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tv   Trending Business  Bloomberg  July 31, 2016 9:00pm-11:01pm EDT

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♪ it is monday, the first day of the month. i am rishaad salamat. this is "trending business". ♪ rishaad: we will be live in tokyo and beijing this hour. japan leading markets down with worries about china and weak prospects. the yen pulling back after friday's surge. oil sliding to $40 a barrel. sony jumping the most in three weeks as surging games
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vindicates the focus on media and entertainment. ,ollow me on twitter @rishaadtv use #trendingbusiness as well. china out with manufacturing pmi numbers. tom mackenzie is in beijing. what are we seeing here? a minor miss for the july manufacturing pmi data. at 49.9, then manufacturing pmi for july. the forecast had been for 50, so marginally off. it was 50 in june. i don't think that will cause concern amongst holocene makers, but below forecast.
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china policymakers. non-manufacturing pmi and june was supported by the construction sector. july nonmanufacturing pmi 53 .9, so it will be interesting to see if services have picked up. key details in the manufacturing firms,a is hiring by factories, keeping labor costs low, starting to increase employment numbers. also, fixed asset investment has been weak. it had been hoped that the weaker renminbi would support manufacturing. deflationary prices at the factory gates have eased somewhat. thee is more credit in system in china, so manufacturers benefiting slightly from that.
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this 49.9 is slightly below those estimates. was time it was above 51 september 2014. expansionaryd the and contractionary figure of 50. we are expecting the private manufacturing pmi data at 9:45 a.m. beijing time. muchad: thank you very indeed. that is tom mackenzie in beijing. justfficial pmi numbers below that 50 level. market reaction to that from shanghai and hong kong in 25 minutes. malaysia, taipei, and having a look at what is going on. investors in australia react to china. indeed, david starting things off. david: if you want a sense of
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the initial thoughts on data out of china, look at the aussie dollar. the currency is flat at the moment. yous not a big deal when look at that 49.9 number out of china. is for looking, unimportant aspect of the pmi number. the aussie dollar lower, unchanged really. asia, theencies in broader theme is the dollar weakness is persisting across some of these pairs. poised for anggit loss. , 13 month highn against the u.s. dollar. it comes on the back of the export numbers that came out and our back. not good is one way i will put that, a 10% drop, 19 straight
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months that metric has fallen. china, 1112 is the level now. the dollar, on friday, have a look at gold prices, a really big drop in the dollar following the gdp print, leading to an increase in commodity prices. we are saying some of that come down a bit. i retracement down for gold, oil, copper to a lesser extent. 1350, big popd, on friday. have a look at the aussie which i gold, mentioned, basic materials, commodities up.
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want to get into some of these names to show you, gold miners leading those gains in sydney. rishaad: thanks a lot for that. one of china's most takeover hungry groups scaling back fosun , snapping up assets, but now focused on getting leaner. what is behind this reversal in strategy? as we interesting timing see other chinese companies get more aggressive when it comes to m&a. have had $15 billion worth
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of deals since 2010 announced or completed. they could sell up to $6 billion in assets. coming as the assets available for sale have ballooned over the past two years. are seeing these assets become more available, and we have not had details about what they are buying, but by the end of 2017, we will have more details about what will be to vested. devested. to me that they are transitioning and a selloff. to 40have 30 billion billion in assets that can be sold. if the market conditions are good, we can sell. we are willing to sell.
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haidi: they are doing all of this because they wanted to get this credit rating which is junk at the moment. they are two notches below investment at s&p, and three notches below at moody's. theirill benefit insurance business if they can get that investment grade rating. the debt has been ballooning. overcreased him a 70% 2015, and 40% now due by december. they need to deliver. ever.l he spoke about volatility issues facing the company. fosun has been aggressive in developed markets, the u.s. and europe. how does greg said change the
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exit change -- brigg the positioning? >> he said the company has been careful when it comes to managing fx exposure. he has always said volatility is a friend. exposure to the u.k., they can reduce volatility exposure as well. he did not agree with that. potential oft the a trump president. he does not see that impacting the openness to chinese investment in the u.s.. having said that, they are trying to consolidate their holdings. we could see the vestment -- estment.g m
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travel, working towards leisure, and pharmaceuticals. a look at some other stories. a roundup here. a consortium of chinese investors making a $4 billion bet on web gaming. >> that is right. the shanghai giant group has offered $4.4 billion in an the onlined for division of caesars entertainment. caesars bottom a year later and the sale may help settle debts. the buyers include to funds. the deal is expected to close and the third or fourth quarter of this year with playtika
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remaining independent a run and headquartered in israel. sony rising after smashing market expert tatian's with its quarterly results up by 2% at the moment. sony doubled operating income in a profit of $205 million. to sales of playstation and other software and vindicates the decision to focus on media and entertainment. sony aims to cement its lead over microsoft and nintendo by launching a virtual reality headset. a new version of the ps for by the end of the year. gainsngs its year to date meeting the broader market. government pension
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investment fund has announced a loss. it is the first reported lost since the fund doubled allocation two years ago and reduced investment in domestic bonds. also1.3 trillion fund has disclose individual equity holdings that shot of the benchmark index. investments are passive, and analysts say it may struggle to increase assets and market downturns. mitsui suggesting the fund should be more active in currency hedging to garner returns rather than just "hugging indexes." ma taking on the murky world using technology right behind that cohen -- behind bitcoin. the latest pmi numbers out of china.
