Skip to main content

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

9:00 pm
♪ it is the 11th of augustgust, thursday. this is "trending business". i am rishaad salamat. ♪ rishaad: right. beijing, singapore, and san diego this hour. australia leading the region down, oil weighing on the market, crew down, an increase in u.s. inventories. kiwi surging as new zealand cuts , more graham wilson
9:01 pm
easing to combat stubborn inflation. devaluation, the prospects for a global use of it. tell me what you think of our top stories. follow me on twitter @rishaadtv, use #trendingbusiness. bank of korea, no change. david: this was expected. deals, survey, 19 economist thought they would stay put. that is what they did. 1.25%. they surprised us with a rate cut in june, a unanimous decision to hold in july, and this is what we have. the south korean won weakening at 1100. there we go. charthave a longer-term
9:02 pm
of the south korean won. a bit later on, we will be getting the press briefing out of the bank of korea. economys in mind, the is faced with a 19 month slump and exports. it does not help it relies heavily on that. plus, when you consider the say on thehat they strength of the currency. it is asia's best-performing currency in the past month. exception -- i stand corrected, the exception of the polish and brazilian currencies. a lot of things to watch out for. no surprise here. later on, we will see if the korean central bank governor
9:03 pm
tells us that everything will be ok. rishaad: right. stocks under pressure, why? we didn't have a great lead from wall street, off record highs. it is a thin day on the ground. ,apanese markets are closed removing a major catalyst of momentum. take a look at what we are seeing an light of that decision to hold. the kospi down. tie one down by .5%. singapore stocks also lower by 6/10 of 1%. the final print coming through. growth that 2.1% in the second quarter. we were looking for 2.2%, so
9:04 pm
weighing on sentiment through the singaporean session. up 1/10 adding green, of 1%. unsurprising given the heavy weighting from the energy sector. extended losses weighing on energy stocks in particular. kiwi stocks off the session lows after that disappointing rbnz.on from the megan front, bank of korea holding rates steady, the won correcting itself a little 3/10 of
9:05 pm
isr the past month, the won the top gainer in the asian region. that has been some cause for alarm. we heard from the ruling political party, if won continues, it will bash up exporter stocks and companies. spacectronics in that given they are competing with taiwan and japan and dealing with the aftermath of the china slowdown. the singaporean dollar, disappointment when it comes to second-quarter gdp. an initial move, but we are more or less flat. take a look at what the kiwi is doing. off the session highs, but still up by 1%, jumping the most in a year after the rbnz came through cut.a .25% interest rate
9:06 pm
we were looking for more. they are as a dollar, this is what we are seeing now. pretty much flat, but the prevailing theme of the asian session is the weakness in oil. wti down 3%. brent caring that through. rishaad: thank you. take a look at the new zealand dollar, up by more than 1% after the reserve bank cut the cash rate to a fresh record low. let's get to sydney, paul allen there. getting the opposite result they were aiming for here. paul: yes. to plan, did it? part of a statement mentioned the exchange rate. has beenexchange rate adding pressure to export and
9:07 pm
import competing sectors. that is the one of the reasons why the rba cut the rate, but achieved the exact opposite. this is what the central bank governor had to say. surprises meally too much in these global financial markets about reactions. either in terms of swap rates or exchange rates. out that thered are things be on the reserve bank's control, and even mention the boj cutting rates to and the yenlds, remains strong regardless. he was asked if the reserve bank would consider intervention to get the new zealand dollar weaker, and not surprisingly, he did not want to comment on that. rishaad: right. the rate cut, does he have a plan b? moore plan a effectively.
9:08 pm
-- more plan a effectively. economists were expecting a 50 basis point cut today. already we have a number of analyst notes out of citibank, capital economics, both seeing they will see new zealand's cash rate over 1.5% in the next few months. is an inflation targeting bank. they are looking to get inflation between 1% and 3%. cpi is .4%, so a long way out. he feels he has no need to adjust that target. rishaad: thank you a lot for that. paul allen in sydney looking at the rbnz decision. some other stories, you are covering full-year results.
