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tv   Bloomberg Markets Middle East  Bloomberg  July 7, 2016 12:00am-1:01am EDT

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anna: currencies make the headlines. the yen is near its highest since 2013. morrison sayst now is the time for australia to move within its means. apple is feeling the heat in china, falling to number five in the smartphone league in the face of local rivals. and the $10 billion deal is
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closing in on u.s. health would maker whiteway. ina: i'm anna edwards london, where it is bright and early. markets." "bloomberg what are we looking at today? >> those havens are working in tandem. we were just taking a look at the bloomberg sovereign bonds and with all of this global market activity, especially after brexit, investors are fleeing to sovereign bonds and to gold. and check out the state of the yen right now. 1.98 per dollar today, another indication of brexit fallout worries, anna. anna: we have the dollar-yen at
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1.98 by .8%., up the hang seng, up by .8%. moves in currency markets, as we have been flagging. quite a few markets are closed around the region. no trading in indonesia or malaysia, or much of the gulf. they are closed, celebrating the end of from it on. let's check in on the first word headlines now. aslinda: samsung shares are higher after its preliminary profit numbers beat out. $6.9 billion. to they now expect samsung to pour at least $9 billion of extra investment into its display.
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health thfoodr creater, whiteway. this includes a product. bys will raise growth by 5% 2020. suspended trading in property funds in the wake of the brexit. trading andlted $7.5 billion worth of funds due to what one called "exceptional liquidity pressures." concerns of the u.k.'s future in europe.
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minutes of the policy meeting a week before the brexit decision shall officials wanted to wait for the results. they also wanted more proof that the u.s. labor market has returned before making a move. global news 24 hours a day, powered by 2600 journalists in more than 120 news bureaus around the world. this is bloomberg. angie: the treasurer now says aftera time for sobriety the outlook has been lowered for the country's aaa credit rating. let's take it to sydney now. what did s&p say and how did scott morrison respond? what weas been saying, have been discussing ever since then, the inconclusive election results from the weekend.
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the election outcome has caused much we getting. they have but australia on a negative credit watch. without the implementation of more forceful fiscal policy decisions, government budget deficits might persist for several years. scott morrison held a press conference very swiftly after the release of this report. he was putting a positive spin on things, really. at theo put out th report said the economy was strong and was only a one in three chance that the rating would be lowered within two years. lines are battle being drawn over this report, right? >> that is right. i mean, the government was unable to legislate savings in the previous three years because former budget was particularly harsh.
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this is where the politicking begins. scott morrison, going on to say there could be stabilization. >> we believe that fiscal consolidation cannot be postponed, or slowed. same thinge said the today. they have concerns about the pace of fiscal consolidation being slowed or postponed. now the government, should we be able to form a government again in the next few days or weeks, has every intention of enjoyin our wsuring that we maintain credit rating by making sure we maintain our fiscal trajectory. >> so, a little taste of what is to come. got morrison, already trying to portray the coalition as the responsible ones,.when it comes to the budget pretty much saying, anyone who opposes their
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measures is fiscally reckless. yuan isw, the chinese the worst performing currency this year. auit quite a coup from half a year ago. why are investors less concerned this time around? we hear a lot from investors in this part of the world regarding better communication from chinese authorities. >> good morning, anna. i think that is what is happening. the pboc has improved its communication. can improve further of course, but when you consider where we were back in january, it has settled nerves now. there are additional press releases. on the other side of it of course, investors are growing more comfortable with china's new exchange rate regime.
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china made clear that they were going to put a flow under the yuan. they came into the market in a big way earlier this year. they spent the reserve and a major that the capital border was closed down to get a grip on capital outflows. when you take it altogether, the sense that china is looking for ion istive devaluate not there right now. but people are still watching very closely where the yuan is going to go. anna: if the yuan weakens much further, does some of this lack , is this related to the lack of big moves we have seen with the currency? >> they could raise the suspicions among investors and they could start to become worried. forcing the what we woul central bank to support the yuan.
