is -- obvious reasons. have a look at silver. have a look at gold. platinum also. silver touch $21 yesterday and this is where we are having. $20.43. just in case you are curious, you are looking at the july contract for silver, august contract for gold. -- back to october, $1062 an ounce. we are seeing momentum. that is where the money goes. that a fewnder markets are shot.
the philippines, indonesia, and bangladesh are closed. deal may bend and a in the works in china's financial sector. china international capital corp. and chinese investment securities are said to be in early discussions. stephen engle is joining us for that. >> the potential merger would create a financial powerhouse with about $186 billion u.s. dollars of combined assets. the structure of any potential deals have not been decided and cicc will only say in a statement that the two firms are in "very preliminary discussions on strategic cooperation and business opportunity. cicc was set up in 1995 and part
by morganl -- owned stanley until sold in 2010. the investment bank has been referred to as the goldman sachs of china for its role in core ranging many mainland deals. it's brokerage ranking has slipped from number one to number 25. largest by the 17th revenue and 100% owned by china huejin investments. that owns 28% of cicc. there is already interconnectivity. 3.7% one as much as monday before closing up 1.5%. c ranks $811ic
million in the hong kong ipo. your marketing -- your marketing money for expanding into wealth management and international business. lucas wong says a merger would be a good deal for cicc as it would combined their strength with high net worth, individuals, and corporate clients for mass markets. that, china investment has 160 branches in china compared with just 20 four cicc and both saw sizable full-year profit increases. rose 70%.fit cis's profit rose almost 200%. angie: thanks. the reserve bank of australia meets today.
27 economists surveyed expect that glenn stevens will keep the cash rate on hold at a 1.75%.of low of paul, look. the survey was taken before the weekend was before the inconclusive election. is that likely to change things? paul: it is possible. it was also taken after britain exited the eu and since then opinions firmed up with all economists expecting the rba to remain on hold. you can watch the dust settle on this. we don't have a result. the reserve bank is an inflation-tightening bank. that is what prompted the last cut in may. the cpi after the first quarter was very weak. the next quarter's cpi is due out on july 27. that is why we have 100% of
economists saying no cut today. the positions will almost reverse come august after we get the next inflation rate and inflation read not expected to be that good, angie. angie: a lot of people expecting rba to do the heavy lifting, especially after this inconclusive election that we have a little bit more least, an today, at clear picture of who will hold power after today's vote count? paul: the vote count gets underway again today and there is a lot of work to do. 1.1 million hosted a vote and they have to be sorted into the correct electorates before counting can get started. a spokesperson said we are not likely to get through one million through a day. leader called on
prime minister malcolm turnbull to resign. knock him turnbull responded saying he would say that, wouldn't he? he will push on regardless. angie: paul allen, thank you so much. we are waiting for the australian government officials to release its latest trade data. that is due in about 20 minute'' time. we will take a more detailed look at the rba's decision later in the show. we want your opinion so please tweet us your thoughts. we can check it out and share. take a look at some of the other stories we are watching. here is heidi. the u.k.'s ruling conservative party takes the next that towards finding a new prime minister today. all 330 tory members will be balloted to the five contenders hoping to succeed david cameron. each have outlined different ways to manage withdrawing from the eu. secretary may has received the
most endorsement. talked about former brexit leader boris johnson. thousands of people in the u.k. are calling for a second referendum and there are indications the remain campaign would win that. ify could stay in the bloc it indeed changes its mind. headingrea's neighbor for a 17-month high. the operator of japan's most popular messaging service the previous. line plans to offer 30 59 shares on debut. the company could end up raising as much as ¥133 billion.
it is expected to be the biggest tech offering this year and it takes place during one of the most monstrous times for global markets. acquisition ofs the company will in a unanimous vote and that was the easy part. intoeal has been thrown doubt by the u.k.'s decision to leave the eu and has been getting pushback by german regulators. they don't want the headquarters to be in london. be moving theould company's location outside of the u.k.. that is according to people familiar with the matter. they could be moving the holding company from london to a different location in the you -- in the eu. talks withexclusive iliad to be the fourth interest in the market. that is according to people familiar with talks that are
ongoing. the move would add to hutchinson'snd italian combined. they are looking to sell off towers and frequencies they don't need. by lining up buyers, they are trying to avoid a repeat of what happened in may. angie: thank you so much. on our website, we are looking at how millions of chinese are making big bucks streaming themselves on reality shows. it is universal. that is at bloomberg.com/asia. coming up later, when it comes to ipo's, what makes hong kong one of the top markets? we will be asking benson wall. can asia's market sustain their bounce back from brexit? we will be speaking with rick spooner.
angie: precious metals on the rise with silver topping $21 for the first time in two years. let's get more with rick spooner. silver not really a precious metal, but certainly a safety haven in this world of ours. why are people flocking to it, rick? the precious metals complex has two things going for it. we obviously have elevated risk levels around the world. geopolitically, particularly in europe. at the second time it has a double whammy of being likely to benefit from low interest rates for a considerable period of time. that makes it a more appropriate
safety haven vehicle been getting out of equities. we have seen this quite spectacular bounceback and equity markets where the risk is short because low interest rates are pushing people back into it. low interest rates are a classical safe haven. it does look as if this is a situation that could last months. doubtless, we will have buybacks. looking at gold for example, i think we have a real chance of getting back up to the next major technical resistance levels, around $1500. 7%-10%, that sort of thing and a similar scenario in silver. angie: it is really notable. gold is the default safety haven, precious metal. why would people be flocking to silver and the rest?