9:09 pm
australia'sk at biggest telecom company, 36 percent rise in profits, 4.46 billion dollars. that was helped by sales of shares a few months ago. it plans a $1.2 billion share buyback and to invest $2.2 billion on networks over the next three years. for 2017, targeting mid to high single digit income growth. let's take a look at how shares are doing now. down almost 1%. meanwhile, singapore, it's dominant telecom company said net profit was $704 million compared with $703 million a year ago. the company said growth was driven by mobile data and cyber
9:10 pm
security services. singtel affirms the outlook and said sales of services to corporate customers are set to rise by low teens. results arele expected in a few hours. median estimates indicate net income at $5.3 billion, revenue at $26.2 billion. china mobile with china telecom has seen growth and subscribers, beating out rivals in the reason. -- the region. website, apple is planning its first macbook pro overhaul in four years. have a look at it, onting sponsorship dollars the olympics, according to one expert. why heavy ties
9:11 pm
next guest says global financial markets are one step away from a bad wake-up call. ♪
9:12 pm
9:13 pm
♪ a quick check of the latest is this flash headlines. hong kong exchange facing a slump in earnings, dropping 27%. a dip in securities and commodities trading responsible. hurt,lloff in china also accounting for 70% of shares traded in hong kong. the exchange is deferring projects and freezing staffing levels. the cut in trading fees are hoped to boost. fee andve implemented a initial margin rebalancing on some of the contracts that will hopefully help us to stimulate
9:14 pm
the market. valeant pharmaceuticals under criminal investigation for allegedly defrauding insurers. federal prosecutors are whether a close link to pharmacies hit their relationship. the drugmaker says it is cooperating with the new york-based investigation. the philippines biggest company doubled profit in the first half. million through to the end of june, boosted by sales of telecom assets. ander refining margins returns from power and infrastructure businesses contributed to its first half performance. opening its first hotel in london if it clenches a deal to move into a historic building. tois the preferred bidder operate the office once owned by
9:15 pm
winston churchill. of deal also so the takeover the fairmont and swiss hotel brand. media group saying its bid for a german robot maker has been approved by the chinese ministry of commerce. after tabling a cash offer that thighs it at more than five billion dollars. it is supported by management. august 11 marks one year since the chinese shock to the violation, and leading currency watchers say stability comes at a cost. we are also getting today's fixing, aren't we? on thatstill waiting one. should be out in a few minutes. 6.6255 is today's fixing against the dollar. what a different day we have from this time a year ago when
9:16 pm
we saw that volatility and hit the markets. has drop since then, the pboc tamping down on the spread between onshore and offshore yuan. the fixing is unlikely to upset markets today. they have tightened capital control, increased intervention, and recently an attempt to defend the dollar pass to 6.7 -- i should say the yuan. 1.72%,s have fallen to so a lot of analysts saying the push for stability has come at a cost, currency deposits fall to three year lows.
9:17 pm
the pboc also on its website releasing a three paragraph statement. s globalpush the yuan' used by cooperation with other countries and increase the use of the renminbi. been no information or elaboration about how they plan to do that. this comes ahead of the and report on yuan internationalization. china is likely to stick with his 13th five-year plan to make the yuan fully convertible by 2020. , one year on6.6255 from the shock to valuation. rishaad: thank you very much indeed. ,rude weighing on equities asia-pacific stocks halting a five day advance. they are concerned that oversupply could provide a wake-up call to the market.