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it would force them to have to put more money into the economy as well. so, it is a little bit of a wait and see approach right now. currently, it is 1.7% down from the left few weeks. but there is the feeling that china really is learning its currency goal. much.enda, thank you very enda curran, joining us there with the latest on what is happening in hong kong. anie: let's continue the conversation because it is a little puzzling right now. yuan dropping in the past couple weeks, back to levels of november, 2010. we are now joined by the head of strategy. the less time this happened, there was a big run. this time, people are a little more sanguine. the pboc was doing a good job
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here, to how long is that going to last? >> the biggest problem is the underlying economy is weak, putting more pressure on the yuan. we have a target of 620% by the end of the year. -- we have a target of 6.8% by the end of the year. angie: where do you see this going? do you thinkt h the pboc is goig to step in at some point? >> right now, i think policies can guide the currency more closely to the euro. european currencies have a big bearing on what is going to happen in europe. angie: the problem is the strong dollar and the weaker yuan. companies are trying to repatriate. they are having an issue when it comes to that kind of divergence. so, why are the chinese
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government and regulators trying to offset that and get more capital inflows here? >> when you look at capital inflows, it has a lot to do with the foreign momentum in the economy. whatnk the real test is happens to the capital outflows. i think that could actually spike higher in the third-quarter of the year. droppedollar bond sales 21% in the first half of this year because of that weaker yuan. >> yes. angie: so, what do you think, in terms of expanding that regulation, t may be changing -- may be changing the yuan rules, this that going to spur some dollar bond issuance? >> it will probably be much easier to do domestic issuance. surged dramatically
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over the last year. angie: stay with us. francis, head of hong kong strategy. coming up later in the show, apple was once a smartphone choice in china, but things have changed. details, later. after a short break, the yuan is near a 60 year low and we talk about the implications for other markets. that is coming up next. this is bloomberg. ♪
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anna: welcome back. angie: you are watching bloomberg. anna: i'm anna edwards here in london. let's get to the latest. david: it is a fairly uneventful day. volumes are quite thin. we are looking at 25% to 35%,
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less activity than we are used to seeing. taken up and out of the equation, it is looking better. hong kong is actually bouncing back from the three-week low we have seen. that said, look at the broader markets here, and you can slice and dice across the sector groups. let me bring up the pie chart here. oil and gas, 1%. they have nothing really to get excited about, $46 to $47 here on new york crude. aussi dollar, the most exciting story across currency markets today. the weakness we saw following that change in the outlook therefrom s&p. from the outlook there s&p. 1.01, that is,
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the level. ten year, -27. we just had this two, five, and 10 year bond auction out of japan. demand is slow there. the previous one was 3.2 times. the demand is still there for yields -- well, bonds doing nothing. angie: let's continue our chat right now with francis, the head of china and hong kong strategy. when it comes to strategy in china, how long do you think this reallocation is going to last? especially as we are watching an underlying weak chinese economy. : you will probably see a reallocation and the market will
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probably support it. but i think this reallocation will last one month or two. i do not think it will break those april highs that we have seen. noise,d for this brexit the chinese economy is going to be weaker than people expect. priceseven with property that seemed to be stabilizing? francis: property has done very well on the back of government policy, but sooner or later, the policy will weaken. they need to keep that stimulus going and we are not sure how to do that. angie: when you think the pboc could step in with stimulus and easing? francis: it will probably be in the fourth quarter, september or october. anna: francis, it is anna in london. i wanted to get your thoughts about the relationship between china and the u.k.
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based on what we have seen on june 23, china had been investing a large proportion of what it put into europe in to the u.k. it like the role the u.k. was playing in europe. how is that going to change, do you think? angie: anna is asking you about u.k. exposure to china here. how is it all exposed? francis: oh, ok. angie: that's ok, go ahead. francis: ok. you look at it actually, most of it is exposed to trade. negative exports have been very little contribution to china. near term, the trade component will not be a big part of this. the investment will shift to other parts of europe, but in terms of economic growth in the
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near term, i don't see many changes. angie: francis, what about the property market in the u.k.? i mean, we are just seeing stats that mainland chinese investors are some of the biggest investors in the u.k. property market. francis: i have seen a lot of that myself, a lot of colleagues in london. this would only spur more money into the u.k. market. pound is is alread -- the already weakened. angie: the safety haven play is huge globally. we have seen this flight to safety over the past couple of days. how long does the extend? a littlee euphoria bit of, maybe this is not so bad, but reality is thinking in. and you are seeing sovereign
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bond yields drop into negative territory' here. francis: people are assuming the worst. it will take a long time before we understand what the real impact of this is. angie: francis cheung, head of hong kong strategy at clsa, thanks for stopping by. anna: coming up, the deal valuing the health food giant at $10 million. that is coming up next. this is bloomberg. ♪
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anna: welcome back this is "bloomberg markets: middle east ." hpc, once ranked among smartphone leaders, has been struggling with unsuccessful products. second-quarter sales fell to about $580 million. in june alone, sales fell 27%.
