tv Trending Business Bloomberg July 7, 2016 9:00pm-10:01pm EDT
♪ angie: it is friday the eighth of july. this is "trending business". ♪ angie: we will be live in sydney, melbourne, and singapore, but first here is what we are watching for you. are underway in tokyo as policymakers discuss the stronger yen. japan leads the asia-pacific higher, albeit only just even
so, the regional benchmark still heading for a weekly loss. rise onaintains its fears of supply. threateningnes is to close down polluting mines. you can let us know what you think by following me on twitter. don't forget to include #trendingbusiness. that china and hong kong markets underway in 30 minutes, but singapore and malaysia have just come online. poised for a flat finish at best. that said, we are .5% away, flash session across asia. as the countryd shuts its markets.
indonesia is also closed. you see the yen weakened a little bit. it is seeing the most pronounced move compared to where the trough was. it's all coming off a three-day slide, so there is value created over the last few days. flat comparedite to the 10 day average. the rest of asia, looking at cautious and tight trading ranges ahead of the u.s. jobs report. let's have a look at currency markets. the story is about a drop in the u.s. dollar. have a look at how it is doing against the pound, falling against the euro. a decent bed as well for the aussie dollar.
valor-yen -- valor-yen -- at .7506. 10 year yields in japan at a record low. hi level talks on the yen underway in japan as the latest data shows the current account balance narrowed in may. let's start with the surplus. it was higher than expected. rosalind: that's right. for one pointas seven ¥5 trillion, and came in at one point ¥8 trillion, better than expected, but still a fall in the surplus. whether that is better or worse
depends on your stance. from month to month, not much change. the part made up from goods and ¥295 billion.from the primary income rose slightly, including money repatriated back to japan. the current account balance dead mero 2.4% year on year, the first time in two years the account balance hasn't narrowed. , japanernal factors yenrts, brexit vote, strong , and of course the fed is about to -- the chances of increasing rates in the u.s. decreasing. there is also the u.s. payroll
numbers later today. cash earnings for japan rose 0.2% because they were adjusted, but labor cash earnings fell 0.2% year on year. a quick mention of the meeting , that is ahead of the jobs data coming out of the u.s. angie: thank you so much for that. let's take a look at some other stories we are watching. it looks like rags it is melting 's brexit is melting tata steals plan. >> they have put a temporary hold on selling their u.k. business. bidders have pulled out because of the uncertainty created by brexit. however, they still want to offload these ads that -- these
assets. they will hold a board meeting to discuss how to proceed. britain still industry has been hurt by costs. this led to their decision to sell off their u.k. operations. alibaba is hoping to return to health after china scrapped their plans to use its technology to fight fake medications. to build a plans commercial platform that could use that same technology to track the origins of products for consumers concerned about safety. losses,e seen mounting the share price has fallen to record lows when that drug traffic system was halted. the company wants to spend a big to invest in this business.
the company's boat to bloomberg and said it is a huge market at an early stage and not were slowing down their pace of goldman simply because of money. group of korea's lotte companies are down after a travel ban was imposed on the company founder. she was arrested on thursday on charges of bribery and investment. investigators have been stepping up investigations into the alleged corruption within the family. shopping coming off those confectionery down by 1% in the early session. putting australia's triple a status on watch, they followed up by doing the same for the big four banks. all allen has the latest.