9:18 pm
let's bring in michael price. do they need a wake-up call here, michael? argue thatu could there is a lot of complacency in global markets. that due to this narrative further weakness is good for stimulus. i think this is the narrative. maybe market should not be where they are at these levels, but the narrative says more stimulus is good. the real problem i see is that if you suppress volatility for long enough, it leads to more meaningful dislocations in the future. this is the risk of is not fully appreciated and priced in. of too: this reminds me big to fail and the moral dilemma that comes with that. >> correct. you spoke about china previously, and china has the same issue. china has basically try to maintain stability at all costs, leading to disruption and
9:19 pm
dislocation in the future. all overhe trade-off the world. short-term gains for long-term pain. this is the dilemma if you are a money manager. the returns are going down and the risks are rising. something,ll me michael, the thing is that we have a situation right now where bond markets are going higher and higher, more and more negative in some markets. when is it going to stop? talking about a search for yield, and you're trying to buy bonds with the idea that you will get some price appreciation. >> that's true. if you think about it, the whole irony of the matter is people are buying for bonds for capital gains and invest in equities for income. upside down in terms of textbook economics, but this is the reality. most likely this will continue
9:20 pm
until it doesn't. who knows? i would argue that the risk situation is deteriorating. many are priced for perfection. if you look at the three-month rate, they are rising. i think the strong numbers last week and the subsequent decline in the dollar seems to imply that some people in the market field the federal reserve could be behind the curve. they talked about raising interest rates. many guests talked about the probability or possibility the fed could hike four times this year. it does not look like it. the last time they height, the market fell off a cliff. they are in a difficult position to maintain credibility and prevent dislocation in the offing. fed manages the u.s. economy and not the
9:21 pm
financial markets, does it not? >> yes, correct, but look. even the united states dollar was pegged to gold. they used to say everything lies and gold tells the truth. be price of gold seems to telling us something, up around 25% against the u.s. dollar, but 44% against the british pound and 30% against the chinese yuan , so gold is telling us that stagflation could be an issue going forward. rishaad: nobody else is talking about that at the moment, michael. >> that is usually the case. think about it. even 2007, when some people were concerned about the subprime crisis and the weakness in housing, nobody talked about the size of it because the narrative was housing prices never decline in the united states. that00, it was the story the new economy is different
9:22 pm
this time, right? here, the same story. because there is a lot of stimulus, these valuation metrics don't apply anymore because it is all about stimulus. thinkked very well, but i they are getting closer to the end of that trade. concrete examples of this is the boeut mostly running into challenges with its latest quantitative easing program. they are increasingly becoming stretch. rishaad: great talking to. michael price of joining us there. -- great talking to you. michael price joining is there. alibaba getting a boost. we will have earnings in just a moment. ♪
9:23 pm
9:24 pm
♪ rishaad: this is "trending business".
9:25 pm sort of the most after narrowing its quarterly loss. closed at a two month high, but cautious about the months ahead., china's second-biggest e-commerce company after alibaba, second quarterly earnings, share price closed at a two month high, rising 4.5%. sales and losses were better than forecast. higher-margin products, cosmetics, clothing, and pulled in fees from third-party merchants. versus was $9.82 billion $9.77 billion, lise is $19.9 million versus $76.9 million a year ago. third-quarter guidance was a miss, nine point nine $1 billion versus $9.23 billion. anticipate slowing consumption growth, third
9:26 pm
quarter guidance is a reflection of that, but we have been seeing slower revenue growth. in the past five quarters, is seeing its slowest pace of revenue growth. quarters,st three revenue growth has been consecutively falling, 57% in 47%fourth quarter of 2015, and a quarter after, and 42% in the most recent quarter. if guidance holds true, it would see only 35% revenue pop in the next quarter. the share price has been falling in tandem with revenue. your today, down 27%. -- year to date, down 27%. rishaad: a look at what we have on the way. for the first time in three years, china's bad loan ratio, not seeing a rise. , are the we are asking
9:27 pm
efforts to clean up the industry working? we will get word on that from beijing. , it is just about the start of the trading day here in shanghai, looking at perhaps some negativity along the rest of the asia-pacific. ♪
9:28 pm
9:29 pm
♪ our top stories, oil deepening its selloff, weighing on asian equities, concerns over what the glut means for global demand. equities in australia and south korea tracking a pullback for the s&p 500. bear market despite unprecedented stimulus from policymakers around the world. kiwi dollar surging to a high after the reserve bank of new zealand cut interest rates, lowering the benchmark by .25%.