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htc's market share peaked at over 9% in 2011. it had just 1.5% last year. now, the sister of korea's group chairman has been arrested. ands accused of bribery development. -- and embezzlement. 73-year-old gave because medic maker preferential treatment in the duty-free stores. lotte has denied the allegation. an australian online retailer has fallen into the early stages of its first day of trade. the company had a share price of $1.80 and currently, it is trading at $1.58. million after138
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starting in the founder's parent's garage. the retailer now carries 28,000 products. the chinese computer head is in hong kong as it struggles with slowdowns in pc markets. those challenges are overshadowing an improvement in the smaller data business. profitability was up 62% in 2015. here is a story that could develop to the trading day, then. the company danone is nearing a deal with whitewave. that good value the health of maker at $10 million. -- that could value the health food maker at $10 million. >> right now, we have got a well-placed source who tells us,
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as early as today, we are expecting danone to make an announcement that they will be acquiring whitewave foods. this is not a household name for many people. it is a denver, colorado company. at deal values the company $10 billion. it is not a household name, but consumers likely have seen the products at the grocery store. deal is quite interesting because it comes at a time when he was consumers, as well as consumers around the world, are very conscious of what they put inside their bodies. anna: this takes it further into that health food space, doesn't it? why to they want to make this deal then? also, they have got challenges
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on the dairy side. >> the is right. -- that's right. according to our bloomberg intelligence analyst duncan fox, showder for danone to consisting growth, it needs to ramp up its dairy sales and this acquisition could help them with that. we are also talking about danone struggling the past couple of years to deliver consistent sales and margin growth because of what is happening with lower commodity prices. it is really looking to hopefully, diversify some of that with this sale. anna: thanks very much. angie? new series oft a bloomberg's highfliers today, featuring asia's wealthiest entrepreneur under 40. he is fourth, behind the most popular processor after
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microsoft. pudur explains his persuasive sales line. >> but we told them was, whatever you are paying right now, you will pay 15% of that. we will handle the company migration. even if you are giving me just 50 cents to implement that product, i would have done it. we started off with one ministry. hours, we are going to go nationwide. anna: you can catch more of pudur in our new season of "high flyers." tune in at 6 p.m. to catch that. coming up on the program, samsung seems to be benefiting from apple's sluggish sales. we will also get an update here
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in the u.k. on the politics story. and we have the latest news from the property sector. all of that, to come. this is bloomberg. ♪ ?c+sv
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anna: it is 1:30 in tokyo. .4%.n right now by the top stories on "bloomberg markets." the yen has strengthened for a third day and gold is extending gains as brexit raises demand for haven assets. policymakers were losing confidence in the u.s. economy's readiness for a rate hike, even before the u.k. referendum.
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the benchmark is higher though, with energy shares leading the way as oil gains. credit rating was cut from stable to negative. the agency says consistent budget deficits could become in compatible with debt. scott morrison says now is the time for sobriety. for whitewave they could value the health food firm at $10 billion. wants to raise growth above 5% by 2020. welcome back to the program. it is 5:30 in london. i'm anna edwards. manusangie: and i'm angie lau. what is the focus today?
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anna: of course, we are going to focus on that danone. but of course, you can politics a very much at the center of things as well, still on a hunt for a new prime minister. this will be around two of the voting taking place today. remember, this is not the public voting or members of the party, it is the conservative members of the party. they get to have their say on the three candidates on the list. michael gove, he is the one on the "leave" side with a lot of experience. he was running with boris johnson "leave" vote, but since then, he has had a fallout with johnson. the wonder how that will affect him. we will see how voting between various elements in the "leave" side affect the results here. and we have got theresa may. she was the favorite in the first round of voting.
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she is the one with a lot of experience around the political table and she is seen by many as somebody who could bring the party together because she campaigned halfheartedly for the "remain" side. this is always what you get when you are trying to elect a leader for the conservative party in the u.k. angie: politics are heading home figuratively and literally here, because we are seeing the brexit impact hit the property sector as well. anna: we have been covering the way how property funds have been effective. aberdeen, marking down the value of their u.k. property fund by 17%. we are looking for what this is all -- the underlying assets here of course, that is something we will be focusing on. we will be talking to a property
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expert about what we know about the underlying value now of real estate in london, martial property in particular, as compared to where was. the are warnings that london office values could fall by 20%. we have seen the pound hit. we have seen property funds in chaos. i have a good chart here that does provide a bright spot if you are exposed to u.k. assets. we have said for a long time that the dynamics around the ftse are very global and when you factor in what is happening with the pound, it leads to a different story. analysts are finally catching up with the weakness in the oun an pound and what this does to the ftse 100. this is comparable to 600.ear-oleuro stocks angie: checking in on first world headlines from around the world. the year-long
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investigation into hillary clinton's use of private e-mail when secretary of state has been closed. attorney general loretta lynch accepted the fbi's recommendation and said clinton will not be charged. republicans though, are trying to maintain the pressure. speaker paul ryan said she should be denied access to classified information during the election campaign. modi is beginning a four nation tour of africa, speaking about india's economic influence. thursday,his visit on before going to south africa, tanzania, and kenya. around 80 business leaders will accompany him, showcasing health care, supply, and low-cost housing. china is said to be discussing a $2 billion deal to buy glencore in kazakhstan.