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this is bloomberg. ♪
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let's get you back to those pmi numbers out of china for july. 49.9, what is the take if you look at the breakdown? is in expansion territory. weather, and the pmi index is stronger than expected. the drought in china is affecting production. is strong.ion index is going on is reflective of the older economy.
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inventories being drawn down should be reflected in the ppi. >> i think ppi is on the rise. rishaad: still negative. still up almost 4%, a big improvement. i think it is a matter of time for the ppi inflation to the past on to the cpi. think iswhat do you going on in the chinese economy right now? we are talking about the concerns you have a about private investment. >> the biggest challenge is we have dramatic monetary supply growth. credit, but the growth is still slowing down. rishaad: stabilizing i think you could argue, couldn't you? >> yes and no.
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outpacing growth is economic growth, and there is concern. that means each unit of money we put into the economy, the marginal growth is less and less. it is declining. secondly, we have seen a very dramatic emergence between public and private investment. public investment is 10% plus and private investment growth is 3% to 4% plus. the lack of investment opportunity in the chinese economy, it makes it harder to find investment opportunities, and therefore harder to generate growth in the second half. ofhaad: if it is the lack investment taking place privately, that is probably quite worrying. that shows a lack of confidence
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with what is going on there. >> it is also showing up in the pmi as well. mid to smaller company pmi, not so great. the is a reflection of diversions i mentioned just now. rishaad: what about the private number coming out in half an hour? surprised not be different than the official number. rishaad: it usually is. >> it is so weak that they don't want to publish the preview number. expect a weaker private pmi number. i think the smaller guys are finding it difficult because even though credit growth is difficult for the
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smaller guys to get credit from banks. also, smaller companies don't have ratings. narrativehat is the like in china, and what are the questions you are being asked by mainland clients? >> mainland people tend to have a shorter term mentality. they tried to trade every little up and down, and it becomes very difficult. if you look at the shanghai it it is pretty much flat. it makes it difficult to trade because the volatility is so small. in so doing, it makes it harder to trade and make money for chinese investors. hong kong is in a better situation.
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i think it is up more than 20%. fun" into emerging markets, hong kong, and people want to get exposure to china. we have these discount to a-shares. is that now disappearing? >> we are still trading at a discount. we are seeing larger chinese companies listed here getting some buying in recent weeks. banks, because of the high yield , banks are cheaper in terms of price violation and the height yield, so it makes people to want to get into. . rishaad: does this rally in hong kong continue? >> the more and port in question is to know where the lower point is.
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in the first two months of this year, the hong kong market totch -- plunged down 18,000, a very important low point. so once the market corrects in are still half, there many, many challenges, the u.s. if we do see., so some correction in the second half in this part of the world, it would create allocation opportunities for investors in hong kong. rishaad: thank you so much. a look at the latest bloomberg/headlines. of amazon japan says a huge opportunity and china after rolling out the mandarin language version of its shopping platform. the site party increased by the millions the selections it can export to china.
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the e-commerce demand from china should almost tripled to more than $22 billion by 2019. negative rates squeezing rates. profits down 16% in the last quarter, still ahead of investments. at japanese banks coming under pressure since the boj started charging them a 10th of 1%. release itsill results later today. up next, australia stock details. this is bloomberg. ♪
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rishaad: you are back with "trending business". i am rishaad salamat.
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dominic stevens the new chief executive of asx. paul allen is with me now. we will be hearing this name for the first time. who is he? ceo of challenger. as a known to the asx nonexecutive director since 2013. he has taken over this job, $1.5 million in pay, not including incentives. ends aointment four-month search. the asx have to do any work on its reputation? paul: they do have some work.
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the former ceo apparently new of an alleged to $200,000 payment to the cambodian prime minister. down subject to police investigation. he denies any wrongdoing. that's what we have at the moment right now. you should hope to hear from dominic stevens a bit more? i'm not sure if we have the soundbite. if we can, we can listen to it now. >> i have a long way to go to absorb myself into the detail of the business. that starts today. i am looking for to it. asx is a high-quality and highly strategic is this aseeing technological change. i'm looking forward to seeking out the opportunities these issues create great paul: one of
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his first jobs is deciding to adopt block chain technology. next, the 28 trillion stimulus. this is bloomberg. ♪
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♪ rishaad: a look at our top japanese shares paring losses following friday's surge in the yen. the topix dragged down. , anay's weak gdp numbers eminent rate hike. china's official factory gate unexpectedly fell between improvement and deterioration, signaling a rebound may be losing steam.
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49.9.he am i was nonmanufacturing pmi at 53.9. planning to sell 6 billion and assets to raise its credit rating above junk. said the company had ample capabilities to reach an investment grade rating. it is the market open in hong kong, also shanghai, reacting to that pmi figure. a lot to consider, gdp numbers out of the u.s. on friday. we were parsing through the pmi data. you have larger manufacturers benefiting, a little better off
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compared to smaller guys. equities looking like this, looking better than 30 minutes back. itselfas managed to get above 1/10 of 1%. shanghai dancing to its own beat. there is money going into equities and being pulled out of the bond space. have a look at the yields in japan. year from -.2810 two -.19, a huge spike up and yields. have a look at the 10 year jgb.