it really does seem it is a reaction to the brexit ability. are we going to see the rally post brexit age? firstly, it is also the case that you get silver and platinum more volatile than gold. when bull markets really get going, often to rally to more than gold. the flipside is when things change, they fall more heavily. i think that is why we are seeing comparably large rise in silver. survived postngs brexit and post european futures? i would say probably not. it could be quite a while before we get through into a post
brexit stage. it is hard to say how long it will last. as things stand now, it seems very unlikely that we will get real clarity on the big issues surrounding brexit and the survivability of europe for some months. angie: i think we are going to have to wait quite a while. a lot of agitation for sure. let's talk about aussie politics. it looks like the rba is going to have to be the adult in the room, i guess, if there is going to be a lot of political consternation in the senate, ability to get legislation full or reform or even a budget. do you think they are going to cut today? rick: no. i think it is very unlikely. ofhink the primary driver the red in australia will be inflation. very much tied to that in the moment. i think it is unlikely the rba
will cut before they see the next lot of inflation done which is on the 27th of the lie. that is what the market thinks. their chances have cut today. there is a significant chance of a cut in august. angie: how should investors take what is going on in australia? look, the election outcome from a market and investor point of view is a worse one than most have predicted going into the election last friday. it seems likely that we are going to have a period of relative policy paralysis, where it is difficult to get legislation through. it seems pretty likely that some of the things the market would have been most favorably inclined to do, like the introduction and reintroduction of the building construction
commission would not happen. there has got to be a significant reason that we will thehorsetrading between government and minor parties in the next few years, couple of years, anyway, which will potentially result in a greater propensity toward protectionist measures, which from the point of view of the overall markets, is likely to dampen the prospect of overall growth in the economy. it will be negative for the wider economy. generally speaking, negative for most of the bigger companies like the stock exchanges. i think from a market point of view, the government outlook in australia is a bit more negative than last week. angie: that is for sure. pmire also getting services coming out today. we has said it is a two-tiered economy in china.
manufacturing is slowing down, but apparently so is services. that is a concern. ric: this will be an important number. broadly speaking, you can stand back and have a broad look at the chinese economy and stand aside from the monthly fluctuations. we have seen a general movement towards rebalancing. some areas have been stronger. if we do see another week figure today, that might be taken well by the market. we shall indeed. thank you so much for that. rick spooner joining us live from sydney. china has jailed a former top aide to former president jintao for life. he is accused of accepting
bribes, obtaining state secrets, and abusing power. he is the latest target of an anticorruption campaign that has jailed more than 100,000 officials since president sheeting ping came into power -- xi jingpin came into power. the jury could not reach a verdict on two other accused. a 385 billion dollar fine. it led to bob diamond losing his job and $9 billion in penalties imposed on the financial sector. sydni's property writers have resumed their -- property prices have resumed their upward march. june, andmbed 1.2% in new listings fell more than 16% last month from a year earlier to their lowest in five months.
raising tensions, making a stand. what is significant is the timing of the exercises. they start today and and on the 11th, a day before the hague is due out with its verdict. we will know how the tribunal threat in the south china sea with the philippines, who filed the complaint. beijing said it will not recognize the outcome. putting it in perspective, china has conducted military exercises in the south china sea, part of exerting its claims overlapping those made by other countries like malaysia and brunei. vietnam says china is severely
infringing its sovereignty again which goes against international law. that is all falling on deaf ears. angie: is the south china sea fast becoming a flashpoint? haslinda: there is concern it could be. thereis also concern could be global consequences should it happen. these countries have fought for the south china sea for centuries. it is not new. what is new is rising tension in recent years. building naval islands and runways in the area. here is why the south china sea is hotly contested. $5 trillion are at stake, $5 trillion in ship trade passes through every year. it is an energy-rich area, strategic water edge. it is an important area. angie: coming up, this year's biggest tech ipo has become even bigger.
>> the top stories trending this hour, asia's docs are slightly down today. stocks are among popular's. silver topping $21 for the first time in two years. then there is talk of a merger between two chinese brokerages. sources tell us china international capital corp. is in preliminary discussions with
china investment securities on strategical operation in business opportunities but there is no certainty of a deal between the two companies with assets of $28 billion at the end of last year. australia here. we talking about central-bank action next acted to keep rates .n the full today shuffled today. glenn stevens maintaining the record low of 1.75%. malcolm turnbull says he remains confident of winning majority but may be unable to form a government without the help of independence. we are getting breaking news right now from australia. ahead of that rba rate decision, paul allen with all the numbers in sydney. >> a trade deficit of 1.8
billion. quite a big blow out there. even worse when you compare it against the april figure. up 1%. key factor probably the australian dollar that did weaken considerably in may off about more than 4% -- four cents . that appears to be waiting on these trades. retail sales also out at the same time. that one much more in line. angie: thank you. wider than expected deficit. how are the markets reacting?
rate. forecast -- look at the equity markets. we are watching a do things here. let me bring up the shanghai composite. let me just refresh that and ane you the latest data for infrastructure upgrade plan for the city. everything from railways to roads. have a look at the industrial for you. i just want to see whether we are going to get that drop.
it's a big trading company based here in central hong kong. 452 million shares. we are seeing some weakness. the index down about 1%. australia now down 1%. >> thank you so much for that. moderate these are continuing the rally. gold also touching near a two-year high. let's bring in our commodities reporter. can this rally last?