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was set uplion fund along the ancient trade route. chinese companies have announced $9.6 billion of mining acquisitions this year. messi has been handed a 21 month prison sentence, but is unlikely to go to jail. he was convicted of evading taxes and fined more than $2 million. spain does not enforce the sentences of less than two years if the guilty party does not have a criminal record. messi says he will appeal. global news 24 hours a day, powered by 2600 journalists in more than 120 news bureaus around the world. this is bloomberg. anna: thanks very much. t's talk about what is
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happening in the smart phone sector. s7ong sales and the galaxy smartphone have helped samsung beat estimates. samsung is managing the slowdown in the smartphone market here. >> that is what it looked like. samsung posted is bigger covering profit in more than year two years. now, operating incomes for $6.9 billion,n at which is better than the average forecast of $6.4 billion. last year, the operating income was $5.9 billion. we can see continuing demand for galaxy s7 phones, continuing to boost the phone market for samsung. samsung probably sold 15 million units of the s7 in the second quarter, after shipping 10
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million in march. that might have helped that the appetite for iphones seems a little sluggish right now. the consumer electronics business also saw increased margins, according to goldman sachs. bills came in at $43 billion, slightly short of estimates. don't forget, samsung is the world's largest maker of android phones, but also the number one memory chip producer in the world, and a key display panel maker. a bloomberg survey suggested that they might have seen operating outcome fall, but a prophet, reversing a loss from the previous quarter. it,but they posted a prof reversing the loss from the previous quarter. anna: what are they likely to spend the $60 billion on? >> they are likely to spend some
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of that on the display business and the memory chip division to company.he ar it is said to be in talks with apple to be an exclusive screen supplier with iphones. samsung could also bring up phones with a foldable screen, changer,ld be a game and it could differentiate samsung phones going into the future as well. that is money they are using to try and sustain their survival into the future. -- s: angie: apple is down to number five in china, behind cheaper local rivals. pple experienced a series of setbacks in china. it had great hopes for china. >> they are still selling quite
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a few devices. they are catering to the middle class and the higher end customer willing to pay $800 to $1000 for a handset. these local manufacturers have gained a lot of market shares, but they have run up the table by selling more in the month of may than apple. you can see, apple, number five now. oppo, a name we had not heard from. that was a contract manufacturer that is now selling its own brand. wei,, and then hua consolidating its role at number one. but you are right, where is samsung? they had been in the top five as recently as one year ago. angie: what went wrong for apple? they have had a lot of setbacks in china this year.
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>> the have had a lot of legal and commercial setbacks this year. they lost a trademark dispute with another company that uses the name iphone on its leather goods. they had to shut down the iphone movies, possibly because of content issues in february. regulators released new rules governing internet content. also, app stores in china are being regulated. last week, they released rules stating that app stores must ensure commercial viability of developers, who in terurn, must monitor customer usage. angie: these upstarts, what are they doing right? >> they are selling full feature phones at a fracture of the cost. angie: what is that mean, full feature phones?
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has got all my apps. >> i want to bring up a tweet. this one was directed right at me, basically saying my report is misleading because it says i am comparing low end smartphones with high end. getting they are more market share because they are selling them at a cheaper price. , in the in mind, apple first quarter, sales fell 26% in china. they might be selling them at a higher price, but they are losing market shares to these fillingayers, comparable smartphones to the c chinese. anna: it has not been a great he month for tech companies. haidi lun is here to take a look
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at the damage that has been caused. microsoftt with mark then. >> essentially what has happened is microsoft sent out an e-mail to its interns to invite them to a party. they started out the e-mail with saying, "hey, intern. there are many drinks and the ability to get lit." they also said, they would be breaking out the beer pong. essentially, this ended up on twitter, as these things tend to. it has attracted quite a lot of ridicule from the social media universe. this is i guess, part of microsoft's attempt to stay relative and stay cool. they have been trying to enga ge with this snapchat generation, if you will.