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there is your spike on friday. here is where we are at the zero, but on below the way out. to wrap things up, a look at your currency markets. aussie dollar on the way down. it was largely unchanged following data out of china. malaysian ringgit poised for the biggest pop against the dollar in three weeks. it has weekend in the past 15 minutes. ,his is your big one dollar-yen, 102. fifth of 1%. by a that is why we are seeing a recovery in the nikkei and the topix.
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japan's government reveals details of latest images package on tuesday, worth $273 billion. 26th since 1990. week's minimalt addition to monetary easing by the boj. what is the real value of spending in this package going to be? what do we know about that? a bunch of different numbers are being reported. trillionrecent is ¥7 in real spending, some of that new spending, and some fiscal loans, where the government loans money to other government organizations.
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new possible the actual amount of spending will only be ¥3 trillion or y4 trillion. rishaad: is this going to be enough to boost growth? is less3 trillion than 1% of gdp. one economist said the multiplier for these things is more than one, so three train yen in new spending will probably have a boost of three train yen to the economy, 0.8%. will that pushed japan to real growth? temporarily, it will be a boost, but as you mentioned, japan has been doing this stimulus since the early 1990's. almost every year there is some kind of extra stimulus package.
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aside the stimulus announced tomorrow, the main budget is the largest in history. ae problem in japan is not lack of physical or stimulus spending by the government. it seems to be this kind of programs don't really have the effect of putting japan gdp growth on a sustainable path. ,his time might be different but based on the previous 25 packages, i doubt that. rishaad: thank you very much indeed. a bit of news coming through with the hong kong open four minutes. dropping 5.3%, the first half e couldsuggesting gom fall 90% by 100%. all of this coming through from the hong kong stock exchange and
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a statement from then. gome.own for some other stories, tokyo electing its first female governor to lead a city of more than 13 million people with the budget a good than sweden. defense minister who takes charge of the city as it prepares for the 202011 -- for the 2020 a limbic's. -- olympics. secondary property prices rose 1.6% in the last quarter, but analysts expect the correction to resume amid higher supply and weaker divan. hong kong's housing will need to fall 35% before we see stabilization to the market. the overall downward trend will continue. investors have bought bonds sold by companies in china's most
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vulnerable province. corporate yields have jumped on concerns about troubled companies. the biggestthat steel male, the moat -- steel susceptible to risks. on -- a $4n bet billion bet on mobile gaming. we have the details from new york. >> the chinese acquisition of playtika seen as a huge payout for caesars entertainment. for $80bought playtika million in 2011. it's price tag today is 5400% more than what it paid five years ago. network giant technology company develops and operates online games in china.
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china ocean light holdings is a capitalrate, also hony fund. that consortium expects the deal to close soon. that is if regulatory approvals are met. 2010 andwas founded in based in israel. they are considered a pioneer in those free to play games. if you play slot machine web games, then you have played a playtika game. they are some of the biggest playing games on google and apple. the company has lost every , and revenue slid 45% year on year from $8.5
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billion in 2014 to $4.5 billion last year. it needs to settle a bankruptcy for its main operating unit, which operates caesar's palace. the sale of caesars interactive could help in a settlement there. caesars share price has lost more than half of its value. jack ma once to pry the lid off chinese opaque charity. he is using the technology -- bitcoin tong hold organizations more accountable. how would block chain work for them? china's murky charity industry to restore .aith
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it brings more transparency and the users who donate will be able to track their donations and see the history. rishaad: if it works, that is the thing. >> right now they are building a private block chain. they will bring in more auditors and more charity organizations in the future. could bring on more charity organizations, currently but they have cooperation with more than 1000 organizations and other corporations. rishaad: how are they going to build this out? have istially what you that they have already launched a project, building a private
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block chain. they have the first project to help with hearing aid charity donations, then they could branch it out. in terms of other areas, there chief technology officer has said they are open to other experiments as well depending on experiment results in. rishaad: what else will they be looking at to use bitcoin is the base of that block chain. technologyk chain brings more transparency and is tamperproof. where you need something to be decentralized and have more inherent trust in it, where you don't have to rely on human beings, but basically technology.
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areasn think of a lot of that they are experimenting with. rishaad: thank you very much indeed. up next, rising risks. china's rising corporate debt. this is bloomberg. ♪
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a quick check on the latest business flash headlines. iraqi kurdish forces close to regaining control of an oilfield seized by islamic state. and thelitants killed field is functioning normally. it produces 175,000 barrels a day. the government produces and
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sells oil independently of baghdad. saudi aramco lowering the price of crude sold to asia, arab light crude will be cut by $1.30 next month, below asia's regional benchmark. aramco's new pricing is part of a battle for market share with iran. to offer banksid short-term loans worth $4 billion to help with liquidity. our sources say they made the money available at a discounted rate. are facing a squeeze. , chinag news manufacturing pmi crossing the terminal, better than the official number. expansion, aing contrast with the official at 49.9.hich came in
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let's have a look at what fitch says about the rapid pace of growth in china's debt and how that poses asset quality risks for the banks. we keep on hearing about china's debt problems. how bad are things? >> it is difficult for anyone to predict what will happen because of the lack of transparency. the fact that credit continues , corporate leverage likewise, and as a result the potential for faster, greater the duration in asset quality than what we have seen already is a realistic possibility. thisad: the thing is that
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is the price of a managed slowdown. >> it is. as the economy continues to slow down, the challenges and headwinds will only increase, so it will become more difficult. it is a never double that we will see a greater rise in asset quality problems than what we have seen. there are certainly 20 of precedents and that regard with regards to slowdowns in the economy and the spikes that inevitably result. rishaad: what about bankruptcies? people have been predicting that since the start of this year, saying this will be the year. would imagine there will be an increase in bankruptcies, but i would not expect to see a significant spike in those. if it is to occur, it would be more in the private sector than a month's state owned enterprises.