9:30 pm
the governor has said he wants to weaken the currency to boost import prices and drive inflation towards 1% to 3%. 1.5uncing buybacks worth billion austrian dollars, net earnings at $5.8 billion. targeting mid to high single digit income growth next financial year and will invest $3 billion in networks and .igitization hong kong reacting to the broader region, hong kong doing the same. haidi: the greater china markets not adding much, a down day for asia. in terms of that shanghai open, kong by0 of 1%, hong 4/10 of one percent. japan is missing. holidays, actually, so a lack of
9:31 pm
momentum, sustained volumes. korean stocks down 4/10 of 1%. correcting a little bit, bank of korea coming out with they wouldn, saying be leaving rates on hold at 1.25% as expected. zealand, off session lows, kiwi stocks down by a 10th of 1%. disappointing markets, a lot of people calling for a bigger move. we did not get that. the kiwi dollar jumping the most in a year, stocks down. this,e expecting energy-intensive sector, the reaction to the plunge in wti and losses in the asian session when it comes to crude prices. malaysia has turned negative after gains.
9:32 pm
singapore down by 6/10 of 1%. a miss on that second quarter -- number, looking for 2.1% 2.2 percent, got 2.1%, so a miss there. that's a quick look at some movers we are tracking today in that energy space. the usual suspects in that space in sydney leading declines. the basic miners also seeing weakness. and care mins or down, but insurance claims are up, non-interest income down for that stock, as well as cba. a strengthening of 410 of 1%, the most since june 23, the one year anniversary this time last year that the pboc devalue the currency by
9:33 pm
close to 2%. at other currencies in the wake of that bank of korea decision to hold. is lookingt the won like, increasing political pressures from korea that talk of potentially intervening if they see more volatility. the biggest gainer out of all asian currencies weighing on exporters. opec, global oil market likely to stay week for some time. -- weak for some time. meet inp planning to algiers. what are they saying here? have the meant to supply-demand balance they were predicting four months ago. fluctuating, but the market is on track to rebalance. opec is forecasting upcoming weakness, and that is no
9:34 pm
surprise given that we are moving into slowing seasonal demand. the risk of the market is the elevated inventories of crude and stockpiles around the globe. an unexpecteded increase in crude stockpiles. the one benefit is gasoline did fall and u.s. output did decline. could puttockpiles pressure on prices. rishaad: iran is trying to get to pre-sanction levels. libya trying to get back on its feet, and let's not forget iraq. market share is something we see quite often, saudi arabian oil production is up, even iran. the rebalancing scenario, the market is in a better situation than the first quarter of this year, where we had disparity ,etween supply and demand
9:35 pm
outpacing demand by one million barrels a day. there is a little bit of a fall -- rishaad: there is a ceiling as well when shale comes in? >> not only shale, but the glut and overhang of inventory. attract more shale if it were $50 or $60 a barrel. rishaad: thank you very much. right. progress in reining in credit, but some say the problem could be far worse than thought. the official ratio shows three years of increases, suggesting the government is reducing risk of their. are we to believe the official line or do we have to look at it and a more nuanced way? investors in and
9:36 pm
china often approach these kinds of numbers with a dose or modicum of skepticism, and that is not different today with this number. research, and off spin, saying the bad loans ratio is closer to 20%. ,he official number is 1.75% equivalent to $110 billion in loans, but bmi saying it is closer to 20%, $1.9 trillion worth of bad loans. saying there is some positive news from this. if you look at the sectors where bade have been a lot of loan buildup, overcapacity sectors like steel and coal, there is some marginal improvement as the central government has been putting pressure on banks to unwind bad loans. 1.75%ay explain why that
9:37 pm
ratio has come through in official statistics and has not increased for almost three years. numbers,to believe the what does it mean for the health of chinese banks? >> as they get their bad loans down, they can reduce the level of provisions they have to put aside, less pressure on profits. we have seen profits improve for the banking sector in china this year in the first half, up 3.2% versus 2015, so some improvement there. the provisions are still 176% up from 175% in 2015. byperforming loans grow, up $6.8 billion. month in june, we reported on a survey that bloomberg
9:38 pm
talking to analysts who said china's banking sector in the next two years would likely have to put aside or be recapitalized to the tune of between $500 billion and $3 trillion, so there is continuing concern about the level of nonperforming loans and how the banking sector will unwind those. rishaad: thanks, tom. were looking out for data out of china in the next few days that should give us a better idea whether this economy is stabilizing. what are we looking at? what is due? what are the expectations? dump,orrow, the big data industrial production numbers, retail, investment, money supply. money supply and credit could come at any time. main one.o the industrial output, 6.2% year on year growth, steady from the month earlier.