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let's bring up some of the twitter reactions, fairly derivative. saying, this is just not professional, regardless of trying to engage the audience. "lots of drinks," very professional. and has not gone down very well. lit"a noms" and "getting should not be included in corporate communications. this is another lesson learned for microsoft, perhaps. anna: another lesson learned. i am rapidly reaching for my urban dictionary, because i am
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entirely lost. but let's look at the other companies raising these issues. >> they have also come under fire, but for a different issue. they posted this beautifully lit photographed onto their google plus page. photos inhelps taking a leading conditions easier. the problem is, the caption tells you it was taken on a four -- it was taken ondsl dslr camera. if you remember, nokia did something similar. huawei is just copy
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aning nokia. they used misleading shots in advertising. tf course, the p9 is mean to be their flagship camera phone. this does not look very good for huawei. coming up, turbulence in singapore. we might seen the first falling assets in seven years. we will ask why. this is bloomberg. ♪
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anna: welcome back to "bloomberg markets." david: thanks, anna. a pretty good hand up at this point for entering the last few hours of trade in asia.
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we are up about pointing percent -- we are up about .3% in asia. just about every single sector group is higher, though we can see weakness on this japanese heavy industries. some of these machinery makers, for example. that is the story across the asian equity markets. volume thatng at is still moving. the dollar-yen is holding at 2014 levels. when you look across asset classes, it is basically the same story. either mixed or trading sideways. gold is at 1367. so, at least as far as precious metals our concert, a decentbid bid here. but energy is not much higher.
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let's get the graphic up. modest gains there. there we go. coffee, just under $56 a pound and live cattle, the last go there, just under $113 per pound of beef. there we go. that is your market story. angie: temasek could see the drop in its portfolio assets after turbulence in the global economy. the investment firm will release details this week. we have our south east asia correspondent on the story for us. how bad does this look? reporter: enough to cause some pain.
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like you said, it is the first decline since 2009, but values mind, that asset last year rose to an all-time high. as he know, the equity markets in particular, they have taken an 180 turn. it shows just how exposed to the temasek purple folio is. more than half of its assets are in china and singapore. china csi index, down 23%. it is really a case of overexposure in these markets, which are not doing well. give us a sense of the temasek portfolio. what did they invest in? reporter: banks mainly. it has the biggest exposure to financials, about 1/3 of its overall portfolio. raised its stake right
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after the slump in chinese equities last year, which is not a great move. icb shares tumbled 20%. also, the bank in singapore, temasek is the largest shareholder in that bank. both shares have been dumped down between 25% and 50% in that same period. temasek almost exclusively invests in equities. anna: we have also seen several changes in manne management as well. how significant is that? reporter: significant in that it shows the challenging global times. that is how temasek chose to describe it. ceo, as well asew two new presidents appointed.
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so, we have to wait and see if that strategy will work. angie: thanks. magnus: anna: coming up anna: -- anna: coming up, our china correspondent. that is next. this is bloomberg. ♪
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anna: welcome back. alibaba is a giant on the web and now, it wants to be king on the road as well. it is taking on google, and other tech rivals, with what it says is the first fully connected car. tom mackenzie has been for a drive. tom: it could look like a fairly regular suv, the alibaba says what they have done with this car is effectively, put a computer on wheels. we will take one for a spin. first of all, getting into the car, you have got the app. you click the unlock button.
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there we go. let's go for a ride! so the car knows we are going to be passing a cafe. we've got the option of ordering our coffee before we set off. i'm going to say yes, and order one of those. alibaba'sr uses operating system and they say it is all interconnected. you can use voice controls, play music, get directions, book a parking space. it uses 4h. they -- it uses 4g. and they say this is basically using the car as a platform for the internet. asked thet off, we car to order copy. the coffee is ready and the car pays for us. voice control options
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are pretty extensive. you can turn up the air-conditioning or turn up the heating and you can also open the sun roof. should we have a go doing that? there we go, opened the sun roof on a beautiful day. so, we have been on the road for a couple of minutes now and we have used the voice controls, opened the sun roof, tournament air-conditioning, and order our coffee. that we have come to the end of our journey and we are going to book a parking space. all it takes is a couple of touches to the button. alibaba says this is a fully connected car. there is internet in here, but this internet connect to other internet connections in other cars. it is really, another internet
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enabled device. that is it for this edition of "bloomberg markets." manus cranny and i
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♪ formalroperty panic, u.k. real estate funds frozen in the wake of brexit. in terms of here, these property funds, just one indication that perhaps the others will fall in line. i think it is coming to worry about. anna: payroll pain, the fed is losing confidence to tighten anytime soon, and facing rising uncertainty as tomorrow's job report looms. and milking the health food market, nearing an agreement for about $10 billion. ♪


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