what is the market reaction? it is a mixed picture. if we run through those big four it is a mixed bag. not going to pretend that i know how to decode that for you. let's stick with what we do know. surprise a huge that s&p made these announcements. they typically keep the banks below the sovereign credit rating. to paraphrase s&p, they say we would expect to downgrade these entities if we lower the sovereign rating. the reason why the sovereign rating is on negative watches because of that very tight election over the weekend. it is likely what ever
government will have a weak hand, meaning wider deficits to put pressure on that rating. angie: speaking of which, the vote counting continues in australia. it looks like the government is finally closing in on reelection. the week grinds on, the picture gets clear, and now we have the coalition on 73 seats. ae magic number is 76 to form majority government. they got a boost yesterday from a colorful character with a large electorate in northern australia. he says he will support the coalition, so they are getting closer. labourosition party, 67 seats, still too close to call. proudly sayinge the coalition has 74 seats in the bank. he thinks they are good for three more and went on to describe the government as an
election winning machine. that is perhaps overstating the matter, but it does look like a backnment is likely to get in with a wafer-then working majority. angie: thanks. on our website, chinese fund of his cashput half back into stocks. that is on bloomberg.com/asia. check it out. net incomes have taken a tumble for one of hong kong's most successful makeup companies. is it time for some cosmetic surgery? we will hear from the cfo. next, predicting a limited impact, j.p. morgan's take on how the uk's decision to leave the eu could play out in asia. this is bloomberg. ♪
markets. it is kind of quiet out there, except for what is happening in your neck of the woods. can you hear me? i think were having a little issue. ok. you can hear me. is quiete saying, it in the markets right now except that ratings outlook downgrade and the banks in australia. not overly surprising given the ratings watch put in place. they areust saying watching closely what will happen with the government and what they would will do with debt levels, consolidate the
budget or not. levels have rocketed pretty quickly since 2008, 20%. that is generally a trigger when you see a ratings downgrade. the impact on the markets will not be as severe as currently thought of. ppens,av t i that means they have to counteract debt by cutting rates further to keep lending going in the economy. angie: that is not what we are seeing. people looking for yield still go into australia. in fact, driving yields down there. oursis new environment of it seems that is what is happening.
you shrug off these ratings downgrades. >> pretty much. it's a response to what we have seen around the world. rate cuts from the bank of england, more easing from japan and the ecb, and again the market not pricing anything in from the fed this year. all that puts downward pressure on yields. an increasedg chance of a little snap back if the nonfarm payrolls are better than expected. these are very extreme positions right now and a lot of caution that should go with that. i think yields will be held down because of all the monetary easing. ofre is a deficit in terms the bonds out there that will keep them lower, but at the same time, you might see more inflation in the u.s.. global bond markets are linked, and that my drag up austrian
bonds a little bit. is you thinkiew you will see a rate rise from the federal reserve this year? we think it is still in the cards. we believe the u.s. economy is still very strong. we look at the consumer. you are seeing general pickup and confidence, wages start to improve a little bit, jobs being added to the economy, granted the last nonfarm payrolls number was week, that we might see that bounceback. for fewer jobs being added to the economy as the labor market tightens, but they are still being added, adding to that good consumer outlook which drives the economy. we still think we can see 2% growth out of the u.s. this year. all that leads us to believe you will see the fed hike at the end of this year. they may wait until after the elections. angie: what is your outlook for
?sia despite the brexit will we see an impact here? rock inlike dropping a a pool of water. that's kind of what we are seeing with brexit, big pain in the u.k., not so much elsewhere in the world. the reliance on bank lending has decreased since the global financial crisis, so that contagion effect is limited. the big risks are lyrical and investor sentiment. political and investor sentiment. the rise in the u.s. dollar and flows out of emerging markets are where the real contagion could be.
it could be a few years before will playw brexit out. in the meantime, economies around the world are looking pretty decent, u.s. growing, european union getting better, becomingslowing, but more manageable, so the outlook to the global economy is still quite stable. still china slowing, but if that u.s. dollar goes weaker, it does provide a reprieve for the pboc. we will leave it there. the latest first word headlines. taiwan has close financial markets, offices, and schools as a typhoon sweeps across the island. it has sustained wind of 200 kilometers an hour. taiwan's china airlines canceled all flights and high-speed rail
services are suspended until late afternoon. the philippines has also suspended -- the new philippine environment secretary says all mines that fail checks will be closed down. overs will be carried out the next month and could see polluting mines forced out of business. the philippines is the leading source of nickel and supplies almost all of china's imports. prices surged after the investigation was announced. is -- thisthere been is be more important than the lives of our people? i will not allow it to happen. relevance does stock markets have with your people? , the welfarewe do of our people must be paramount. the state department has announced the resumption of its inquiry into hillary clinton's use of private e-mail when she was secretary of state.
the news comes after the fbi and wouldey general said she not face any charges. the associated press said the department is opening an investigation now that it is not getting in the way of other inquiries. the u.k. is to get it second female prime minister with the race down to two candidates. conservative party members will choose theresa may or the energy minister as the person who will lead the country out of the european union. in a voteve came last among mps and was eliminated. his colleague boris johnson did not stand. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. coming up, the heat is on with the singapore dollar on a high, will the monetary authority step in? we will take a look at the likelihood of further easing,
angie: this is "trending business". our southeast asia correspondent joins us now. are we looking at monetary easing here? yes, looking for monetary easing at the next policy meeting. the strong singapore dollar a cause for concern, stronger against most major currencies in the world, 14% against the pound, 5% against the u.s. dollar, 4% against the swedish krona. investors taking cover. it is a safe haven because of its top credit rating.