>> i guess that is the question. the main winners from that vote in the u k to leave the european union. fromhave really benefited turbulence across the market as we have seen investors move toward those safe haven assets. the big question is is that sustainable? well that continues to be speculation, the central banks may need to add stimulus because of brexit. also while there are u.s. interest rate will remain low, preciousnarios persist metals are poised to continue to win games. there are those who -- most
precious metals have made it a little bit overcooked and maybe some of those gains could retreat. will be interesting to see the thoseorward and to see flows of investments. silver backed etf rose to a record last month. angie: that low interest rate environment is something that rick schooner just pointed out as well when it comes to the precious metal rally but what about these precious metal producers? also getting things from a lower oil price. the mining companies to a large
extent tracking 14 of the largest gold mining producers. gains of about 27%. we look at the largest primary silver producer and it's surged about 176% in london. those companies really benefiting not just from brexit but some of the other factors. thank you. checking in on some other stories. the brexit vote drove the pound to a 30 year low and sent shockwaves through the market
globally. some companies including j.p. morgan have indicated they might move jobs out of the country. refiner is to spend $6 billion boosting capacity. the indian oil corp. once to raise production by 30% to about 2 million barrels a day and joined other refineries to add to capacities. energy agencynal expected to surpass japan and the thirds -- world's third-largest oil user this year. a net income of $1.9 billion and three months. goldman sachs, morgan stanley, jp morgan chase all sponsoring the listing. retailing.ast
target to between 2900 and ¥3300 , slightly more than the earlier projection. this tends to raise about ¥116 billion and the company has decided strong investor demand and market conditions for the change. angie: line is a little troubled here. why do it now? in may be now or never in their similar reasons but one is despite my average usage of the app, there are 218 million people who are sending
money and messages. that number hasn't changed much in the past year. at the same time, giants are growing and steadily expanding into the asia regions. you said it. a lot of people use it but not as much as people are racing to facebook. how does line stack up against those? whatsapp user, i think the line interface -- on top of the basic messaging services, line has managed to build a whole ecosystem of offerings and these things range from on-demand taxis to job listings, payments, media streaming. has is a model that we chat
pursued in china for a long time but you now see facebook catching up, offering no services, suggesting there is a convergence on a certain messaging model. for line would be over markets like indonesia, malaysia, india where there is not a single dominant platform but you have millions of people downloading their first act and making those decisions for the first time. angie: thank you so much for that. breaking news for you. it has fallen by the daily limit. it resumed trading after six month of trading halts from last december coming back online. this is china's largest property builder here and it's a bitter struggle for ownership with a hostile takeover and unwelcome
50 indicates an expansion, below that means contraction. this is a good figure. hong kong has retained its spot as world's top ipo market. that according to the latest report from pwc. the number of new listings fell 22% on the year with total funds raised 66%. of the oceanter falling? >> i don't think this is like the ocean falling. if we compare hong kong to the national changes like london, new york, i think the most important point is in the first half of 2016, the entire global economy come ipo markets are not attractive. so for the other changes, in terms of fundraising, we see the drop off 60%.
