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tv   Asia Edge  Bloomberg  August 14, 2016 11:00pm-12:01am EDT

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sharp enters a new era, the management has changed and the cash injection has gone through. 119%n bears collide after surge this year. straight to the markets. asian stocks are holding gains close to a one-year high. the gdp number coming out of japan really did miss estimates. >> how frustrated would you be if you were prime minister abe right now? exports easing into that headline number, 0.2%. we were looking at growth of 0.7%.
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the pace is narrowing. what more can a markets do? we have seen this oil story, the pounds -- the bounce we have seen in oil, looking to extend the rally. that is driving the energy sector. that is outweighing the poor than unexpected gdp number. 1.6%, a up by seven-month high. i will tell you about the movers, in particular. it is the property sector. gains across energy. bitre seeing a little coming from hong kong and .outheast asia as well we are seeing a
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selloff surprisingly. we are getting trade numbers at some point today. china,perty sector in this is what is driving the rally. a lot of talk about potential consolidation. it is at its highest since 1990. this is another company. trading at record highs. an outright takeover is not entirely out of the cards. i want to take a quick look at and where the japanese yen is sitting. flate looking for a new
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range. data onthe latest japan's gdp growth fell short of estimates as business investment going backwards last quarter. us and isider joins standing by in tokyo. what were the key takeaways? >> as you pointed out, the weaker number, much growth than expected. business investment actually down, declining, which is a worrisome sign. personal spending, up very slightly, and that is something the finance minister also mentioned in a briefing this morning. saying it was not strong. abe?e: what about
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a bit of frustration that the a largent has been -- stimulus package announced recently. unprecedented easing. the economy is oscillating between slight growth and contraction. the finance minister mentioned the bank of japan and the government are working closely together to fight deflation. these efforts are not showing up in these numbers. very slight growth and we have seen it go between slight growth and contraction. yvonne: what about for the boj? the comprehensive policy they review -- the review the announced. they have no choice but to take action? >> one economist we spoke to said just that -- this really
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puts the pressure on the bank of japan to ease. seems it isg, it going to be more pressure for the boj to do something. these numbers do add to the pressure on the government and the bank of japan. . have been focusing on the state of japan's economy with our guests today. the growth numbers are a warning for policymakers to take action. take a listen. >> it is pretty much as expected. nor bad.either good the japanese economy is stalling. the fact that business investment is down, negative for a second consecutive quarter and that is the litmus test. if private entrepreneurs,
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business managers do not invest in japan, that really is a warning sign. boj needs to be more decisive. >> people are really confused what to do with all of the numbers. in my view, what they need to see is a decisive boj making sure we have monetary policy -- that is not happening. i do not think negative rates is the way to go. i think more qe is the way to go. japan is 230% on the government side. yvonne: bank of tokyo mitsubishi told rishaad that investors are used to seeing japan falter.
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willdo not think japan slip into a recession anytime soon. the air is leaking out of the tire very slowly and the car is having trouble moving forward. air keeps coming out, the car will not move it all properly. >> we have been through this a couple of dozen times. the market is used to seeing japan falter. the question is whether they have any new ideas. it looks like they are going back to the old ideas. yvonne: a quick check on today's other big stories. shareholders are said to have approved a plan to do list the property company in hong kong. he considers the unit undervalued. vote makes it hong
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kong's biggest ever privatization deal. thailand's economy finished 3% narrow low -- narrowly beating estimates. investor confident was bolster by the peaceful completion of a constitutional vote. ministries for the transition may not be ready to start talks as early as expected. the sunday times say departments are still recruiting staff making it unlikely article 50 will be evoked -- invoked until late next year. donald trump has once unlikely -- has won some unlikely support. says heer of hezbollah
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is correct. australian oil and gas minister announces a billion dollar write-down of the lng project. let's find out more from paul allen. paul: we all know what has been happening to the oil price. specificok at a more example. not a great time to unlatch .ieces of expensive equipment has taken a $1.05 billion write-down on this after taking a $433 million charge on the
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same project a year ago. not great times for santos. the chairman saying this is clearly disappointing. if we take a look at shares, the market working through the five stages of grief pretty quickly. earnings, you mentioned national australia bank. also out with disappointing news. cash profit of 3%. paul: $1.6 billion for the quarter. this is a trading update which the australian banks do from time to time. a useful snapshot, anyway. the bank struggling with the same issues as all the banks. a tougher regulatory environment.