ago, it was a completely different story. the singapore dollar was among the worst performers in the region because of its income it -- of its economic indicators. that has not changed. a strong singapore dollar spells into of trouble, putting question inflation forecast, and that's why they are bracing for monetary easing in the coming months. so, watch this space. angie: how badly has singapore been hurt by the global slowdown and brexit? complicates things for singapore, adding to pressure. growth has been on the decline, , consumer prices have fallen, non-oil exports forecast to drop this year. it looked gloomy enough back in april that the central bank adopted a neutral policy, zero
appreciation, something it has not done outside of a recession. singapore is expected to be among the hardest hit and asia by brexit. singapore's economy is open and exposed. the impact of brexit should not be underestimated, so again, look out for monetary easing. bloomberg surveys is looking to the currency dropping. angie: which singapore companies are getting hurt by brexit? >> uncertainty is created by brexit. , analystesidence trust already estimating a drop in annual share earnings by 3% over the past month. is also being viewed as bad news for global energy demand, downgrades hitting a rig
builder, grappling with an a number ofso quite singapore companies are expected .o be hit i brexit -- by brexit angie: the stories making headlines. investmenttate company assets fell for the first time in seven years. to 9% to $180ped billion in the last fiscal period. the firm has been cutting exposure to banks. dannone trying to drum up its $10 billion takeover of white wave foods. deal since largest
♪ angie: the top stories trending this hour. asian stocks headed for a weekly decline as investors wait for the u.s. jobs report. energy shares falling after crude hit a two-month low on renewed fears of oversupply in america. japanese policy makers meeting to discuss global turmoil and the ends strength. shares and australia's take for banks are mixed after s&p revise their outlook from stable to negative.
their credite ratings remain at aa minus. there are worries about ballooning budget deficits. game on,shares, jumping the most since march last year in tokyo on the success of a new mobile game. it was released just this week. the augmented reality game has players finding and capturing the imaginary creatures in real-world settings. we are sticking to the real world. the markettoring opens in shanghai and hong kong. before i get to the
markets, a lot of data out of china. that we get the jobs report tonight and this list on your screen from sunday into friday next week. set of data does come in worse than expected, shanghai's news security reporting that a rate cut might be an option for policymakers to turn to as far as the response is concerned. markets looking like this. we are looking at a mild weekly drop. markets are a bit mixed, flat on the regional benchmark. japan up for the first time in weaker yen.lightly that said, a cross currency markets, a drop in the u.s. dollar against most, oil on the back foot as with gold prices. nothing extreme though i should note.
that me wrap things up with a look at hsbc, shares are down. s&p cuttingown to the outlook or creditwatch hsbc, as with other banks in the u.k., rbs, royal bank of scotland, and barclays. hong kong listed shares paring back from the lower close. 10, 13, and seven, by hold and sell. from whereut an 8% we are. angie: china's foreign exchange reserves rose last month. we have more. reserves have been falling as china tried to keep the yuan stable. we saw late last year after
china haduation that to defend the currency, spending 513 billion dollars trying to defend it, so that whittle down 3.21 in the last month, which was an increase of 13 billion. last year saw the first time since 1992 that they had a full year annual drop. we have been seeing it's that the again, but it has stabilized. it has actually gone up in the last month. you have two factors in june, brexit and china in their fx reserves has yen, and the yen appreciated.