hong kong is in line with the other exchanges. .ngie: in-line still number one but at the end of the day, the appetite is waning. but in hong kong and china, we still have a pipeline. we are talking a pipeline of over 800 companies waiting for an ipo. in hong kong at the end of june, like when hundred 10 companies waiting for the ipo. and around 40 of them expect a submission in june. a strong pipeline. angie: the regulatory environment in china was very strict. it is ever-changing sometimes when it comes to the ipo market. have the regulatory environment impacted that pipeline? >> absolutely. ago, after dropping the stock market in china, the ipo
was suspended. , we saw the ipo market in china suffering but in the second quarter, it picked up a bit. we have noticed like 61 companies are listed. angie: fund raising has dropped 66% first half as compared to last year. >> i think if you compare hong kong to the international markets in particular, brexit impacted hong kong and relatively mild as compared to other changes. we still have the strong pipeline and in the past few years, the companies -- is contagion
exposure about brexit but what i'm talking about is the dollar, n, this ising the wo restricting the value of some of these ipos. >> you are right. for that part, a lot of hong kong companies coming to hong kong from china, a strong pipeline. but if with the brexit, we have seen a pressure and if that got depreciated, it would affect fundraising size and also some companies may prefer to move their timetable of it. angie: what are the kind of companies in the pipeline? are they sector specific? >> in terms of fundraising, they are the financial service sector. angie: interesting. sme's what he to get in on the game. day about at the end of the
, you have these establishment cornerstone investors. this is a criticism of hong kong ipos that for the public, they don't get it into the secondary the ipo, much of it is reserved for establishment investors. it's already parceled out before it gets into the hands of the public. this is not necessarily a good. >> the company still have a choice. offering is a must. we tell investors there's not much interest in the psx or so that's why companies are getting more cornerstone. but from the companies side, the more cornerstone investors you have, you are in a better position to make sure you will get listed. angie: thank you for bringing
that report here. thank you. the latest first world headlines. saudi arabia was hit by three suicide bombings monday. the worst, four people killed near a mosque in medina, one of the holiest trying to and islam. happened explosion near the u.s. consulate extending a wave of attacks that killed four people across the middle east in the past two weeks. chinese naval drills that start place.ill take the exercises run until the 11th. vietnam's does that infringes its sovereignty and contradicts an understanding made by the countries and violate international law. a futuristicplayed elevated bus that could be the answer to crowded streets. it is tolerant enough to allow other vehicles to pass
underneath and runs on rails and cost about $20 million. the bus is expected to come into operation next year. global news 24 hours a day powered by more than 2600 journalists in more than 120 countries. angie: next, how the u.k. decision to quit the eu could have founded the death for economics. this is bloomberg. ♪
shock? never going to be a great year for japan inc. and as the yen had been strengthening, companies had been providing pretty conservative forecast but with the brexit, that pushed the yen a bit through the threshold level to where at in aggregate base, earnings will now be declining for the first time in 10 years. that is a pretty big blow when you look at the knock on effects for even the smaller companies in japan that do business with the bigger companies. that's a pretty big threshold to be going through. levels we yen is at haven't seen since 2013 before all of this started. what are the declining forecast ?eaning for abenomics >> people are telling us it is the yen for abenomics. we have heard that before.
still has anister economic program but we have come full circle with the yen. we have seen the monetary easing and the limits of that have been known for some time. you can recall a year ago when the yen was weaker, you had a forof pressure, and companies to invest more of the cash they had been piling up inside japan and they were saying it's not really strong enough for us to do that yet. now we see why. part of their concern was the yen could raise again. when you have global instability, you have the currency rising and that makes it tougher for them to arrive in japan. the saga continues. thank you. still ahead, we will discuss the in the market with
angie: i'm angie lau and this is "trending business." we are going to be live in sydney, singapore, tokyo this hour but here is what we are watching for you this morning. -- asia fix stocks are pacific stocks are on the retreat. the china bank among the big losers today. then we have got the aussie dollar slumping as a trade
deficit came in much worse than expected in may. linsky -- ect let's pick it up for japan's favorite messaging app. aims to raise more than $1 billion. shares are rising in seoul. you think ofhat today's top story by following me on twitter and include the hash tag #trendingbusiness. markets are open for business. here's david with an update. things have actually picked up. yet seen a fair amount of emergence in the last 15 minutes or so. we are dow -- down more than the
equity markets. really comes down to what is happening -- the onshore rate is actually the 5.5 year low for a fair amount of buying here. off theust a little bit peak there. have a look at the dollar yen. 10217. lead buying up yen at the moment. near 102. the charts tend to move. quickly, let's have a look at other asset classes. we're looking at gold, silver. have a look at where nickel prices are.
a 10,000.ing back below 10,000. 1992 is your level for silver. i think we are seeing some pressure there. having some trouble getting over the 200 day moving average. 10 year yield in australia. we will get you data in just a moment but the 10 year yield in australia now at a record low, 194. the 10 year in the u.s. now pushing back towards 1.4%. we are back here again with the yields on the way down. a shell you has made trade deficit to the equivalent of 1.7 billion u.s. dollars.