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we think the prospect of a significant increase in corporate bankruptcies is part of the reform process. it is pretty low for 2016, and 2017 for that matter. rishaad: how does that then impact the sovereign side of things? i know you don't do sovereign ratings, but this must play into that. >> absolutely. you probably have no that we have a stable outlook on the sovereign rating. the general government debt , 34% in around 55% relation to local government liabilities. more corporate credit in particular, state linked enterprises, to migrate closer to the sovereign balance sheet, so it is inevitable that the balance sheet will reflect
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that over time. whether that results in ratings action on the sovereign, it is probably too early to tell. if there was a very significant problemsn of the debt going forward and certainty around the economy and the , i think balance sheet that most people would probably view that quite positively. rishaad: nonperforming loans have to be looked at closely. they perhaps reflect what is happening in the economy. we have this problem of win is a nonperforming loan really a nonperforming loan? they tend to be a backward looking indicator. that is definitely the case in china. bankingcial commercial nonperforming loan rating was 1.8%.
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we think that understates the true picture of asset quality. we think the number could be something well north of that. is anyone'smber is guess. we have made an attempt in our view thatt we don't to be our base case at all. capacity,e look at and in that regard, the state banks have significantly greater absorption capacity. rishaad: are things likely to get worse before they get better in your view? we think so. we don't expect an immediate resolution of these problems. that might be the best solution for china, but we do think resolution will probably play out over the course of the next couple of years, so we will likely see a deterioration in asset quality before we see an improvement. rishaad: how closely do think
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the government is monitoring the situation? actually.osely i think they would like to address the problems much itner, but in doing so, risks destabilization and we could see a very significant imbalance within the economy if they were to try and address the problems faster than -- rishaad: so there are behind the scenes stuff going on? is behind the scenes, not just in the banking system, but the rest of the financial system as well. rishaad: thank you for joining us this morning. quit is paying soldiers to as the president overhauls the world's biggest army. you are watching bloomberg. ♪
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the world's oldest
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lender turning to private investors with speculation of a third estate they'll out. they are hoping to raise $6 billion in new equity and backing for a new fund to buy its bad loans. the prices are higher than what buyers are prepared to pay. singapore central bank saying it is investigating a goldman sachs unit. the monetary authority of singapore is issuing a statement promising decisive action against any institution or individuals found to have breached anti-monday are longing -- anti-money laundering standards.
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they have seized assets linked to 1mdb. china offering its soldiers generous buyouts to retire early to scale down the world's biggest army without causing instability. a promise to reduce the army by over 300 thousand personnel, so i guess the heat is on. the need some way to reduce the numbers of this institution so key to the china government and the communist party. he needs to reduce it by 300,000 members. centerpiece of the general restructuring he is overseeing. rishaad: the question is why it's such generosity here? i think he wants to get it done and get it done quickly with as little resistance as possible, so he is trying to
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make it as easy as possible for the army. the army has a special place in the communist party, it is the ultimate guarantee or of party , power flows from the barrel of a gun, and they are seen as a symbol of that. rishaad: what are the challenges as he tries to reform the military? the powere concerned individual soldiers and officers have as a constituency after they leave the service. they end up organizing, petition, protest? to be wellhe power organized and generate public sympathy as a symbol of patriotism and the interest in defending the country. rishaad: thank you very much indeed. we have to take a break. coming up, what is going on with commodities.
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this is bloomberg. ♪
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>> i am rishaad salamat, this is "trending business." rishaad: we are live in beijing and singapore this hour. china falling below the dividing line between growth and retraction. it's a recovery losing steam? with the highest seasonal level in two decades. do not rule out higher rates
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this year, investors underestimated the chances of a hike. follow me on twitter. day.ght to the trading comments -- looking at the gdp numbers on friday. andame down to inventory that is only are seeing right now across the asia-pacific. thatxpectation still is easy money will continue. have a look at the gains across the region. level.s around the zero there is a lot of money getting out of the u.s. dollar. looking at the taiwan dollar, on -- we will get you more on china other a moment by the
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data point out his agent, south korean exports, 19 straight arehs that these exports climbing out of south korea. it is the world's biggest exporter to china. the last seven months hasn't seen a little bit of a recovery, easing in the drop. the latest data for july, 10.2% drop. third just ticker before i go, just an update on sovereign bonds. a big spike on friday. yieldbout crossing the curve in japan. we are continuing to see that moving up. theact, doubling from pre-boj level on friday. the u.s. yields, a big drop.