they also have the pound, so keep that in mind, but also you have indications that the pboc is not intervening as much, basically allowing the yuan to weekend. angie: what does this mean for the yuan? >> it looks as though the authorities are ok with allowing it to slowly depreciate it they don't like the reaction they got after that one off devaluation. help as the chinese economy is slowing down, but they don't want to much appreciation. it could spark trade friction. beijing apparently has a buys for depreciation due to the weaker economy which will lead to more outflows and pressure the reserves in the second half. angie: so far capital outflows from china have stabilize? >> yeah, that is the interesting thing. if you have a weaker currency, people run for the exits. it wasn't all caps off capital
flight, but there was some , one trillion and outflows, some of that capital flight, and now what we are seeing is the outflows have stabilized while yuan the yuan is weakening. economists say this is a good development, which means that pboc can continue to allow the further depreciation without triggering market panic. angie: don't panic. >> don't panic. angie: keep calm. carry on. the chinese president xi jinping is putting more state in state owned enterprises, giving the communist party and a greater say in a sector worth $18 trillion. malcom scott is here. what has changed. haven't state owned companies always had to listen to the party? the main thing is that it has
become far more explicit. we have companies that have added a new section to their articles, which basically state that it is all around party building, far more explicit that the managers and the board has to listen to these party committees, especially when making big decisions around key parts of their business. it's not just them. a whole range of state owned enterprises are reasserting the power of the party committee. angie: isn't this a little concerning? we did not think it was a party strengthening its own say in the state owned companies when they were talking about reform. >> if you think the hands off ism the party -- there another camp that says this is all about the party ramming through some of these state owned enterprise reforms that perhaps have been blocked by reluctant management, but it certainly seems that the state
and the premier and the president wants a bigger role for the party. speaking oninping monday. state owned enterprises of the major force to boost the copperheads are strength of the country and protect the common interest of the people. we should make them bigger, better, and stronger with full confidence. it seems the state is certainly keeping the state in state owned enterprises. angie: where this is outlook for further reform? we have the call for market orientated reform to a line output of state owned enterprises with demand. that will take some retrenchment in some cases, cutting down that, but so there is then you have the party reasserting its control into some of the state owned enterprises. is that reconcilable? does see there is
some conflicting purpose here. he thinks this trend towards merging state owned enterprises suggests it is about strengthening them, not necessarily boosting profitability. he thinks is the animal profit gains are not the party at the moment. angie: thanks for that. some other stories, despite cold dipping in the latest session, further gains in store before prices taper off by year in. expected to reach $1425 an ounce by the end of september, a more than 4% jobs -- jump. she abandoned her bears out look to call the gold surged. officials tell bloomberg that india may raise the limit on foreign direct investment in newspapers and magazines.
the finance ministry is now recommending raising the limit on newspapers to 49%, on par with tv news channels. news whileed on the others pare losses. due to announce second-quarter earnings guidance later today on friday. analystsocal estimating operating cost at $570 million. analysts say robust home appliance sales good makeup for sluggish sales of tvs and smartphones. commoditiesmes for cratered after chinese regulators took steps in april to deflate a bubble. speculators aren't done yet. what is pushing chinese investors back into the market? only really speculate
about exactly who they are and what is motivating them to return to the market, but the general consensus seems to be that it is a combination of speculation over further andomic stimulus and china by central banks around the world, as well as particular supply and demand side issues affecting particular commodities in china. as you say, trading volumes are back up to levels last seen in april in the wake of that massive speculative frenzy that was ultimately quelled by the and the exchanges who raised margins and fees to curb speculation. to thoset back up levels yet, but we are certainly commodityeturn of investors into the chinese market. angie: some of these commodities
are interesting, including eggs. what else are they trading? >> precious metals have really got a boost in the last few weeks, gold and silver seeing a lot of trading amid this global hunt for havens following the brexit vote. gold volumes on the shanghai futures exchange reached a record on the day after the vote. silver trading has also ballooned in recent days. nickel as well, volumes have ballooned, concern over supply of nickel from the philippines, china's biggest supplier, and then also agricultural commodities are getting a real boost, in particular animal feed tied to concerns over supply and demand. seeing in general that chinese investors are ready to
january through june saw eight weather related disasters that each cause $1 billion in damage. 21 people heard, some seriously, in an explosion on a commuter train. caused by a bomb designed to look like a firecracker and was hidden in a backpack. an investigation is underway, but the government says it seems to have been a deliberate act. witnesses say they heard a loud explosion before the train burst into flames. north korea has denounced ,anctions against kim jong-un describing them as unopened our creation of war -- an open declaration of war. pyongyang has also threatened strong retaliation.
global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. the sharp fall in chinese visitor arrivals in hong kong has hit retail sales. full-year profit plunged 54%. nearly 300 has outlets across the region and is seen as an indicator of the economy. thank you for joining us. fors a difficult landscape retailers. what are you seeing in terms of the pressure? are they geographically specific? there are many pressure points. the manifestation is weaker sales. with theles started mainland chinese. also, their spending less.