it came in 2.2 aussie billion dollars expect -- worse than expected. no change expected. let's go to paul allen in sydney. the economy is surveyed by bloomberg unanimous, no cut today but it could be a different story for august. muche position is pretty reversed by the time august isls around and the reason the cpi. notwithstanding all the political turmoil going on, the reserve bank still expected to keep that cash rate unchanged but later this month, consumer prices. into it was very weak in consumer prices in the first quarter that caused the reserve bank to cut the cash rate back. -- take a look at those trade figures we had a minute ago. much worse than expected, a $2.2
billion deficit. the aussie dollar pulled back about 1%. that helped propel some hefty revenues. imports cost more. these deficits keep getting wider. economic reform is looking bleak. look county resumes today in australia's nailbiting election. any indication of who might be holding power soon? but,would love to say yes no. votes to beposted counted. they all have to be sorted into the correct electorate before the counting can get underway. the commission morning everyone they are not like you to get
through one million votes on tuesday but the picture should start to sum up at the week wears on. meantime, the opposition telling markham -- malcolm campbell to resign. the prime minister vowed to push on. push on in d just like the rest of the country. thank you for that. let's take a look at some other stories we're watching for you today. >> this could be a big one. two chinese brokerage said to be in merger talks. they are in early talks to create what would be a financial powerhouse with $20 billion in to see ipssets stop only said the firms are in preliminary discussions on strategical operation. the icc was set up in 1995 and
by thears, it was run investment banker sometimes being referred to as the goldman sachs of china. unit has fallen from the top spot on the name and to about 25. chinese investment securities is the 17th largest brokerage in china by revenue and is 100% owned by china. angie: shares of south korea's neighbor headed for a 17 month high close. the operator of japan's most popular messaging service updates pricing range to the to $41.nt of about $32 taking into account the issue
could raise as much as $1.3 billion. the off ring is expected to be this yeart tech ipo taking place during one of the most to mulch rules times for global markets. tumultuous times for global markets. talks to be the fourth player in the italian market according to people familiar with the ongoing and private talks. the move would increase competition. they're trying to avoid a repeat of the eu veto of the u.k. carrier in may. let's get you the latest on the brexit situation. the uk's conservative party takes a new step toward a new prime minister today. all 330 members of parliament
will be balloted on the five contenders hoping to proceed david cameron. the reason they -- theresa may has acquired most public endorsement. ofrea letson topped a poll party members on monday and has the backing of boris johnson. the decision to leave the eu may not resell final after all. thousands in the u.k. are calling for a second referendum in the are indications the campaign would win this time. the u.k. could stay in the block if it indeed changes its mind. we have some breaking news coming to you out of the south china sea where japan is saying that three china coast guard vessels entered its waters with one chinese navy ship sailing close to disputed 9 and thatk on june
is one japan summoned the chinese ambassador to answer to that but right now, we're eyelids.bout the this has always been in dispute between john and japan. the last incursion was june 9 when the japanese government called for the chinese ambassador. overng and tokyo fighting the eyelids. this is also a day where the chinese naval ships are conducting exercises in the power cell islands. these are just you did waters and islands with vietnam. very intensifying action happening in the south china sea when it comes to china and japan, the latest this hour. as a u.k. continues to adjust to life after the brexit vote, hedge funds and asia are feeling the effects.
the industry is heading for its worst performing since 2011. claus joining us from brazil. what are we seeing here? >> we see a bleak picture. hedge funds in asia on average down 2.6%. you already mentioned this has been the worst performance in some years. especially down are the equity. on the other hand, we see some performing pretty well. credit strategies and event strategies. picture butmixed the hedge fund industry is an equity longshot and those have not done well this first half of the year. some funds have been caught offguard by what happened june 24, the unexpected vote of the
brexit. the strategy of this fund is for the use of options. it amplifies as a return. juneopics are down 7.3% 24. the capital was the best performing fund in japan last year, gaining 64%. another fund based in singapore wash performed well june 24 the macro fund, which through its bond holding fund gained 6.2% june 24. seeing more big
hedge funds joining platforms. why? >> there is a very interesting trend. namely the smaller hedge funds which had been using hedge fund , we are seeing the bigger funds also joining and one good example which i got from a source is let's assume a midsize tax fun running on a cost of about of an hundred thousand u.s. dollars a year and those funds can use 80% to 90% of those costs so they can save 700,000 u.s. dollars by joining and another interesting aspect is the repercussions of platforms gaining. they can institutional investors are seeing platforms more as a's all would and -- as a solid and good infrastructure.
this is another reason why we see in asia the trend that bigger hedge funds are joining platforms. angie: all right. i guess bigger is better. thank you so much. on our website, we are looking at the millions in china who are live streaming their day-to-day lives. it's not just a fad. you can actually make big money here. still ahead on trending business, a financial powerhouse in the making. talk of a merger between two of china's big brokerages. details of that later on. next, how even the most bullish forecasters may have underestimated the yen. we are discussing the latest move with bank of america merrill lynch. this is bloomberg. ♪
>> these are the latest first world headlines. saudi arabia was hit by three suicide bombings on monday. in worst, for people killed a mosque, one of the holiest shrines in islam. the third explosion happened near the u.s. consulate, extending a wave of attacks that killed scores of people across the middle east in the past two weeks. retire. top it to he was convicted in a closed-door file monday over illegally obtaining state secrets and abusing power. highestthe latest profile target in the anticorruption campaign that has ensnared more than an hundred since 2014.icials vietnam says chinese naval drills that started a will take place in its territorial waters. says that infringes its
and violates international law. vietnam says china should cancel and stop threatening regional security. global news 24 hours a day powered by more than 2600 andnalists and analysts more than on hundred 20 countries. angie: australia's dollar is trading lower this morning. traders that the central bank will stand at a policy meeting today. let's bring in my next guest. ,our office is very busy especially post brexit. but let's focus on that dollar in australia. as well, that really kind of exacerbated the trade deficit we to 2.2m 1.7 billion
billion australian dollars. really on the back of the currency. >> investors i speak to have been surprised by the resilience of the australian dollar since brexit. but it's important to know the trade rated index is about 4% lower than the peak we saw in april. they will be looking at the australian dollar with a bit of concern but for now, i don't think they're at the point where they will cut rates just because the australian dollar is strong. angie: i don't think there's any anticipation of that in the economy surveyed, all 27 believe they will stand firm. is at some point, the rba expected to act, especially with the uncertainty in the political landscape. >> they won't cut today but don't rule out they will be more dovish.