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higher,ow a little bit 2.5 basis points, just under 1%. rishaad: china's official numbers for july coming in below forecast, signaling the growth rebound may be losing steam. tom mackenzie has the story from beijing. what are these numbers telling us? therter: as you said official number is disappointing, 49.9 for july, below expectations of 50. it is the first below 50 reading since february. it points to the fact that this credit expansion, that this debt fueled growth that we saw is starting to slow. the effects of that are starting to ease but if you dig into the
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numbers, new orders are down, and output is down. unemployment levels picked up marginally in july from june. then maybe because manufacturing is keeping wages low. we have seen that cutting wages for employees. interesting to see that the larger enterprises are still in an expansionary phase versus smaller enterprises which many say should be shouldering the virgin. -- shouldering the burden. that is going to concern some as well, the week's in medium to smaller sized enterprises in the property sector has picked up in the first few months of the year and infrastructure spending by the government helped support this manufacturing. whether or not that has fed into this remains to be seen it
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analysts are saying that this is a tipping point for the chinese economy and really the downward pressure. whether or not we see the government resort to more fiscal spending to support this slow the growth because, they have set themselves and ambitious growth target for 2015. in the second quarter, that came in at 6.7%. so, within range, but can they maintain that? obviously, that i should private manufacturing survey came in above estimates so maybe that is a glimmer, a silver lining, perhaps, and we are going to get manufacturing data. we are going to get the service survey out on wednesday, and on sunday, the affects reserves.
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the -- the fx reserve. that.d: thank you for tom mackenzie there in beijing. let's go on to other stories we are watching, here is juliet with the roundup. that is william dudley. he says investors seem to be too complacent and are underestimating how many times the fed will raise rates this year indexed. he's put today at a conference in bali saying it is premature service acting and 2016 pretty said investors are correct in thinking the pace of the hikes would be slower than previously thought. investors are putting the chance of a rate hike by the end of the year at roughly one in three, and by next year, only slightly better than act. so-called shanghai giant group
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has offered $4.4 billion in a cash did for the online division of caesar's entertainment. and brought it a year later it is understood the sale may help etc. number of debt. buyers include capital funds. it is seen as a wager on the rising popularity of mobile gaming in china. the deal is expected to close in the fourth quarter this year with playtika remaining .ndependently run from israel sony shares rising the most in three weeks after smashing expectations with quarterly .esults, up 2% doubling operating income in june, reporting a profit of $205 million. analysts were expecting a loss of 380 million. thanks to sales of playstation's
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another software. it indicating that ceos decision to focus on media and entertainment. they aim to cement their leader for microsoft and nintendo by logic and mike -- a virtual reality headset. here today gains around 13%, beating the broader market decline. rishaad: we are going to turn to one of china's most hungry groups is scaling back of purchasing spree. snapping up assets from club med to cirque du soleil, now focusing on getting leaner. we sat down with funders in china last week. heidi, what is behind this strategy? it is quite the reverse of by a company that has
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coughed up $15 billion in acquisitions since 2015. it now plans to dispose of up to $6 billion across property, stock holdings. all of this is to get the credit rating upgraded. rating currently three notches below investment grade and duties. the ceo acknowledges that leverages the company is high, debt increased on a 70% last year, the company now has more debt than equity paradigm emerging from that junk status insurances in particular. this is a priority for the company modeling itself as the brookshire hathaway of china. i spoke to the ceo recently he spoke about the need and the drive to get leaner. on consolidated balance sheet we have about $40 billion in assets that can be sold which
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are available for sale accounts if the marked conditions are good we are willing to sell. reporter: it is worth pointing out that brookshire hathaway is at about 33%. the question is what will be on the chopping block and when when it comes to the disposal of assets? the executives declined to give details other than they plan to disclose disposals between now 2017 year but the the group is a very consolidated ,nvestments across themes wealth, health, happiness -- finance, measure, and health care. we could see a potential disposal of businesses that do not fit into those sectors, sectors that have turned less profitable, the chinese economy has been rebalancing. fosun has traditionally been aggressive in these markets. how does the brexit changes positioning here?
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they ceo told me that he sees a lot of opportunity, more opportunity now in case of the brexit, particularly in the wealth sector. that is because he things that others might not have the assets to stay in and create these vacuums for investment opportunity. he says they are embracing volatility. some may argue that chinese company can be insulated from risk provided braise it does not expand to the u.k. global volatility will increase and become more unpredictable. you will not know when it will happen. the best solution to risk from events like riggs at -- braise it is to be globalized. reporter: he also taught me that emerging markets are becoming a focus for the group, singling out russia and india.