9:39 pm
showingl, surveys are 10.5% year on year growth. very healthy. proppedumer remains a to the economy. investment, 8.9% for the year through july. the real story is what is happening underneath that headline figure. reluctant are to invest, going down. rishaad: this is one of the keys. when will we get a breakdown of that investment? allf we see the trend through this year, we are likely to see further moderation in private investment. the animal spirits of corporate china art still pretty much tamed. celebrating,we are marking, i should say, the yuan
9:40 pm
one year on since the devaluation or rapid depreciation we saw. stability seems to have cut back there. >> exactly right. peopleooking bad, as were so worried about currencies, the stock market blowing up, the economic fundamentals never really fell off a cliff. it has not been so hard for authorities to put a baseline undergrowth, but that is key. in ahave had two quarters row, 6.7%, so this multiyear slowdown, some signs it is stabilizing. for the china bears, it may be proves them wrong, that is if you believe that stabilization can hold. there are plenty of questions over whether it will. rishaad: thank you so much. a quick check on other stories. netflix, another record year of tv production, bad for business
9:41 pm
according to an fx negative. fx will make 21 original scripted shows. that is a 20% gain on last year. the oversupply is overwhelming viewers and threatening profits. the firstaring significant overhaul of the macbook pro in more than four years. sources saying the computers will be thinner, touch screen strip, and more powerful graphics processor. they are not expected to debut in september. twitter one a ruling that it can't be held responsible for the so-called islamic state using it to spread propaganda. a federal judge ruled the social network is protected as being treated as a publisher. the case centered on islamic state claiming responsibility
9:42 pm
for the murder of a u.s. contractor in jordan and brought by his widow. could sponsors be wasting their money? we will hear from a brand consultant that thinks that is the case. ♪
9:43 pm
9:44 pm
♪ rishaad: footballs governing checks concerned a formal on the indicted head. he has been under investigation under a us-led inquiry into corruption. he has not faced questions and has avoided traveling abroad since indicted. has not in the olympics stopped a chinese sportswear brand from reporting its profit first time in four years. above analyst
9:45 pm
calculations. the company achieved tighter cost controls after posting losses every have since 2012. let's have a look at the games. our next guest says advertis ers are wasting sponsorship dollars. thank you for joining us. how do you come up with this idea that advertisers should perhaps not bother? i did do quite a bit of research comparing and analyzing different advertisements. what i found is that the sponsors who were able to make a connection between their brand and customer with their advertising are the ones doing well. everyone else's wasting their money. rishaad: right. so can you give us an idea of who has been able to do that and who has missed the mark? >> proctor and gamble has done the best job. they have that thank you, mom campaign. it is a great way for them to
9:46 pm
use the olympic athletes, but in a human way that speaks to moms, the customers of procter and gamble products. they make this emotional connection that makes their brands relevant and makes them care. that is a great way to combine sponsorship with product message. rishaad: who has missed? the would say that these has done a good job and a bad job. spot showing fun the different athletes and the ways they are paying for getting to the olympics. great spot again that ties the athletes to the function or the product that visa offers. they have another spot called on --,rt, and it focuses and it is about him preparing for and training for the olympics and shows his heart pumping and growing. i have no idea what this has to
9:47 pm
do with visa, so there is no connection to the brand, and that is why it misses. rishaad: the successful campaigns will be the ones that can provide relevance to people's lives, correct? >> exactly. a good example is the contrast between adidas and nike in the 2012 london olympics. be the official sponsor, $150 million. marketing, where they were not an official sponsor, but ran ads that captured the spirit of competition. they had this moving ad of a chubby teenager on a road. that tugged on people's heartstrings and made the brand relevant to the customer. people are not athletes. they are rated of people trying to be fit and do a workout. nike generated more social mentions. they got more people to identify them as a sponsor, even if they weren't, and had more people
9:48 pm
connect nike to the olympics, which i think shows the power of making that emotional connection. ,ishaad: tell me something here how has this changed over the years? we have more and more, well, narrow and deliverable adds, if you will, through social media now. is that the channel people should be using? how do you make advertising work and then? >> definitely return on investment is a big topic for advertisers these days. easier to prove a return on investment through social media because there are more metrics there. going back to procter and gamble, they have done a brilliant job of taking the this great tv advertising campaign and what has happened on social media is that athletes and other people are posting their own tributes to their own moms, creating this social campaign that complements that their tv