uncertainty, confident with business and consumer will probably take a hit and i think they recognize that. the expectation that they cut in august. they couldossibility be a bit more dovish in their statement today. scarlet: for currency analysts, is like engaging a boxing match with one hand? you have only got monetary because fiscal reform is likely going to be stuck in the senate. >> i think the burden will be on the rba to cut rates down the line. we are looking now for one further cut. most people are shifting in that direction but the rba has room to cut. they can cut rates and support the economy at a time when fiscal policy would be limited. actionthe yen is at
stimulus levels in 2013. that's pretty dire. at the end of this month, they have to do something. you have the resumption hike tax delay and on the monetary side, they have to do something even the people are asking questions about their limits. angie: how big of a firepower do they have to engage? much. very they could buy more etf's, tweak around with the rate in their lending operations. it's difficult for them to buy the because they're not -- big bang balance sheet expansion we saw in 2013 is now very difficult. angie: what about helicopter money? much peopleing how are talking about helicopter money in relation to japan now. i think it's risk but it's a longer term risk. helicopter money only becomes realistic when they have to buy from the private sector.
angie: they're almost there. saidal bank, the main one, -- fed, what is the likelihood of a december rate hike? >> we are calling for a december rate hike. i think the external uncertainties are very high. if there is a global deflation, if europe is slowing down, the a relatively.s. is closed economy but the fed does not ignore global conditions. it is a risk they might delay that. angie: re: factoring politics into that? trump and clinton? >> not really. we don't know what will happen there but that is another uncertainty that will be there. angie: we will find out together in november. good to talk to you. thank you.
pretty strong show of confidence by line. angie: since they announced the ipo last month, timing went from bad to worst. the markets have been going on a doozy. why not delay things? >> this may be a case of better now -- either now or never. the fact is the company's growth has slowed down in the past year. o'neill has barely budged -- the needle has barely budged. at the same time, you have whatsapp, facebook messenger breathing down their next so they do have to raise money and expand or die. because itnd or die has rivals like whatsapp and wechat in china catching up fast, overwhelming it. amazingine has an
ecosystem of services on top of basic messaging services. you can order a cab, find a job, enjoy streaming video. this is something they have been doing for a while. now you have facebook taking a page out of the playbook, adding more and more services and considering the 2 billion user base they have to work with, line has to make a move fast and make sure when these new users in markets like malaysia, india, indonesia get their first mark on downloading their first messaging app, they want line to be the app they choose. angie: thank you so much for that. in.s check markets trading here in asia for us to fix, we see much of this region giving back the gains of yesterday. inugh we are seeing gains shanghai and let's take a look
angie: top stories trending this hour, asian stocks are down with the regional benchmark at a four-day rally. energy stocks among the top losers with brent crude dropping below $50 a barrel. meanwhile, we are seeing metals continue to seeg rowth, and also silver following the uk's decision to leave the eu. it has retreated after topping $21 for the first time in two years. australia's trade deficit was lighter than expected in may,
coming in at $2.2 billion, the equivalent of 1.7 billion usd. rbadata comes in with the expecting to keep rates on hold today. mostly, the governor is maintaining the record low of 1.75%. we're betting the rba will ease in august. shares in china's largest property developer has slumped for yet another day, the second straight. they resumed trade for the first time this year on monday following a six-month halt, its two biggest shareholders fighting for control. the company announced in your $7 billion share in metro group ina a bid to end the battle. --arket check with david it's all about currencies and commodities so far today. david: absolutely. when you look at how price
actions form, when you look at these currencies and commodities, seeing the dollar strengthen, the yen strengthen, it gives you an indication of what we are looking at. in the order of 6/10 of 1%. we have consolidated at this level on the last hour or so. a day of risk aversion after a 45-day rally. ta the dollar-yen has been at a session low. that is perhaps why we touched near those levels. have a look at euro and sterling -- we are seeing declines against the dollar, and you are also seen yen strength.
long story short, that's risk aversion. the market is zeroed in on the problems beneath the hood. story here is more banks are coming out and rising their , we are now looking at 120. that's also unicredit. if you want to be more bearish, look at deutsche bank. this seems to be the consensus of a 10% drop, roughly speaking. let's move things along and have onook at dollar, weaker now this pair. if you look at the spot price, in the chinese currency.
similar story, but if you look across these asset classes, at those points, risk remains fairly fragile. let me wrap things up with this. have a look at borrowing costs. we're not seeing yields coming down, but that being said, these are fairly low levels. we're looking at the 10 year u.s. treasury yield, in other words it's a very big low, flattening on the yield curve. yeah, not a sign of things to come. angie: thanks. it has been a busy morning in australia, with worse than expected trading, and the rba do to make its latest rate decision in the next few hours. this comes against the backdrop of political uncertainty with vote counting once again underway.
the election result could potentially be some way off . whyave david mechling on investors should not fear a hung parliament. i guess we are used to it in australia, but what is there to like about the current situation? >> [laughter] indeed. australians have fairly recent memory of this, the government from 2010-2013 was another minority government. memoriesns have bitter because it's a period of political turmoil, but if you look at the economy, it performed pretty well. look at returns on the asx 200 index. they annualized 5% over that period. that's the second-best performance for the howard government in the years up to 9098. that wa-- 1998.