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net interest margins are a little lower. 21%, $228 million in the third quarter. higher saying we saw funding costs, but asset quality remains strong. joining us live from sydney. coming up later, the imf's warning china that urgent action is needed to contain growing risk in the economy. largest rail freight operator has announced disappointing results. this is bloomberg. ♪
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yvonne: everbright security has
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raised $1.1 billion. the chinese brokerage priced its shares above the midpoint of the range. shares in is selling hong kong to fund potential acquisitions. climbing ins singapore this morning. on sunday, the oil and gas producer reported a second-quarter loss. it also warned debt covenants may come under stress. a deal to gain control of brazil's energy. major shareholders have agreed to sell the combined 45% stake in a $7.3 billion utility.
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the deal is likely to be announced in a few weeks. australia rejected a great -- a bid on national security grounds. australia's largest rail freight .perator is thinking today 88% drop in full-year profit as miners cut back on resources and spending. the company sees lower profits for the rest of the year. joining us from sydney is the ceo. lance, great to have you. after these earnings, shares taking a bit of a beating. it seems like the earnings were driven down by your freight business. talk about how tough of a year it has been for horizon -- aurizon.
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outlook is challenged, as we know, but remain stable. in our freight business, the remainder of our business, with a range of factors weighing on us, even though we have taken our cost down 20%, revenues of gone down more than that. we have initiated a performance review in that space. we have been driving a transformation in the business, the efficiency of our business, and taken $131 million out of that. continuing challenging outlook. yvonne: you have not ruled out selling all or part of your freight hauling business. ?an you elaborate on this
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what asset could be on the chopping block? >> to the last point, we do not have any significant joint ventures. this part of our business covers everything from livestock business,grain aluminum. it is a real mixture of businesses. what we need to do is look at every part of the business, every geography, every product in which we call. -- haul. there are parts of that business that are in good shape and improving shape. there are other parts of the business that are under severe pressure. we need to find a way, either to
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fix those businesses, or to take other action. you mentioned about a performance review. is there a time frame in terms of what you will be targeting? is there a target price or a dollar amount in terms of assets that would be reduced? >> the target is to have this business and a component part of not have ass, we do preconceived notion of what a particular target is in any component part of the business. what we are doing is breaking it out. it is already underway.
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we are running as hard and as fast as we can. the timeframe will be as quickly as possible. there is a degree to which it is at onet -- once we look part and make a decision, that might have implications for other parts of the business. yvonne: let's talk about volumes. what does this mean for the broader coal market? >> a couple of aspects we have spoken about this morning. on our modeling, the proportion of our customer base in coal at or below breakeven has reduced from 26%, that was the number back in february, 210% at the end of june -- to 10% at the end
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of june. significant challengers out there. then it is the relative position of australia's competitive place against other suppliers into the asian region and we have seen grow toa's market share 65%. -- our customers are continuing their cost efficiency productivity drive. when you add together all of the benefit across the supply chain, we are seeing not only stabilization but the opportunity for some modest increase in the penetration of
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australian coal. time.: we appreciate your on thosen update breaking news from jfk airport where one terminal was evacuated. flights delayed and possibly diverted. reports of shots fired. they can find no evidence of any shots. the terminal was cleared. several planes were also held up. police say they have found no evidence of shots fired. asia may be showing some signs of stability. our next guest says investors should not get carried away. ♪
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yvonne: welcome back.
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let's take a look at the china sincedisappointment friday with the factory output retail sales. let's bring in cohead of asian economic research. he joins us here in the hong kong studios. interesting, the second quarter gdp numbers from japan and then it was china last week. we have not seen markets react to too much. is this the new normal? >> to some extent, yes. we had expectations. in the last few months, things have stabilized. we have these big floods in china and that distorts the reading. investors are not sure whether it is as bad as the headline number suggests.
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drop in loans.rp we heard from the pboc economist over the weekend, playing a little bit of defense on these figures. should we be taking it with a grain of salt? you see credit growth slow. growth accelerates. that suggests corporations are hoarding cash, government entities are hoarding cash. despite monetary easing, the money is not being deployed. like japan, for example, china may have to shift more towards fiscal easing. yvonne: he also mentioned they should be lessening the focus on
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gdp and more so towards jobs. is that a signal they are running out of options? they should accept a lower growth rate? >> potentially, yes. they boxed themselves in. picking a number like that is yourself in.box you want to make sure the labor market is stable. away from this fixation of 6.5 might be a positive thing. possibility that the yen could appreciate in the second half. >> china's economy is still slowing. the latest numbers were not that positive. to the extent china is still slowing, that might mean a weaker yuan.