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that is really evident by the most recent deal announced by the indian drugmaker gland pharma fitting and that health part of their investing -- all of this to realize what they say is a long-term target is to become a $100 billion market value company. they pay us soldiers -- do have a look at it. later, making china's charities more next, heading to charles gertie -- is going to be live at a conference finding out why commodities may be coming to an end. ♪
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you are back with
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"trending business." exploration spending back on the up in mining, but is it a sign that commodities have turned the corner? our next guest is managing director at s2 resources, which is listed on the afx. -- a sx. thank you for joining us. up when itng a tick comes to the expiration spending . does it eventually me that there is more confidence returning to the commodities industry and a fluor is being found for many of these raw materials? yes, when we saw the chaos of global markets in january and february that was probably the final act of the [inaudible]
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there is a consensus now that we are at the start of another hasing and that confidence returned and there is more money available on the equity markets for exports. i guess withd: what has been seen it is confidence but i guess it is also met with a high degree of skepticism? yes, expiration is an inherently risky game. the odds are very slim so it is probably one in 100 that actually succeed and it is largely, these days, smaller companies that do a lot of the exploration. they are beholden to equity if in a bear market headers not enough money available, there is not a lot of exploration. there is also a lag effect with the lack of exploration -- not
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much more in production anytime soon and that will help commodity prices. will lift rising tide boats but in this instance some bullets may go higher than others. what commodities do you expect to do better than the others? gold is certainly the hot commodity right now. reasons,le variety of i think, and the consensus that .old has a long way to go nickel has been in the doldrums, but is actually improving. there are political decisions being made in places like the philippines which is impacting on supply. energy, with the green it's also a very hot topic right now. probably iron ore and those bulk commodities and coal is still
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lacking somewhat. rishaad: absolutely. what about your investments? you have gone prospects in australia right now. how does the prices of gold compare when you break even? give us an idea of how much money you are making. we are in an expiration stage so we are now producing right now. we do not have a breakeven cost but the price of gold in australian dollars is at record highs for producers. if gold mining companies cannot make money now, you might wonder when they could. exploring,hen you go you are not looking at a particular price because generally when you find something and bring it into production, the pricing cycle has moved on anyway good their
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key is to really search for a low-cost opportunities irrespective of the price. you have projects in sweden as well. what about the prospect they are? they are very good, still also early stage but the things we have in sweden are mixed or of copper, gold, and silver. it is a natural hedge commodity between precious metals. also on aobably number of people's radars as one of the metals that should perform pretty well. rishaad: i believe that rio tinto will be telling people that the mining industry in for itsa is to -- due next big discovery. they cannot really legislate
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that, can you? guest: no. beingk rio tinto proactive and looking for opportunities in australia -- australia is a well endowed theral country and most of state governments are supportive of mining, particularly western australia. people recognize that it provides a date chunk of the wealth. generally, mining projects are fairly easy here. in my previous company at exactly 2.5 years from discovery to the start of mining which is probably 10 times quicker than some jurisdictions. rishaad: thank you for joining us today. have a great conference there. , a conference taking
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place in western australia, there, as well. the president of amazon japan says there is an opportunity in china, one month after ruling out and mandarin version of the japanese shopping platform. the site already increased traffic by the millions. japan's economy street ministry saying that e-commerce and china should triple by 2019. profits dropping 60%. however, that was ahead of estimates. japanese things under pressure as the boj asserted charging them 1/10 of 1%. have resultsll later today. the world's largest oil exporter lowering the price of crude sold
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it to asia by the most in 10 months. for will be cut by $1.30 next month, which is below the regional benchmark. u.s. markets is also produced. coming up, facing scrutiny, singapore investigating the goldman sachs deal with malaysian troubled investment funds. this is bloomberg. ♪
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rishaad: singapore is investigating goldman sachs from 1mbd. they are promising what it calls for decisive action against any institution or individual breaching regulations.
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haslinda has been watching this get us up to speed. goldman sachs under investigation. the federal bank is try to determine the extent of their involvement in the bond deals. to date, regulatory lapses already found in the local units in falcon private bank. if you remember, goldman collected on the $600 million in fees after augustine three -- the fee collected is about 9% of the amount raised more than average. many say it is an eye-popping amount third as of now, goldman has not been accused of any wrongdoing, also declining comment. goldman also being investigated in the u.s., reports and suggesting u.s. authorities subpoenaed goldman asking for documents related to its dealings with 1mbd.
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rishaad: where is this investigation going? haslinda: well, one name that a formers jasmine liu, lawyer for 1mbd. in complaints filed by the u.s., it was said that $5 million of the cash raised travel through shell companies and ended up in her swiss bank account. as was also referred to officer number three and even other $5 million amount is small, it stands out as she is the only president who was singled out by the u.s. justice department has having received a payment. one of dozens of illicit payments, $3.5 billion estimated to have been misappropriated. investigations are ongoing. rishaad: thank you for that.
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let's have a look at the trading day. this is the position at the moment if you are an equity investor. there we go. shanghai blocking the asia-pacific trend. falling just below that psychologically important 3000 .evel -- off by about 1% the official pmi reading coming in just a fraction below the line between contraction and expansion. indicateicial one did growth for small and medium enterprises. singapore up by three quarters of 1%. tense of 1% -- 8/10 of 1%. jakarta coming on strong. promising shinzo abe
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a plan to revive the economy, the will it actually work? why the prime minister is heading down a failed path, if you can call it that. ♪
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♪ a look at our top stories. a benchmark reversing losses. japanese shares pairing the kleins. -- pairing declines. to deliver his fiscal plan tuesday. gauges official factory fell below the dividing line. it does signal a rebound may be
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losing steam. official pam i was 49.9. was 49.9. a private pmi number was 50.6. down in hong kong, selling up to $6 billion in assets to raise its credit rating above junk. telling bloomberg it has ample capability to reach an investment grade rating. japan closing out it's morning. david is looking at small cap's under pressure in china. a group of small cap's, tech heavy, continuing to fall. 1.9%, this on top of
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declines last week. direct linko make a between the two. across a breakdown enterprises. the small guys are taking the worst of it. 46.9. if you look back to 2012, not a single month, the pmi reading above 50. equity markets looking like this. nikkei two to five up .5%, jakarta up to the highest level since april 2015. a few things we are following, earnings reaction in tokyo.