and productivity growth -- paul krugman once said isn't everything, but it's almost everything. productivity growth was the best of the decade. all in all, it was not about period for the economy, despite the political turmoil. if theisn't it better government has a clear mandate, though? you?u'd think so, wouldn't that is what we generally expect. but if you look at international comparisons, that doesn't seem to be the case. there's a long-standing study in en yous. that shows wh don't have the same party in control of the white house and both houses of congress, it is better for the u.s. economy then when there is unity. similar data in germany as well. i think you even say something similar in australia. remember, the howard government returned in 2004 with the
majority and control of the senate, which is quite rare. they used that to pass changes to workplace law, which were very unpopular, resulting in landslide labor in 2007. 2013, advocates the biggest majority in 17 years, and proceeds to pass the budget that is very unpopular, and now you have added kicks from his job by turnbull, and turnbull struggling to cobble together a majority government. angie: why do we see economic performance and politics lineup the way we expect? >> sure. i sink there are cup -- i think there are a couple reasons. governmentidea that is like the engines of the economy, but really they are more like the routers. -- the rutters yesterday the
australian dollar and market turned down at the start of the day what would be election results, but rallying after monetary prices rallied. i think that's one reason. the other reason is related, which is that we tend to assume that the rise of business friendly government is going to pass the policies that are right for the economy. that is certainly what a lot of the business community is calling for. but i think it's a bit more complicated. if you look at productivity growth over the last 19 governments, it managed 1.8%, not much that the government can make much of a difference. i think we have a united government that pushes through quite dramatic reform, that can create uncertainty. in some ways it is better to have a hung parliament. gadflybloomberg
columnist, thank you. checking in on other stories we are following. willinto's new ceo says he keep their head office of london despite the decision to leave the u.k. he said simply, "rio doesn't do politics." the brexit vote to troll the pound to a 30 year low and sent shockwaves through global market. some companies, including j.p. morgan and hsbc, indicated that they might move out of the country. spent $6op refiners billion boosting capacity over the next six years. indian oil corp. wants to raise production by 30% to about 2 million barrels per day, with other refiners racing to add capacity. the international energy agency urged japan to be the third-largest oil user, and china's coastal bank has revealed an 11% jump in profit
ahead of its clan share sale, which could be the world's largest this year. documents filed to the hong kong stock exchange show a net income of $1.9 billion in three months. goldman sachs, morgan stanley, china international capital, j.p. morgan chase, and bank of america are responsible for the listing. and take a look at fast retailing in tokyo right now. three-quarters percent down after a jump in revenue for third straight month. as peopleune rosose went shopping for summer clothes, but the sale fell short of their estimate of 5%-10%. and a big m&a deal may be in the works in china's financial sector. china international capital corp. and china investment
securities are said to be in early discussions. stephen engle joins us for more. cecc, cif -- stephen: it's an alphabet soup. that china post story you --tioned had china capital this is really why they are referred to as the goldman sachs colloquially of china. it's china's big investment bank , set up in 1995, co-owned back then by morgan stanley, their first foray into china. they sold out in 2010. this would be a combined asset -- this is according to people familiar with the deal -- in ofliminary stages discussions about this is opportunities with china investment securities. but again, people familiar with
-- they say it could combine assets of about $28 billion usd, the talks our private right now, so we're just getting inklings of it. angie: is this a good fit? stephen: well, according to investors -- we can bring up the stock so far, up for its second day. it rose as much as 3.7% yesterday, listed here in hong kong. that's over the last year to date. it's up again today by about 1.3%. on top of 1.5% yesterday. we had lucas wong calling it a good deal for ciccc, because we need to put this into perspective. i talked about the legacy issues cicc, run for many years by the son of the former
premier. it's known as the goldman sachs of china, but its brokerage side of the business has come down a bit. it was number one in 2005 a decade ago, and it's now 25 in terms of revenue. is it a good fit with cis? number 17 in revenue but have so many more branches across china, nearly 200 branches, whereas china international has about 20. to high network individuals, corporate clients, where cis is more mainstream. angie: and together they could be a behemoth. thank you steve engle. it's not the only big merger on the horizon with the london stock exchange getting the green light. lsc shareholders approving the union in a near unanimous vote, of the details have proven tricky.