9:49 pm
campaign. it made it even more effective all around for that brand. something, when we look at advertising, does it matter what event it is? you could argue that the football world cup like the olympics is bigger than the games in rio at the moment. or football events, does it make a difference what the sport is? >> i think so. i think that is why you see adidas not sponsoring the olympics, but sponsoring the world cup. to bek they have relies more targeted on their core customer and brand appeal makes more sense for them to be in the world cup and other football competitions. that is again speaking to the relevance that brands have to create between their advertising -- andre's partnership their partnership and their
9:50 pm
customers. rishaad: what about the organizers themselves? it seems they just want to get asthma much money as they can in terms of sponsorship. it does seem like that are primarily concerned with getting money, and that is probably their job, but one thing the olympics committee has done this year is to open up the possibility for advertising. even if you were not an official sponsor, you could apply for a waiver early enough so that you could start running olympic-themed ads before the olympics. it was a way to get more brands to be part of the olympic conversation without requiring them to spend money. i think the more options they can give to brands, the more the olympics will benefit. -- ork where they tend the stand they tend to take is more restrictive. nevertheless, people
9:51 pm
are still going to go there and indeed advertise during the olympic games. the thing is it is about the whole process at the end of the day of brand building, isn't it? and brand awareness by the end of the day. brand awareness is one thing, but you need that conversion to brand appeal and brand connection. bridgestone is another example of a brand that has used the sponsorship to get their brand out there. i'm not sure what the return on investment of that is. rishaad: thank you very much indeed for joining us there. news, bank of korea, kept interest rates on hold. 1.25%. the economic sentiment has improved slightly, and one of economists are
9:52 pm
in wait and see mode at the moment. top rate inflation will remain low, saying the policy to ensure cbi approaches targets as well, and they hope to approach that target in the medium-term. the bank of korea saying the economy will continue its modest growth as well. seeing what is going on as the and could doear damage to south korean exporters. we have to take a break. pokémon may be banned in china, but it has not dimmed that country's appetite for gaming. it is the world's third against videogame market. ♪
9:53 pm
9:54 pm
♪ looking foryou are a shift to china's consumer-based economy, look no further than the videogame industry.
9:55 pm
let's bring in our chief asia economics correspondent. sales telleo games us about the economy and china? >> they tell us that videogame sales will not be enough to revive china's economy or fill a hole left by the coal mining sector. we do look for signs that the consumer is growing. growth inignificant the videogame sector. they are predicting growth of 7.4% to 2020. it is a real example. let's remember that there are 534 million video gamers in china. one in every 14 humans on the planet. not enough to turn around china's economy. rishaad: is it supporting a push towards this? >> they are.
9:56 pm
they are spending money on technology sectors, doing more to build wireless networks, which are vital for gamers to go online. tencent is doing work in the video gaming industry. chinese countries are going offshore and buying videogame assets. the president is not sitting there extolling everyone to play video games all day, but they are pushing this idea of a new andomy, technology innovation, even if it has a long way to go yet. rishaad: thank you. we have this beleaguered gaming ilweb.y ph the suspension is to be lifted about half and hour on the philippine stock exchange in manila. this company is about to lose its contract or license for
9:57 pm
gaming because of the new administration. coming up, one year on, how china's yuan is weathering the storm. this is bloomberg. ♪
9:58 pm
9:59 pm
10:00 pm
announcer: from our studios in new york city, this is "charlie rose." charlie: david brooks is here, a columnist for "the new york times." his most recent book "the road , to character" will be released in paperback in september. he has been writing about the presidential election and the unprecedented candidacy of donald trump. 50 republican former national security officials signed a letter warning trump would be the most reckless president in american history. senator susan collins also announced she would not vote for trump. i am pleased to have him here to talk about that and many other things. welcome. david: good to be bat


info Stream Only

Uploaded by TV Archive on