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latest we will get the on japan's reopening after the break. ♪
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yvonne: asian shares are holding near a one-year high as rising oil prices bolster sentiment. , chineseil spending lending, and japanese gdp numbers have all missed estimates. crude is extending its gains after saudi arabia said it is ready to talk about stabilizing the market. japan's gdp expanded just 2/10 1%. .usiness investment declined gains in tokyo.
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,hares jumped 17% this morning a 39% rise in two days. --global news 24 hours a day powered by over 2600 journalists and analysts in more than 120 countries. latest on the markets now. asian stocks are holding near their one-year highs. haidi: we are barely hanging on to that one-year high. we are tracking lower by 2/10 of 1%. it really is tension between the bad news of the day, japanese gdp missing expectations. markets were looking for a gain .f 0.7% seeing very much a mixed
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picture. yen looking range found. we are getting trade numbers today. australia, upside of a quarter of 1%. gains ontending the the hopes the opec meeting will result in some sort of market stabilization measure. that is continuing to drive crude gains. 7/10 ofg stocks up by 1%. something of a drag coming through from the casinos.
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shanghai, take a look at that. developersperty driving those gains that we are seeing when it comes to china. yvonne: foxconn completed its capital injection in sharp. does this mark a fresh start for sharp? it marks an end of an era for the company. it has been brink -- on the brink of insolvency for years. remember this is a deal that has been four years in the making with many false starts and close calls. actually having the money is
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pretty reassuring for investors. yvonne: take a look at sharp's core businesses, still losing money. how is foxconn going to change that? >> the company reported its seventh straight quarter of losses. it is not a good time to be an lcd maker. company showed a 40% drop. the other business is not much better. electronic sales have slumped. this is not all of the operation. they also make washing machines, solar panels, office equipment.
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display, access to clients of foxconn, the world's biggest manufacturer of electronics. the investment will allow sharp to develop new technologies, such as the internet of things. it brings new discipline and a new management team to make hard decisions. much.: thank you so a leading member of china's central bank has stopped to ease fears about the economy. chinago to our correspondent, tom mackenzie. is the pboc trying to strike a confident tone?
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the data we have on retail , it missed forecasts. the focus from this top pboc economist was on the credit supply number that came through below its growth. m2 number, at the that was up in july. 's target for the year is 13%. we saw aggregate financing. loans, half -- new at what analysts had predicted
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for july. likely have come up as well. it is very unlikely 13% for the year will be changed. yvonne: were there any other comments? >> talked about corporate debt levels. they are higher than international players. he is concerned about that. the need to tackle some of those, especially in areas of overcapacity. be more focused on job markets
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and stability. when you combine that with his comments about zombie companies. focus on the job market. -- we have heard from other pboc officials. it isg about the yuan, continues to yuan be market-driven. we heard from the state information center this morning saying they predict second half growth of 6.6% in china. -- your growth of 6.6 four-year growth of 6.6%. tom, thank you so much. the imf warning, urging action
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-- urgent action is needed by china. thistte has been following for us. they are worried china has to put a lot more reforms in place. the imf, the mission chief for china, was speaking on article 4 on china. phone or abilities in the economy -- vulnerabilities in the economy are rising at a dangerous trajectory. the imf did say they are confident china will rise to the challenge. yvonne: what about these shadow credit products? >> these are high yield, high risk.
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aboutave a yield of 11-14%. the return is high, but the risk is as well. the imf is worried defaults on these could lead to big liquidity shocks in the system. were --four japan, they four japan, they were operating on some unconventional policies. called an income policy. a lot of economists are not really a fan of this. problem. a different deflation at the moment, they need wages to rise. a lot of analysts saying this is
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not going to work. one of the people in charge of the policy for the white house back in the 1970's, he is a senior fellow at the brookings institution and says there is no way a company will take on more cost and push wages higher. it is unlikely to work. the imf's answer to helicopter money. yvonne: qs so much. -- thank you so much. we will look at what went wrong. this is bloomberg. ♪
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yvonne: indonesia is considering setting up tax havens.
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proposals for last week's announcement that repatriated funds could be invested into assets such as gold. it is wanting to sell devices for as low as $99. concerns rise about pay and job security. after singapore lowered its annual growth forecast. hong kong, though, had the weakest across southeast asia thanks to a poor employment outlook. seeing shares up the fifth of 1%.