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kitty 2.3%, first quarter profits dropping. operating loss and net loss for the company for any see, down 11%. for miraca holdings. to profitsdown better than expected, 10% improvement in the first quarter. asia, have a look at down.g heavy, 4.8% second-quarter operating loss, 290 billion won, more than double the estimates.
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that's what happens when you put out a profit warning and say profits may fall 90% to 100%. rishaad: thank you for that. japan's government revealing details of its latest fiscal stimulus package on tuesday, the 26th such package since mar kets crashed in 1990. bloomberg news japan economy editor is in tokyo. the real value of the spending in this package going to be? the headline number, ¥28 trillion, but we are hearing the actual spending will be between -- just under ¥7 trillion. we heard initially ¥3 trillion, then that has been bumped up.
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it is unclear how much will be from the budget and fiscal loans . that is one of the questions. how much of this is fiscal spending and how much is things the government includes in the package, but is not actually stimulus. the government still has not announced on how the package will be constructed. stage, we have no idea of how much actual stimulus spending will be in this ¥28 trillion fiscal stimuli spike at. rishaad: the question everybody wants to know is will it lose growth? i'm sure the jury is out on that one. >> if you look at our story today, they have been doing this since the early 1990's.
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doing the same thing and expecting different results is the definition of insanity. it hasn't put the economy on a sound growth path. the economy keeps swinging between contraction and expansion. only italy has a worse record than japan does on gdp growth. is this package going to be the one that brings the economy onto a sustainable growth path? one analyst japan has a 1990 solution to a 2010 problem. the results of this package being different to the results of the past 25 packages, probably not. rishaad: thank you very much.
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some other stories we are following. a rebound in hong kong home prices. rosedary property prices by 1.6% in the last quarter, but analysts expect the direction to resume. would need to fall 35% from last year's peak before the market stabilizes. the overall downward trend will continue. investors are looking at bonds sold by companies and what is seen as china's most vulnerable province. yields in the northeastern province has jumped on concerns that the government is cutting support for troubled firms. itomberg intelligence saying is the most susceptible to risks among chinese 31 promises -- provinces. the israeli president -- former israeli president saying donald trump saying they would not defend allies unless they pay is a mistake.
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said america became a supercar by making friends, not enemies. >> to suggest that america will disconnect her relations with , america leads battlefield open to other countries. in my judgment, a mistake, a really great mistake. by giving,ame great not taking. rishaad: shimon perez there. dominic stevens name the new chief executive of the asx. we are joined by paul allen. he is well known to the asx. he has been a nonexecutive director since 2013, a former companyhe investment challenger as well, so he has the pedigree for the job.
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dominic stevens has to say. to go to a long way absorb myself in the executive detail of the business. that starts today, and i am looking forward to it. ask x is a high quality, highly strategic is this in a spacing technological change. i am looking forward to seek out the opportunities these issues create. we heard stevens mentioned technological change. that will be one of his first decisions, whether to adopt block chain technology at the asx. about to lose its monopoly over that business as well. resignedthe former ceo amid corruption allegations. is the asx trying to restore its reputation, even though the to this did not take place when he
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was at the asx. it was said he had knowledge of a payment to the cambodian prime minister, advised to not allow that payment to happen. denies any wrongdoing and is cooperating with police. he has stepped aside in the interest of good corporate governance. that something dominic stevens picked up on as well, the asx is and is in a strong position and has an in deal reputation. rishaad: thank you very much. a consortium of chinese investors making a $4 billion bet on web gaming, buying ofytika, the online division caesars entertainment. we have the details from new york. >> the chinese acquisition of playtika is seen as a huge payout for caesars entertainment. 80 million it for
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dollars in 2011, so it's four point $4 billion price tag is 5400 percent more than what it paid five years ago. let's run through the players, giant network technology company is the lead firm, developing and operating online games in china. china ocean wide holdings is a conglomerate and media. capital fund,hony at chinese pe firm. close asct the deal to early as the third or fourth quarter this year if regulatory approvals are met. playtika was founded in 2010, and it is based in israel. they are considered a pioneer in free to play games, so if you played slot machine web games, then you have played a playtika game. they are some of the biggest grossing games on apple and
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google app store. so that begs the question why is caesars letting go? it is straightforward. the company has lost money every 2009-2014, between and revenue slid 45% year on year in 2015 from a $.5 billion to $4.5 billion last year. it also needs to settle eight bankruptcy and filed for its main operating unit, which operates caesars palace. the sale of caesars interactive for $4.4 billion could help in a settlement there, and since the start of 2015, caesars share price has lost more than half of its value. up, sell, sell, sell, the chinese conglomerate trying to raise its status. our chief interview with liang xinjun is next. ♪
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, tokyo, a quick check the yen strength continuing after governor kuroda announced a slight increase in the stimulus program. this is the situation when it comes to the aussie dollar. dollar strength posing a threat or taking its toll on the trade position for the u.s., $.76 for one aussie dollar. the won,here we have three quarters of 1% the move there.