you could say brexit jumbled things up. >> yes. brexit has thrown lots of things into doubt regarding this deal, but there are some other factors. one was the headquarters. they don't want the combined company's headquarters to be in this is now more brexit and by the when the u.k. is finally leaving. they want to have the headquarters of the combined company outside the yoeu. the original deal is keeping a separate operating headquarters in london, and the company based wouondon and the current -- d remain ceo. the deal was overwhelmingly voted for by the shareholders, 99.9%. it would create a mega exchange
in europe to compete with cme, intercontinentalexchange -- the combined entity would be number three. despite the fact that there are issues, there shareholders have voted for this to go ahead. angie: what other options are there for headquarter locations? well, they could consider moving the country to another location in the eu, which is not frankfurt. for example, the netherlands. but they can only consider that after they a proof an existing plan. toestors have until july 12 tender offers for shares. there are a few days to go until that part is done. but this issue of the
headquarters has been raised yesterday at the lse shareholders meeting. one said they would not want the headquarters to be moved outside of london. angie: thanks for that. coming up next, trouble is brewing in south china sea. the potential flashpoint between china and vietnam, next. this is bloomberg. ♪
angie: 10:47 in hong kong. three former barclays traders have been convicted of libel between 2005 and 12,007, but the jet -- and 2007. four years ago, barclays paid a fine for its role in the scandal, which led to overhaul of the banking industry. it also put their then ceo without a job and around $9
billion in penalties imposed on the sector. china has displayed a futuristic bus that could be on private streets. it's tall enough to allow other vehicles to pass underneath, and it could reduce congestion by 35%. -he london rail - it's expected to come and operation next year. and nasa is about to celebrate an the store close encounter. it will make its five-year journey to jupiter. it will fire its main engine to slow down and slip into orbit around the planet. the maneuver happens automatically without help from earth. it will go through jupiters clouds and map the surface. global news, 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. i'm rosalind chin; this is bloomberg. japan has made a formal
protest after chinese forgets injured water around a group of islands claimed by both tokyo and beijing. it's the first time the warship has joined the game of cat and mouse from the sink a good value -- the chain. last month, tokyo made another formal protest of what it called chinese incursion into its territorial waters, calling in beijing's ambassador. this is just the latest evidence of heightened tension between china and its neighbors. it's starting six days of naval exercises today and waters claimed by vietnam. so many sovereigns are against china -- we have haslinda amin taking track of all of this, thi long lists of nations getting a little bit irked that china is flexing its muscles again.
haslinda: yeah. see it as a show of defiance, conducting a naval it's believede -- to be more than 100,000 square kilometers, an area controlled by china but claimed by vietnam as well. this is also home to woody island, where china is said to have about a thousand personnel and missile systems. understandably, tensions are rising, vietnam insisting it be exercised if china is infringing its sovereignty yet again and that it should stop threatening regional security. but china is clearly not taking heed. it has had no other ships will be allowed in the area while the drills are happening, so here we are again, and beijing upping
the ante. the south china sea is fast becoming a flash point here. haslinda: well, the risk is there. if tensions escalate even more in disputed waters, there could be global consequences. there have been competing claims in the south china sea for centuries, but it is only in recent years that tensions have been rising. the situation is made a bit more complicated with the involvement of the u.s. the u.s. supporting asian allies to counter china's expanding claims, it says it is upholding freedom of navigation, that lawful trade should not be hindered, in here lies what's at stake -- $5 trillion in shipboard and trade. it's an energy rich area, and it's an important area in desperate need of a resolution. angie: has, thank you. coming up next, the uk's
forecasts because of the surging yen. we have bloomberg asia conglomerate editor joining us from tokyo. dave, the yen has been rising all year, and brexit pushed it even stronger. david: it certainly did. as you mentioned, from the beginning of this fiscal year, they were forecasting a lackluster performance. they were concerned that the yen was pushing higher, getting near that threshold where the stronger currency over mind overseas earning. a lot of companies are looking at a decline in annual earnings for the year. keep in mind, a a lot of the biggest companies have seen record profits, the weaker currency pushed them up high. they are coming up from pretty high-level. angie: what are these declining
forecasts meeting for abenomics, anyway? david: well, one of the few bright spots for abenomics has been corporate earnings. last year was a fantastic, but as i mentioned, a lot of the biggest companies did have record earnings, that was feeding through ministerout the prime and others to put pressure on companies to raise wages, to boost inside japan. that was what the hope was. there were still a lot of critics of abenomics from the beginning, that said it wasn't going to work unless you get some broader base corporate reforms. pushing the yen down isn't enough to convince companies, and those critics have improving proven right. companies were smart not to have raised wages or invested in building in japan, because the currency strengthened again. angie: ok. well then how are companies
likely to respond now to this new reality? david: well, japanese companies are, especially big manufacturers, used to a strong currency. they know what to do, to shift the growth emphasis overseas. it's a pattern may have seen before. you can expect them to be moving more production offshore to focus on big markets like southeast asia, where growth is a little faster, populations are growing. that's where they are going to be putting their emphasis rather than on japan, where it is harder for them to make money at this level. angie: david coombs, thank for that. that's it for us on "trending business." stay tuned for "asia edge." ♪
>> take another wife look over victoria harbor here in hong kong. a sunny day, but the msci is retreating from a three-week high. we are live in hong kong, and this is "asia edge." i'm yvonne man. top story -- asian-pacific stocks decline for the first time in a week as possible bank bailouts give investors another reason to be wary. china's largest property developers among the losers,
with the daily limit for a second straight day. policy makers are digesting the news that australia's trade deficit was wider than expected in may. glenn stevens is expected to hold the record cash rate. coming up this hour, millions of people in china make money by live streaming their lives. ande are doing stuff live, i'm watching the markets. we are led by australia and japan. this comes the day after brexit levels, a correction which had already climbed a few days ago. equities intot of bonds and yen. let's show you where we are -- bonds getting picked up. we're