that has affected certain areas where we have a lot of stores. that has continued into this year, although not quite as bad. in addition, locals have started to spend less, and that started towards the end of the first quarter calendar year this year, , onee believe two things has more to do with the currency. the hong kong dollar strong, non-u.s. dollar currencies are weak generally. so after traveling, spending some money, they come back and spend less. the ticket size for local started dropping. korea and japan specifically have seen the pickup when it comes to the cosmetics retail space, the weaker yen, the weaker yuan. it is also the mainland chinese
traveling there. those currency fluctuations, how are you buffering that this year? this has been happening for the oast couple of months, s how are you trying to buffer those? >> hong kong in general is very competitive. even now or in the last six months or so when the yen was much weaker, hong kong in general in hong kong dollar shoppers shopping in hong kong are still generally competitive. ofsumers like the idea shopping in locations where they can find cheaper hotels. shopping,about cheaper hotels, cheaper spending, etc. a lot of consumers are tending to allocate more of their budget to lifestyle spending. that is why there is more spending in those locations.
for us, coming back to your question, we have maintain competitiveness. it is just that the market has changed somewhat in the short run. angie: you are also mixing up your product mix and offering more low in products. >> yes, that is true. the market has changed in that respect in that the internet has brought about a proliferation of information, basically consumers and a lot of information they can read about all that content online and even buy online. angie: and you are building up your e-commerce as well. >> yes, we are. we built up e-commerce to meet that demand, whether for information or sales, and the younger generation tends to buy the more trendy products. they tend to be from asia, and that's why we do better. are you able to
renegotiate your rents in hong kong, and if so, how much? at thes polarized moment. the places where we can get a good reduction now in the last has been inr so several locations. angie: how much? >> in first-tier locations, 50% off. in second two locations, even more. wow.that is hugely significant. it is broadly reflective of the broader economy. reflects the market, because we are business people and just look at the figures. we did share in november when we announced our results that while sales didn't slow down in the first half, 97% of the slowdown was due to three areas, and that's why there is such a lot of pressure on the street locations. angie: how does the political
situation impact this? we heard a lot of retailers when occupy hong kong happened, preventing retailers from doing business. did that and prove? did that triggered the so town -- did that improve? did that trigger the slowdown? >> that should have set a low base for 2015, october-november 2015 but when we look at figures and compare that with previous years, we get much worse. the inconvenience was very bad, but i think the sentiment would be even more important. angie: what is your outlook for the hong kong economy? you have 80% exposure. retail, hong kong is still the place.
quiteked at a report recently, and they said london in terms of offering of rands available isbrands number one. its rank above paris, dubai, and tokyo, so in that respect we are still strong. the problem is hong kong has high costs. this is now correcting. we are optimistic in the longer run. as costs correct, we can do better and are optimistic about the completion of the infrastructure projects, the rail links. angie: putting a pretty outlook on sasa international, pun intended. of sasa cfo international. who wants to buy mcdonald's in china?
mcdonald's is nearing the field of bidders for the rights to its franchise in china. we have been following the story. selling mass is franchise rights to its restaurants in china and hong kong for 20 years, the golden arches could rake in $2 billion. the information is private. mcdonald'srned that has invited for companies to be second round bidders for those rights.
once the deal is signed, mcdonald's hopes to have 95% of its restaurants in north asia under local ownership. after the bell thursday, the company did come out with news that it will get hit right charges related to its business turnaround strategy. will have 230s it $5 million in pretax charges in the second quarter, $.20 a share on an after-tax basis. they are related to re-franchising about 4000 restaurants by the end of 2018 as well is moving its headquarters to downtown chicago from the suburbs. mcdonald's is giving a heads up to investors that more charges are coming in the pipeline, but it is all part of the turnaround plan, including all day breakfast rolled out last october. mcdonald's share price has risen 25% in the past year. we are now looking ahead for
♪ major: good evening. i'm major garrett, filling in for charlie rose. we will start this evening about the legal aspects of james comey's decision to not bring charges against hillary clinton. joining me from washington, eric lichtbau of the new york times, and ari melber, chief legal correspondent of msnbc. equal justice under the law. did what james comey said yesterday meet that standard? ari: yes, based on the evidence