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it has been on a $15 billion global spending spree, but fosun may be switching from buying to selling. ofy are prepares to dispose assets worth $6 billion to raise its credit rating above junk. to liangexclusively xinjun. improving our credit rating has been our strategy since last year. ratingse attempt to let firms know that fosun has a good asset structure. nearly three quarters of assets health, happiness, and wealth sectors, generating strong cash flow, nonstick , and havenon-cyclical good growth prospects. assigned, it is
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focuses only on a certain time. considered,is growth prospects should also be taken into consideration. to add another point, we are strong with liquidity. we are taking various measures to increase liquidity, and including the listing of some firms. >> what you targeting this year and next year? >> we have commitments to rating agencies. there is a step-by-step issue. big of awant a too fluctuation on operations, and management has clear internal targets this year, next year, and the year after. i cannot disclose the figures to the public, but the assured we will achieve the normal level in investment grade. >> so within that challenge of attaining investment-grade
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ratings, improving the company's credit profile, are you open to disposing of assets. is it time for the company to turn from a buyer to a seller? our consolidated balance sheet's, we have 30 billion to 40 billion in assets that can be sold. if the market conditions are good, we can sell. we are willing to sell. similarly, and available-for-sale property assets, properties or equities. you will get more news on this in the second half for next year, so the answer is, yes, we paidsell assets through that's. we are willing to lower our debt in this way. include old economy industries like steelmaking, mining. there have been rumors that perhaps you would dispose of one
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of the steelmakers. there are many ways to dispose of assets. some are simply selling assets, reducing stakes and listed companies, or dilute our assets or the equities for placements. we issued new shares and sold old shares and steelmaking and mining sectors to reduce stakes. we will base the timing on market conditions. there are properties available for sale, but it does not mean you will sell it tomorrow. you would do it at a suitable time. that was our exclusive interview with liang xinjun. this is the latest bloomberg business flash, the headlines. a 52 billion dollar annual loss, the biggest since the financial crisis, the first reported loss since the fund doubled its allocation of stocks to years ago and reduced investment in domestic bonds. disclose individual equity
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holdings for the first time. the world's oldest lender is turning to private investors in speculation of a third state bailout. the bank hoping to raise six been in dollars of new fund to buy its bad loans. some analysts say the prices are higher than what buyers are prepared to pay. banks are the worst performers, down this year. closekurdish forces are to regaining control of an oilfield seized by the so-called islamic state. officials say three militants killed and the plant is still functioning normally. it produces 175,000 barrels of oil a day. the semiautonomous kurdish government in the northern part of iraq producing and selling oil independently of baghdad. arabia offering banks
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short-term loans worth $4 billion to help with liquidity there. sources say the central bank may make money available in june at a discounted rate. it sells local currency debt. after ashares higher surprise first-quarter profit of $205 million for sony. analysts were expecting a $380 million loss. playstation outweighing a slowdown in sales in image sensors. coming up, held to account, jack ma's plan to shine a light on ok chinese charities. you are watching bloomberg. ♪
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rishaad: this is "trending business". i am rishaad salamat. welcome back. jack ma wanting to pry open the lid on china's opaque charities. technologyusing the behind bitcoin to hold organizations more accountable. and is the block chain,
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they want to use is because of the transparency it affords. that'ss tamperproof, and why they are using it to tackle china's charity industry, hit by a series of scandals, a murky industry trying to regain trust again with block chain technology. gain useroping to confidence when they donate the money. able to track of their donations history and see where the money is going on a clearer basis. rishaad: how are they building it out? block chain is what they are building right now. have a future where they want to bring in charity organization and auditors with access to the block chain and be able to audit and work with
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projects in terms of donations. charity how did china's industry get in this mess in the first place? you said it is a murky world. >> i think it has been these incidents we have seen in the past. in 2002, china's top watchdog was investigating a charity organization, saying they saw a regularities. , we remember the incident with the red cross, a young lady posting photos of her lavish lifestyle. the organizations said they had nothing to do with her and she was not part of it, but the public trust that was lost during the process is hard to regain. a technology like block chain, they are hoping to restore that faith. rishaad: let's get back to the
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block chain itself. its technology is perhaps revolutionizing other industries , so what are they looking at apart from the charity side of things? open tosaid they are looking at other possibilities, requires more transparency is an area where they could apply their technology, especially with smaller entrepreneurs and individuals across the world as they expand, so these are areas that catch with their nature -- match with their nature and their business. rishaad: thank you very much indeed for that. ant financials as it tries to make the china charitable sector more transparent. rivals,urne smashing
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the movie raking in $60 million in its opening weekend. bad moms and nerd. the fifth installment of the action franchise beat forecasts right 18%. it marks matt damon's return after he skipped the legacy in 2012. that is it for "trending business". edge" up next. we will have a report from the diggers and the dealers conference in australia. "asia edge" is next. ♪
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>> it is the middle of the asian trading day. could be ee hitting the city this week. we're live in hong kong and "asia edge." hour p story this
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the yen falls the most in two months. economy ishina's losing momentum. don't underestimate the of a hike rate this year. preparing to sell assets rating ts credit above junk. warnings of brexit and weak gloomy nt mean a outlook for commodities. forum.morton diggers >> i'm keeping my eye on the markets. just on that point, dollar.y a weak that's what we're seeing. commodity prices, let's see lasts.g this managing to shake off a quiet and rusty start. midpoint over today's session, as you can see, equities are mostly pointing with the exception of the chinese mainland. reversireak,


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