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let's look at hong kong. shares are resilient, up about two thirds of 1%. we will get the latest on that. joining me now -- we have to talk about the gdp figure coming out of japan. was it is bad as it looked? >> not quite as bad. trend growth in japan is about .2%.e -- is about >> where does it go for now? theme. a common more and more central bankers are saying, we have done what we can.
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>> they cannot really pullback. if they pullback now, the yen would shoot up to 80. they have to stay the course. it is clear that is not enough. >> the imf had an interesting idea to revise the incomes policy the u.s. used in the 1970's, but in reverse. do you think companies will take this on? >> it is a very interesting proposal. should do a name and shame policy with corporations. if you do not deliver that, you have to explain publicly why you're not doing that. it makes sense because there is
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clearly a lot of profits being generated in japan but it is not dribbling through to wages. >> i know housing starts were a little bit stronger. five and consumption pretty fat -- private consumption pretty flat. europe,st economies in sweden, switzerland, the most in the fact with negative interest rates -- in effect with negative interest rate is to strengthen the housing market. homes.building more it looks in the short-term but is that the best use of capital? the risingt face
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house prices at the end of the day. >> that is the path we tried before. we do not see as much leverage. it is not necessarily a great leverage behind that. long-term -- >> japan still has this huge problem with the aging population. >> there, the fiscal stimulus comes then. during this enormous fiscal stimulus, a lot of measures to improve social welfare services bytry to help the elderly helping family members care for the elderly. it is more of a social policy
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issue. >> the thing that -- to let in more foreign workers. >> we saw what they did to the bond market. now they are getting into the etf market as well. what happens when that liquidity get squeezed? most economist say, they will have to continue to do the same thing. is there any limit to this. >> there is no magic bullet anymore. you guys were carrying this report this morning. the banking supervisors are suggesting bank profits are coming under pressure. there is ascenes, lot of tensions as the boj is
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reviewing monetary policy and debating whether to cut interest rates further. some of the banks are saying, we are really getting hurt here. what do you dois here, negative interest rates don't seem to be working. there is a nationalization of the stock market taking place. point do you blend monetary policy and industrial policy. >> they can strong-arm those companies we own. that becauseused they have this corporate governance code. japans nudging corporate
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a little bit in the right direction. extreme -- it to the >> where do you see the yen heading? with the strengthening of the yen, we solve tourist spending come down. 95we see it strengthening to year and because the fed is that of bullets. currenthas a massive account surplus. out on how story this local japanese are still not spending more. they're waiting for inflation to pick up. why are we still stuck in this
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deflationary mindset? >> wages are not increasing as much as one would expect in the japanese do not believe they have turned a corner. the other thing, negative interest rates. they are counterproductive because interest rates are going negative. that is a natural reaction. >> coming up, two sides to every story. this is bloomberg. ♪
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yvonne: a hong kong student
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activist has been given community service. they were convicted last month of illegally taking part in a protest that triggered the occupy central movement and 2014. -- in 2014. a third activist was also given hours of community service. here is a china stock for the bulls and bears. china's answer to twitter has rewarded investors quite well. the short sellers are looking their wounds. >> they want this to turn the corner. you have the stock at a record high but you also have short that's at a record high -- short
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high.t a record it had positive earnings results for second quarter last week. $.16.ed eps, we were expecting $.11. revenue and user growth has been steady. ofrd quarter balance upwards 100 73 million u.s. dollars better than expected. they are adding tv and video partnerships and growing their user base. why the stock is going up. yvonne: what about the bears? when do we start talking about it? >> the 119% rise is twice as much as the next biggest rise.
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stock caps, this is more than twice the game so far this year. 132 times earnings. that is more than double facebook, more than double alibaba. >> the earnings growth, revenue growth, user growth. yvonne: david, thank you so much. to bulls and bears continue collide. yousef is standing by for us.
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jampacked show. it had been rising off the back of this rally we are seeing in oil prices. in the case of saudi arabia, changing legislation where they are trying to entice more .oreign capital to be deployed what that means for a possible inclusion and we will also be joined by the ceo of the dubai corporation for tourism and commerce. he will lay out the strategy for us in terms of becoming the most visited hotspot in the world for global travelers. how is the organization going to achieve that? always a global conversation from the u.s. all the way to japan. yvonne: thank you so much.
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stocks with a little bit of
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yousef: ulf markets enjoy a positive start to the week led by dubai and qatar. >> talks will be revived when opec meets next month. -- rishaadrain

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